Marine Cargo Insurance
11
DURATION OF THE INSURANCE 1: THE TRANSIT CLAUSE
Structure of the duration provisions
Duration of risk in cargo insurance
11.1 The practice is to insure cargo on a voyage1 basis whilst hull and machinery are generally insured on a time basis.2 As cargo is insured on a voyage basis it is essential to define the duration of that voyage or, more precisely, the duration of the insured transit. This issue is addressed by the duration provisions of the Institute Cargo Clauses3 which form a complex and comprehensive scheme which defines the duration of the insurance and regulates the continuation of that insurance even if there is delay, interruption or termination of the transit, or if there is a change of voyage. Three main Institute Clauses put this scheme into effect. The first is Clause 8, the Transit Clause itself, which is examined in this chapter. This Clause defines the attachment and termination of the insured risk (Clause 8.1) and deals with the situation where the goods are to be forwarded to another destination (Clause 8.2). The Transit Clause then provides that the insurance shall remain in force during delay beyond the control of the assured, deviation, forced discharge and variations of the adventure arising from the liberties in the contract of carriage (Clause 8.3). There are then two further clauses, considered in . The first, Clause 9, deals with termination of the contract of carriage in circumstances beyond the control of the assured, and the second, Clause 10, deals with a change in voyage, where the destination is changed either by the assured or by the carriers. Held covered and analogous provisions relevant to Clauses 9 and 10 are examined at the beginning of . The following diagram summarises this structure and indicates the paragraph of the text in this book where the examination of each Institute Clause, or sub-Clause, begins. In all cases the Clauses themselves and the text at the paragraphs indicated should be referred to as this table only summarises the position. Diagram of Duration of Risk Institute Cargo Clauses: Transit Clause: Clause 8| Clause | Para | |
|---|---|---|
| 8.1 | Attachment of insurance from the time the subject-matter insured is first moved … for the purpose of the immediate loading … | 11.8 |
| Continuation of Insurance … during the ordinary course of transit | 11.26 | |
| Termination of Insurance | ||
| 8.1.1 | unloading at final warehouse or place of storage named in the insurance etc. | 11.44 |
| 8.1.2 | unloading at any other warehouse etc. which the assured elect to use for storage, or | 11.50 |
| 8.1.3 | use of any vehicle or container for storage, or | 11.59 |
| 8.1.4 | on the expiry of 60 days after discharge from the oversea vessel, whichever of 1 to 4 shall first occur. | 11.62 |
| 8.2 | Termination by reason of forwarding (which may or may not be insured under another policy) | 11.64 |
| 8.3 | Continuation of risk by reason of delay (beyond control of the assured), deviation, forced discharge, reshipment, transhipment and a variation of the adventure under the contract of carriage - automatic continuation: without notice or additional premium | 11.65 |
| Institute Cargo Clauses: Termination of Contract of Carriage Clause: Clause 9 | ||
| Clause | Para | |
| 9. | If the contract of carriage or the transit is terminated in circumstances beyond the control of the assured the risk terminates unless prompt notice is given to Insurers and, if required, an additional premium is agreed. | 12.11 |
| additional cover thus granted remains inforce until | 12.11 | |
| 9.1 | • the goods are sold and delivered at a port of distress, or unless otherwise agreed, | |
| • after 60 days after arrival at such port, whichever shall first occur | ||
| 9.2 | if the goods are forwarded within the 60 days to the named destination, or another destination, Clause 8 (above) applies and termination is in accordance with that Clause. | 12.11 |
| Institute Cargo Clauses: Change of Voyage Clause: Clause 10 | ||
| Clause | Para | |
| 10.1 | Continuation of risk where destination changed by the assured subject to prompt notice to insurers and (1) rates and (2) terms to be agreed. Retrospective insurance is subject to the availability of cover at reasonable commercial market rates on reasonable market terms. | 12.13 |
| 10.2 | Insurance deemed to attach despite ship sailing for a different destination as long as (1) the goods have commenced the “contemplated” transit, and (2) sailing occurs without the knowledge of the assured or their employees. | 12.17 |
Open covers: special duration provisions
Special voyage clauses and stock throughput cover
11.2 Before examining the transit provisions in the Institute Cargo Clauses, it should be stressed that the duration of risk provisions in the standard Institute Clauses are frequently modified to suit particular trades or the needs of the assured’s business. For example, the import of wool in British & Foreign Marine Insurance Co Ltd v. Gaunt 4 was insured from “the sheep’s back”. Insurance cover may extend from when the rubber is grown on the tree to when the manufactured product, whether it be tyres or training shoes, is sold in a retail outlet. Accordingly, the standard provisions for duration of risk in the Institute Cargo Clauses are frequently modified in London market covers by special “Voyage Clauses” tailored to the particular risk or by stock throughput clauses. Such special clauses have precedence over the printed Institute Cargo Clauses5 except where the Institute Clauses themselves have been modified in respect of the risk in question and will prevail over the special clauses.6 11.3 In Eurodale Manufacturing Ltd v. Ecclesiastical Insurance Office plc 7 the typed clauses of the open cover stated:“VOYAGE