Non-Institute Clause-9

Special Replacement Clause (Duty)

Notwithstanding the provision in the Institute Replacement Clause hereto, it is specially understood and agreed that the Insures shall also be liable to pay for loss, if any sustained, by payment of duty on part or parts for replacement or repair in case the full duty is not included in the amount insured but only in respect of such shipments where either the anticipated cost of duty was originally included in the sum insured or the Insured agreed to retroactively pay the premium calculated on the actual amount of duty to be paid in respect of the shipment.

Explanation: The Institute Replacement Clause provides for customs duty paid on parts replaced following an insured loss including duty provided "full duty" is included in the original policy. Insuring Cargoes contains a very detailed commentary on wha "full duty" could possibly mean. The percentage of duty on parts is generally more than the percentage of duty on the machinery as a whole. The above clause (but requires a bit of modification to make intentions clearer) is quite useful in project insurance.

Rest Clause:

Risk to cease on arrival at____ attaching again upon being re-consigned.

Reissue Clause:

It is agreed that in the event of loss of negotiable securities caused by a peril hereby insured against or from any occurrence entailing their destruction, Underwriters shall only be liable for expenses incurred in reissuing such negotiable securities, of forwarding to destination and insurance premiums and charges connected therewith.

Explanation: There are wider versions of this clause.

Repacking Clause

It is understood and agreed that should outer packing be damaged from any cause which renders interest unfit for on-shipment or distribution, irrespective of final destination shown herein, Underwriters to pay the cost of reasonable repacking expenses, provided such damage occurred during the currency of this Insurance.

Explanation: This is a simple version-there are many wider versions available (discussed in Insuring Cargoes)-e.g. for pharmaceutical products

Returned Shipments Clause

Shipments upon which delivery to the consignee cannot be accomplished because of refusal of acceptance and which are returned for this or any other reason are covered while at the risk of the Assured until sold or otherwise disposed of, subject to cover terms and conditions.

Explanation: Underwriters should exercise caution before agreeing to such clauses-often the goods are repacked by the overseas buyers and this is seldom to the same standard of packing of the seller when he exported the goods. Again, there are many versions-some warrant that returned shipments should be repacked to same original standard and this is often difficult to ensure by the seller who is now at the mercy of his buyer(who has rejected the goods).

Salvage Loss Clause

At the option of the Assured, claims for damage to insured property hereunder may be adjusted on a Salvage Loss basis whereby these Insurers will pay the proportionate insured value of the damaged quantity after deducting any salvage proceeds.

Explanation: Insuring Cargoes has a detailed commentary on this clause which overrides the adjustment formula of the Marine Insurance Act!

Seals Clause

It is hereby noted and agreed that in respect of consignments shipped in containers or curtain sided trailers or full vehicle loads that claims in respect of Theft, Pilferage and Non Delivery of a whole package will not be invalidated by the fact that the seals appear intact and that such claims will be settled in full on production of loading and discharge tally sheets. Underwriters hereon to be subrogated to Assured’s rights against Carriers and/or other bailees.

 Explanation: Insuring Cargoes has a detailed commentary on this clause. This clause is not as wide as a cursory reading of the clause would suggest. Further in the book I have explained that this clause needs to be used along with another clause without which its efficacy  is even further restricted.

Transit Extension Clause

Notwithstanding the limitations of the “Duration” Clauses of the Institute Cargo Clauses and Institute Strikes Clauses, Insurers hereon agrees to hold covered, at an additional premium to be agreed, any interest failing to arrive at consignee’s warehouse within the 90 days period in normal course of transit after completion of discharge from the overseas vessel due to circumstances beyond control of the Insured, subject to notification of such delay at the earliest possible moment.

Unexplained loss or inventory shortage:

In no case shall this insurance cover loss or damage caused by or resulting from unexplained loss, mysterious disappearance or shortage disclosed upon taking inventory (except when in the custody of a bailee)

This is the concluding part of the series on Non-Institute Clauses. Seller’s Interest (also called Seller’s Contingency) clause has not been included as there are many versions which require a detailed understanding of the subject. In my book there is a separate chapter on Contingency Insurance.

My book Insuring Cargoes has several versions of each clause with commentary on each version.