Volume 1,Issue 6

April 2014

THIS TECHNICAL BULLETIN IS NOT A PRICED PUBLICATION & IS PRINTED FOR PRIVATE CIRCULATION ONLY
TRANSOCEAN MARINE & GENERAL SURVEY AGENCIES

NAVIGATOR

SR.No. Contents Pages

1 EDITORIAL 2
2 WAREHOUSE TO WARE HOUSE COVER 3
3 IMPORTANT PROVISIONS IN MIA 1963 & ICC (A) 4

( insurable interest)

4 INCO TERMS 2012 5-6

5 COMPARISON OF WAREHOUSE TO WAREHOUSE 7-8
CLAUSE & TRANSIT CLAUSE
6 TRANSPARENCY INDEX TO KNOW DESTINATION 9-12
CONDITION
7 RBI GUIDELINES FOR CARGO INSURANCE ANY 13
WHERE IN WORLD TO ANY WHERE IN WORLD

8 VOYAGE POLICY ON GOODS 14-20

9 BUYER/SELLERS CONTINGENT CLAUSE 20
FROM EDITOR’S DESK

We came across one of the import claim

where Zink slabs were probably pilfered at
overseas road transit and terms of Import
purchase was CNF Shanghai. Policy was
issued on warehouse to warehouse basis
and Assured put up claim with Indian un-
derwriters and was not in agreement with
our following views:-

The titles of goods are transferred under

CNF contract when ship was loaded
with subject cargo.

From origin to loading point Insured was

not having Insurable interest.

Thus as per ICC (A) Clause 11 at the time

of loss, Assured was not having
Insurable interest.

Assured did not agreed with our views

and threatened us to challenge our opin-
ion in National consumer forum. The bul-
letin is prepared in order to give informa-
tion related to warehouse to warehouse
cover and precautions to be taken during
underwriting.

Varun A.Gawarikar

DID WE SEE YOU SMILE !

We have lowered
cargo insurance pre-
mium to impossible
level & therefore it is
management decision
that majority of
claims must be repu-
diated

Page 2 N A V I G A TO R
 WAEWHOUSE TO WARE HOUSE COVER
WAREHOUSE TO WAREHOUSE COVER

Warehouse to warehouse cover. Marine insurance for goods covered the period from port-to-port without any cover
during transit to the loading port. The warehouse-to-warehouse cover was introduced in the late 19th century to
cover the land transport. However, there was no time limit on the sea passage, nor on the journey to the loading
port. In order to encourage the cargo owner to take delivery of the goods quickly a time limit was imposed after
discharge. During the Second World War this time limit was found to be impractical and was extended to 60 days.
The cover was known a transit clause and it included the warehouse-to-warehouse cover as per clause I ICC
( FPA ) 1.1.63. In the Institute Cargo Clauses (1982) the clause is known as transit clause which provides that:

“This insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein
for the commencement of the transit, continues during the ordinary course of transit and terminates either :

-on delivery to the Consignees’ or other final warehouse or place of storage at the destination named herein;

-on delivery to any other warehouse or place of storage, whether prior to or at the destination named herein, which
the Assured elect to use either

-for storage other than in the ordinary course of transit, or for allocation or distribution;

or

-on the expiry of 60 days after completion of discharge over side of the goods hereby insured from the overseas
vessel at the final port of discharge, whichever shall first occur.”

The clause should be read along with ICC(A) clause II which read as follows:-
“ 11.1 In order to recover under this insurance the assured must have an insurable interest in the subject matter in-
sured at the time of loss”.

Thus loss even in under w/w coverage can be paid if assured is having insurable interest at the time of loss. The
international chamber of commerce have designed when titles of goods are transferred from seller to buyer and
these terms of sales are known as into terms.

Thus warehouse to warehouse cover is only facility given by insurance company to assured thereby he can have
any type of sales contract say from Ex. works to duly duty paid etc.Cargo underwriters should take precautions
while giving warehouse to warehouse cover by additions as follows:-

“ Warehouse to warehouse cover insurance attaches as per into terms of sale”.

Thus import consignments on FOB or C & F terms of sale indicates change of titles of goods when ship is loaded
and insurance risk would attach when ship is loaded i.e. goods completely placed on board.

In CIF terms of sale for export client friendly Indian underwriters can give warehouse to warehouse cover but must
restrict coverage if terms of sale is FAS, FOB or C & F.

