ISM endorsement

The International Safety Management (ISM) code was adopted by the SOLAS convention and in 2002 , it was made applicable to all cargo ships. The aim- To ensure safety of human life at sea & to avoid environmental pollution. All ships had to be ISM Code- compliant or the owners/ charterers should hold a current Document of compliance.

So what is the Cargo ISM endorsement doing in almost all cargo policies? The endorsement states that if a ship in which the insured cargo is carried is NOT ISM compliant or there is no Document of compliance produced, any loss, damage or expense to the cargo would not be payable as a claim. This is however only if the insured was aware of the vessel being not ISM compliant or as a prudent businessman should have been aware of this fact. This exclusion would however not affect the rights of an innocent third party( assignee) claiming under the policy.