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Inchmaree Clause Definition | Investopedia 5/3/18, 01)27

Inchmaree Clause
An Inchmaree clause is found in maritime insurance policies and provides
coverage for the ship’s hull from loss or damage caused by machinery. The
Inchmaree clause, also called the negligence clause, covers damage that is
caused by negligence of ship personnel, such as engineers and captains, when
navigating. It is a type of additional perils clause.

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BREAKING DOWN 'Inchmaree Clause'

The Inchmaree clause was, in large part, developed with the advent of steam
navigation and machinery aboard vessels. Shipping cargo across vast oceans
can carry great risk. In addition to storms potentially sinking or flooding a
ship, the actions of the ship’s crew and other personnel responsible for
maintaining a properly working vessel may result in damage to the ship’s
cargo. For example, a boiler that is not properly maintained may burst,
causing a ship to lose power and run aground, or a shaft may break loose and
strike items held in the cargo bay.

The Inchmaree clause typically provides additional coverage for damage or

loss caused by broken drive shafts, burst boilers, hull defects and other
problems associated with a ship and the ship’s equipment. Additionally,
policies will cover negligence from a ship’s officers, engineers and crew,
including errors in navigation. The Inchmaree clause also extends to damage
resulting from accidents in loading, discharging, and handling cargo;
negligence of charterers or repairers; accidents while going on and off dry
docks, scraping docks, etc.; and explosions on shipboard or elsewhere.

Until the Inchmaree clause was established, most cargo insurance policies Page 1 of 2
Inchmaree Clause Definition | Investopedia 5/3/18, 01)27

only covered perils that occurred while on the open sea, such as bad weather.
This changed in the late 19th century. The Inchmaree clause is named after a
British court case, Hamilton vs. James and Mersey Insurance. The case
involved the Inchmaree, a British steamer that sunk in Liverpool harbor in
1884. The ship’s cargo was damaged when an internal pump flooded the
holding area, but the cargo owners’ claims were denied by the insurer because
the damage was not caused by the “perils of the sea”. The maritime insurance
industry was pressured to provide additional coverage for accidents that were
not caused by the sea, and instead caused by other factors such as negligence.

Inchmaree Clause and Warranties

There is often a tension between the Inchmaree clause and the warranties
under the policy. Warranties, in particular promissory warranties, are usually
found in almost (if not all) marine insurance policies. The warranty is
regarded as an essential term of the contract, non-compliance with which
discharges the insurer from liability, arguably, even if there is no causal link
between the breach of the warranty and the insured loss. Page 2 of 2