VOLUME 1,ISSUE 6 Page 3

IMPORTANT PROVISION IN MIA 1963 & ICC (A) ( insurable interest)
We must understand important sections covering insurable interest from marine insurance Act
1963.S7,8 and 9 which is as follows:-

7. Insurable interest defined.

(1) Subject to the provisions of this Act, every person has an insurable interest who is interested
in a marine adventure.

(2) In particular a person is interested in a marine adventure where he stands in any legal or eq-
uitable relation to the adventure or to any insurable property at risk therein, in consequence of
which he may benefit by the safety or due arrival of insurable property, or may be prejudiced by
its loss, or by damage thereto, or by the detention thereof, or may incur liability in respect thereof.

8. When interest must attach.

(1) The assured must be interested in the subject- matter insured at the time of the loss, though
he need not be interested when the insurance is effected: Provided that, where the subject- mat-
ter is insured" lost or not lost", the assured may recover although he may not have acquired his
interest until after the loss, unless at the time of effecting the contract of insurance the assured
was aware of the loss, and the insurer was not.

(2) Where the assured has no interest at the time of the loss, he cannot acquire interest by any
act or election after he is aware of the loss.

9. Defeasible or contingent interest.

(1) A defeasible interest is insurable, as also is a contingent interest.

(2) In particular, where the buyer of goods has insured them, he has an insurable interest, not-
withstanding that he might, at his election, have rejected the goods, or have treated them as at
the seller' s risk, by reason of the latter' s delay in making delivery or otherwise.

INSTITUTE CARGO CLAUSES (A) 1/1/82

Clause 11 - Insurable interest clause
11.1 In order to recover under this insurance the Assured must have an insurable interest in the
subject-matter insured at the time of the loss.

11.2 Subject to 11.1 above, the Assured shall be entitled to recover for insured loss occurring
during the period covered by this insurance, notwithstanding that the loss occurred before the
contract of insurance was concluded, unless the Assured were aware of the loss and the Under-
writers were not.

Page 4 N A V I G A TO R
INCO TERMS OF SALE—2012

INCOTERMS are a set of three-letter standard trade terms most commonly used in international
contracts for the sale of goods. It is essential that you are aware of your terms of trade prior to
shipment.

• EXW – EX WORKS (… named place of delivery) The Seller’s only responsibility is to make the
goods available at the Seller’s premises. The Buyer bears full costs and risks of moving the
goods from there to destination.

• FCA – FREE CARRIER (… named place of delivery) The Seller delivers the goods, cleared for
export, to the carrier selected by the Buyer. The Seller loads the goods if the carrier pickup is at
the Seller’s premises. From that point, the Buyer bears the costs and risks of moving the goods to
destination.

• CPT – CARRIAGE PAID TO (… named place of destination) The Seller pays for moving the
goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears
the risks of loss or damage.

• CIP – CARRIAGE AND INSURANCE PAID TO (… named place of destination)

The Seller pays for moving the goods to destination. From the time the goods are transferred to
the first carrier, the Buyer bears the risks of loss or damage. The Seller, however, purchases the
cargo insurance.

• DAT – DELIVERED AT TERMINAL (… named terminal at port or place of destination) The

Seller delivers when the goods, once unloaded from the arriving means of transport, are placed
at the Buyer’s disposal at a named terminal at the named port or place of destination. “Terminal”
includes any place, whether covered or not, such as a quay, warehouse, container yard or road,
rail or air cargo terminal. The Seller bears all risks involved in bringing the goods to and unload-
ing them at the terminal at the named port or place of destination.

DAP – DELIVERED AT PLACE (… named place of destination) The Seller delivers when the
goods are placed at the Buyer’s disposal on the arriving means of transport ready for unloading
at the names place of destination. The Seller bears all risks involved in bringing the goods to the
named place.

• DDP – DELIVERED DUTY PAID (… named place) The Seller delivers the goods -cleared for
import – to the Buyer at destination. The Seller bears all costs and risks of moving the goods to
destination, including the payment of Customs duties and taxes.

VOLUME 1,ISSUE 6 Page 5

2. MARITIME-ONLY TERMS

• FAS – FREE ALONGSIDE SHIP (… named port of shipment) The Seller delivers the goods to
the origin port. From that point, the Buyer bears all costs and risks of loss or damage.

• FOB – FREE ON BOARD (… named port of shipment) The Seller delivers the goods on board
the ship and clears the goods for export. From that point, the Buyer bears all costs and risks of
loss or damage.

