I was in the middle of a Training session, explaining the Duration clause under the Institute Cargo clauses of 2009. Made a statement that the Duration clause reads as under :
” This insurance attaches from the time the subject-matter insured is first moved in the warehouse or at the place of storage (at the place named in the contract of insurance) for the purpose of the immediate loading into or onto the carrying vehicle or other conveyance for the commencement of transit”.
The cover under this insurance would continue during the ordinary course of transit and terminate on the occurrence of one of the 4 eventualities listed out, whichever occurred first. I added that the first of these eventualities as stated in the Duration clause was ‘ on completion of unloading from the carrying vehicle or other conveyance in or at the final warehouse or place of storage at the destination named in the contract of insurance’. The point of emphasis was that, under ICC 2009, loading & unloading risks were in-built and there was no necessity to specify separately by a manuscript wording in the policy that ‘loading & unloading’ were covered.
A participant came up with a pertinent question — Are loading & unloading considered as perils/risks or merely a part of the transit process? Will losses suffered during loading/unloading be covered under a policy issued on ICC-B or ICC-C terms? This was the second question.
Loading/unloading are ‘risks’ and hence, there is the need to read the Duration clause of ICC-B or ICC-C in conjunction with the respective Risk clauses. No doubt, cover under policies issued on ICC-B/ICC-C terms commences as per the Duration clause narrated above. However, if any loss/damage were to occur during loading/unloading, one has to see if it falls under the ‘named perils/risks’. ICC-C does not name loading or unloading as risks covered and hence cover would not be available. In case of ICC-B, limited cover would be available as stated ‘total loss of any package lost overboard or dropped whilst loading on to, or unloading from, vessel or craft’. What are the limitations? Package should be a Total loss, and this should have happened during loading/unloading from ‘ vessel or craft’. So, this cover will not commence when the subject-matter insured is first moved for the purpose of immediate loading.
Similar situations can arise in cases where insurers write on the face of the policy — ‘ Cover under the policy will be in line with the Incoterms’. If the Incoterms chosen are DAP or DDP and the marine cargo policy is on ICC-A terms, there could be contradictions. Both these Incoterms are ‘on delivery’ basis, i.e. the risk transfer from seller to buyer happens when the subject-matter insured is offered for delivery at the named place. Unloading risk and costs will NOT BE THE SELLER’S RESPONSIBILITY. Notwithstanding what is stated in the Duration clause, if a loss were to happen during unloading, insurers can well argue that the seller who had taken the policy had delivered the cargo and since policy was issued to be in line with Incoterms, the unloading risk of the buyer was not covered.
Is there a solution in cases cited above? It will be appropriate to discuss clearly with the insurer before placement and have the understanding reduced to writing on the face of the policy as a condition. Depending solely on the printed Duration clause of ICC-B/ICC-C could be dangerous.
Discover more from BalasBroadcast
Subscribe to get the latest posts sent to your email.
Loading and unloading can given with icc b and icc c , even some cases while insuring used cargo where icc a cover restricted then loading and unloading cover can be offered by underwriter depending upon risk.
That’s right, can be given but not automatic
Why isn’t loading and unloading considered part of the transit process instead of a separate peril? I can understand that in earlier times the cargo would be loaded and unloaded once during the course of the voyage but today when there is multimodal transport the cargo needs to be loaded and unloaded as many times during the single transit as there is the change of mode of transport…
By loading and unloading, what is referred to is the first loading and the final unloading. Any number of loading/unloading in the ordinary course of transit is anyways covered.
thanks. my point was why should the first loading and last unloading be considered a separate risk. The risks they carry is no different from intermediate loading and unloading.
Duration of cover is different in SG form of policy and it is changed by Institute clauses.In 2009 clauses risk in loading and unloading is covered.Duration in 63 and 82 clauses did not provide for this.In English law the term delivery doesn’t include unloading but American case law is different. Further inco terms create problems in the absence of purchase contracts clarifying transfer of risk
Thank you for the comment. You say: Similar situations can arise in cases where insurers write on the face of the policy — ‘ Cover under the policy will be in line with the Incoterms’. We have Insurable Interest 11. 11.1 clause in ICC (A). Does it mean that in every case I will look at who bears the risk for damage in transport according to incoterms and claim that according to DDP or DAP the risk passes to buyer at unloading stage? Does it mean that statement ‘ Cover under the policy will be in line with the Incoterms’ is superfluous?
Also does it mean that if the buyer under DAP takes insurance from A to B, he is covered only for unloading part at point B – without reference to incoterms rules in the insurance policy?
Two aspects need to be considered here — 1) Whose risk it is ? 2) Is there a duty on the seller to insure? Except in case of CIF & CIP incoterms, seller is not obliged to provide insurance, right? Taking your example of DAP, where cargo is at the risk of the seller till offered for unloading. There is no obligation for seller to insure, though. In his own interest, he would buy transit insurance. Assume for a moment, he has not, the buyer has made advance payment and there is a loss during the transit. Where does this leave the buyer? The buyer is not barred from buying insurance to protect his interests. Yes, he has a legal right to claim against the seller in a civil court, but you know the time and effort involved. So if buyer has an insurance and it can be established that the buyer has made payment for the purchase, he can claim for the same with seller giving a clearance. Waht the insurer will seek to ensure is that no two claims are lodged for the same claim under one or more policies. Hence the need to look at the underlying transaction/documents in detail instead of blindly going by the incoterms alone.
Bala Sir, I have a query on 8.1.3 of Duration Clause, “8.1.3 – when the Assured or their employees elect to use any carrying vehicle or other conveyance or any container for storage other than in the ordinary course of transit or…..”
In what circumstances this termination point shall trigger.
Supposed there are at times say during a peak business season, multiple trucks have arrived at Insured’s warehouse for unloading, however, due to the high frequency majority of the trucks have to stay outside the warehouse waiting for their turn to be allowed to enter for unloading. What happens when there is a loss whilst the vehicle are outside insured’s premises for such reason.