Non-Institute Cargo Clauses-3

Co-Mingling Clause

It is agreed that when property in bulk is stowed so as to be co-mingled with like property belonging to others, loss or damage arising from a peril insured against shall be apportioned

over the party or parties involved in the shipments in accordance with the respective interest(s) of the said party or parties involved, in the ratio that the quantity of property belonging to such party bears to the total quantity of property stowed at the time and place of loss.

Explanation: in my book Insuring Cargoes, I have discussed the origin of the clause and also discussed  in considerable detail a possible solution to the problem. I have also modified standard co-mingling clause used in the London market and suggested alternative wording in my book.

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.  Many versions of this clause are explained in my book.