• CFR – COST AND FREIGHT (… named port of destination) The Seller clears the goods for ex-
port and pays the costs of moving the goods to destination. The Buyer bears all risks of loss or
damage.

• CIF – COST INSURANCE AND FREIGHT (… named port of destination) The Seller clears the
goods for export and pays the costs of moving the goods to the port of destination. The Buyer
bears all risks of loss or damage. The Seller, however, purchases the cargo insurance.

Page 6 N A V I G A TO R
COMPARISION OF WAREHOUSE TO WAREHOUSE CLAUSE WITH TRANSIT CLAUSE

1/1/63 E1-1-(1) INSTITUTE CARGO CLAUSES ( F. P. A. ).

[Transit Clause (in-corpora ting Warehouse to Warehouse Clause.)]

1. This insurance attaches from the time the goods leave the warehouse or place of storage at
the place named in the policy for the commencement of the transit, continues during the ordinary
course of transit and terminates either on delivery

(a) to the Consignees' or other final warehouse or place of storage at the destination named in
the policy,

(b) to any other warehouse or place of storage, whether prior to or at the destination named in
the policy, which the Assured elect to use either

(i) for storage other than in the ordinary course of transit

or

(ii) for allocation or distribution,

or (c) on the expiry of 60 days after completion of discharge over side of the goods hereby in-
sured from the oversee vessel at the final port of discharge, whichever shall first occur.

If, after discharge over side from the oversee vessel at the final port of discharge, but prior to ter-
mination of this insurance, the goods are to be forwarded to a destination other than that to which
they are insured hereunder, this insurance whilst remaining subject to termination as provided for
above, shall not extend beyond the commencement of transit to such other destination.

This insurance shall remain in forge (subject to termination as provided for above and to the pro-
visions of Clause 2 )

during delay beyond the control of the Assured, any deviation, forced discharge, reship-
ment or transshipment and during any variation of the adventure arising from the exercise
of a liberty granted to ship-owners or charterers under the contract of affreightment, but
shall in no case be deemed to extend to cover lose damage or expense proximately
caused by delay or inherent vice or nature of the subject matter insured

Page 7 N A V I G A TO R
INSTITUTE CARGO CLAUSES (A) 1/1/82

DURATION CLAUSE

8 8.1 This insurance attaches from the time the goods leave the warehouse or place of storage at
the place named herein for the commencement of the transit, continues during the ordinary
course of transit and terminates either

8.1.1 on delivery to the Consignees' or other final warehouse or place of storage at the destina-
tion named herein,

8.1.2 on delivery to any other warehouse or place of storage, whether prior to or at the destina-
tion named herein, which the Assured elect to use either

8.1.2.1 for storage other than in the ordinary course of transit or

8.1.2.2 for allocation or distribution,

or

8.1.3 on the expiry of 60 days after completion of discharge over side of the goods hereby in-
sured from the oversea vessel at the final port of discharge, whichever shall first occur.

8.2 If, after discharge over side from the oversea vessel at the final port of discharge, but prior to
termination of this insurance, the goods are to be forwarded to a destination other than that to
which they are insured hereunder, this insurance, whilst remaining subject to termination as pro-
vided for above, shall not extend beyond the commencement of transit to such other destination.

8.3 This insurance shall remain in force (subject to termination as provided for above and to the
provisions of Clause 9 below) during delay beyond the control of the Assured, any deviation,

