Co-Mingling Clause, etc

Co-Mingling Clause

When shipments of oil or other bulk products insured hereunder are stowed in such a manner as to be co-mingled with other bulk shipments belonging to and/or insured by others or owned by the Assured and intended for different consignees, it is agreed that in the event of loss or damage recoverable under this Policy, such loss or damage shall be pro rated in accordance with the respective interest(s) of the party or parties involved in the ratio that the quantity of product belonging to each party bears to the total quantity of product co-mingled.

Should the portion of the co-mingled cargo delivered to the Assured/Consignee be lost and/or damaged in a percentage greater than the ratio mentioned in the previous paragraph, these Insurers will pay the loss in full, but not exceeding the insured value, subject applicable deductible, if any.

Underwriters will be subrogated to all rights against carriers and/or other third parties, including other cargo owners to the extent Underwriters have borne the loss in excess of their pro rata portion.

Concealed Damage Clause

It is agreed that any loss or damage discovered on opening containers, cases and/or packages shall be deemed to have occurred during the transit insured hereunder (and irrespective of attachment of Assured’s interest) and shall be paid for accordingly unless proof conclusive to the contrary be established, it being understood that any containers, cases and/or packages showing signs of damage are to be opened immediately on the cessation of risk hereunder.

This agreement shall, however, only apply where such loss or damage is discovered within 30 days of the cessation of risk hereunder.

It is further agreed that subject to prompt advice to Underwriters and the payment of an additional premium, if required, the above-mentioned period may be extended.

Explanation: Again many versions of this clause are available and you need to select the appropriate one. For instance you may not want the last para (It is further agreed that subject ….extended). The need for concealed damage clause (also called Late Discovery of Loss clause) has arisen due to the fact that good packing technology and containerization has led to concealed damage that is discovered only when the insured transit is over. In the case of projects, a package is often opened only when at the time of erection.

Container Clause

Where Cargo, insured hereunder, is carried in Containers, it is agreed, as between the Assured and Underwriters, that the fitness of the Container is hereby admitted unless the Assured or their servants are privy to such unfitness

Explanation: Often containers have leaky roofs and rust points. It is difficult for the insurer to prove that the containers were defective with the privity of the assured. However for clarity, such clauses are used by brokers when the assured has no control over choice of containers of their overseas sellers. The entry of water into containers is a recurrent problem and can lead to substantial loss. Pre-shipment inspection of containers is suggested but when the turnover is huge and/or the assured is a trader (and not the seller), such pre-shipment surveys become difficult to implement.

Container Demurrage Charges Clause

This policy shall cover demurrage charges and/or late penalties assessed against, and paid by the Assured for late return of containers when said containers are retained by the Assured at the instruction of the Underwrites for inspection by the underwriters Surveyor in investigation of loss or damage recoverable under this policy.

Explanation: There are other versions which provide for demurrage charges when a container cannot be sent back to the terminal before the agreed due date provided this delay was caused by an insured peril during the period the container was in the custody of the assured.

Copper Coil Exclusion Warranty

In respect of Jet AI excluding claims for contamination due to contact with copper and/or copper alloy heating coils.

Explanation: Jet fuel is very sensitive to contamination. Even the heating coil in the ship can lead to contamination-hence this clause.

Cutting Clause

The cracked or broken portion of each pipe, sheet or tile to be cut. Underwriters to pay proportionate value of the part cut off and to receive any salvage on such proportion.

Explanation: Again, a number of versions of this clause are available (for pipes, steel etc). One has to be careful while using this clause in project cargoes  where dedicated lengths/dimensions of pipes etc are required and any damage to the cargo renders them unusable. Similarly some pipes have bevel ends which if damaged may render  them a total loss. Cutting Clause therefore should be inserted only after agreement with the assured.

Errors & Omissions Clause

Assured shall not be prejudiced by any unintentional delay or omission in the reporting hereunder or any unintentional error in the amount or description of the interest, vessel or voyage, or if the subject matter of the insurance be shipped by other vessel, if notice be given to Insurers as soon as practicable after said facts become known to the Assured and deficiency of premium if any, made good.

Explanation: This is a useful clause to have in the open cover. For instance, often the seller would advise the assured buyer the name of the vessel only after it has already sailed out. It is however most important that there is no history of selective declaration and all voyages/goods which come within the scope of an open cover is declared to the insurer. This clause only says that the assured is not prejudiced by an unintention delay/omission-but the insurer will have other defences-e.g, vessel not conforming to the classification clause for instance. The Institute Classification Clause has a held covered provision but read Insuring Cargoes for a detailed commentary on the current Class Clause.

Exhibition Risks Extension Clause

This insurance covers property in transit to/from and whilst at exhibition, trade fair or show premises.

Subject to the following exclusions:-

1. Loss or damage arising directly from demonstration, use or testing of equipment.
2. Wear, tear and gradual deterioration.
3. Liability to third parties.
4. Damage to goods being returned from exhibitions or shipped elsewhere unless they are packed to the same standard as for the outward journey, such packing to be supervised by a responsible official of the Assured.
5. Theft from unattended stand during exhibition opening hours.

In the event of goods being sold from the exhibition, cover is to terminate at the time of lifting for removal from the exhibition premises unless specially agreed

Fifty Fifty (50/50) Clause (sea/air transits)-also called Marine/Non-Marine Loss Sharing Clause

The Assured hereby undertakes to inspect each item of the Insured Property upon arrival at the Contract Site for possible damage sustained during transit.

In the case of packed items which are to be left in their packaging until a later date the packaging is to be individually inspected for signs of possible damage and where such damage is visible the items are to be unpacked and inspected and any damage discovered reported to under this insurance (Marine Cargo).

Where the packaging of an item shows no visible signs of damage to such item having sustained during transit any subsequent damage discovered upon unpacking will be dealt with by the Construction All Risks Insurer or under any other insurances in place , according to whether it can be clearly established that such damage was caused before or after arrival at the Contract Site.

Where it is not possible to clearly establish whether the damage to an item was caused before or after arrival at the Contract Site, it is hereby agreed that the cost of such damage shall be shared equally between the Construction All Risks Insurer and the Insurer under this Insurance.

Fitness of Container Clause

The Assured’s right to indemnity hereunder shall not be prejudiced by any inadvertent omission to establish the fitness of a container or liftvan for the safe transit of the interest insured hereby, where such container or liftvan is provided by a third party.

Explanation: It is difficult to prove that a container was defective at the time of the leaving the warehouse of the overseas supplier. Often damage such as holes or rust spots are present on the roof of the container and when there is a large turnover of goods round the year, it is quite difficult to check the roof of the container before stuffing each and every container. I have exaplained the container clause and the unfitness of container etc clause in ICC in considerable length inInsuring Cargoes.

Fumigation Clause

In the event of loss or damage to the interest insured caused by fumigation, Underwriters agree to indemnify the Insured for such loss or damage, and the Insured hereby agrees to subrogate these Underwriters any recourse they may have for recovery of such loss or damage from others but this clause does not extend to cover loss or damage caused by customary fumigation applied prior to or at the inception of risk.

Thank you to Vish who originally posted this valuable articles