Page 8 N A V I G A TO R
TRANSPERANCY INDEX TOOL TO KNOW CONDITIONS AT DESTINATION

India ranked among the world's highly corrupt nations at the 94th spot in a global list topped by
Denmark and New Zealand as the cleanest, while Somalia emerged as the most corrupt.
While India's rank has remained unchanged from the last year, it has emerged as more corrupt
than three of its BRICS peers -- China (80th), South Africa and Brazil (both ranked 72nd) -- but
better than Russia (127th) in this annual list of 177 countries compiled by Transparency Interna-
tional.
According to the list, India has scored 36 points on a scale of 0-100, where 0 means that a coun-
try is perceived as highly corrupt and 100 means it is perceived as very clean.
None of the countries have managed to get the perfect 100 score. Top-ranked Denmark and New
Zealand have scored 91 points each to share the first place on the list.
Somalia shares lowest rank with North Korea and Afghanistan with 8 points each. Those scoring
marginally better than these three countries include Sudan, Libya, Iraq, Uzbekistan, Syria, Haiti,
Venezuela, Zimbabwe and Myanmar.
On the other hand, Denmark and New Zealand are followed by Finland, Sweden, Norway, Singa-
pore, Switzerland, Netherlands, Australia and Canada in the top ten. Among other major coun-
tries, Germany is at 12th, the UK 14th, Hong Kong 15th, Japan 18th and the US at 19th spot.
India has done better than its neighbor Pakistan (ranked 127th), as also countries like Thailand
(102nd), Mexico (106th), Egypt (114th), Nepal (116th), Vietnam (116th), Bangladesh (136th) and
Iran (144th).
Releasing the list here today, Transparency International said that its "Corruption Perceptions In-
dex 2013 offers a warning that the abuse of power, secret dealings and bribery continue to rav-
age societies around the world".
More than two thirds of 177 countries have scored below 50 -- the mid-way point between most
corrupt and the cleanest.
"The Corruption Perceptions Index 2013 demonstrates that all countries still face the threat of
corruption at all levels of government, from the issuing of local permits to the enforcement of laws
and regulations," said Huguette Labelle, Chair of Transparency International.
She said that many countries continue to face issues like state capture, campaign finance and
the oversight of big public contracts which remain major corruption risks.

VOLUME 1,ISSUE 6 Page 9

The Index is based on experts' opinions of public sector corruption, Transparency International
said.
Countries' scores can be helped by strong access to information systems and rules governing the
behaviour of those in public positions, while a lack of accountability across the public sector cou-
pled with ineffective public institutions hurts these perceptions, it added.
"Corruption within the public sector remains one of the world's biggest challenges, Transparency
International said, particularly in areas such as political parties, police, and justice systems.
"Public institutions need to be more open about their work and officials must be more transparent
in their decision-making. Corruption remains notoriously difficult to investigate and prosecute," it
added.
Future efforts to respond to climate change, economic crisis and extreme poverty will face a mas-
sive roadblock in the shape of corruption, it warned, while urging international bodies like G20 to
crack down on money laundering, make corporations more transparent and pursue the return of
stolen assets.
"It is time to stop those who get away with acts of corruption. The legal loopholes and lack of po-
litical will in government facilitate both domestic and cross-border corruption, and call for our in-
tensified efforts to combat the impunity of the corrupt," Labelle said.

Page 10 N A V I G A TO R
VOLUME 1,ISSUE 6 Page 11
WHY FOREIGN UNDERWRITERS RESTRICT COVERAGE TO INDIAN PORTS ONLY

We asked this question to many marine cargo Insurance experts but could not get satisfactory
answers in background of Indian underwriters friendly coverage of from any where in world to
Any where in world cargo Insurance cover.

One of the claims head opined that Reserve Bank of Indian apparently do not permit such Insur-
ance for inland Journey in India. We tried to check out from RBI Circulars and RBI Permits exten-
sion of CIF Period in India Ports from foreign Insurance Companies but we could not get any RBI
circular prohibiting Inland Insurance by foreign underwriters as extension to ocean voyage.

In our opinion restricting cover may be attributed to risk involved on Indian roads and normally
this risk is related to followings:-

• Corruption in general

• Poor Road conditions

• Driving Rules with regards to safety and overloading and condition of vehicle are grossly
violated

• Theft and pilferage remains undetected. The reasons can be listed A to Z but the answer
is provided by Map/Chart envisaged by Transparency International indicating corruption
Index of various countries/nations India is rated as most corrupt nation.

In India in general we are aware that vehicles are overloaded, RTO’s are friendly with transport-
ers during annual passing, underpaid drivers & transporters staff in general are involved in
thefts, drinking and driving is not seriously checked on national highways. No proper rest rooms
are available for drivers on highways. Police have soft approach

Police have own ways like RTO’s in investigations of transit accidents. Roads can be accident
prone------------- our National transparency index is 3.9 and being lower side foreign underwriters
are not keen to extend cover for inland transit in India.

Indian underwriters may restrict coverage to port only instead of giving export warehouse
to warehouse cover considering transparency index of destination country.

Page 12 N A V I G A TO R
ANY WHERE IN WORLD TO ANYWHERE IN WORLD CARGO INSURANCE
RESERVE BANK OF INDIA’S GUIDELINES

AP(DIR Series) Circular No.18 September 12, 2002

Premiums on Marine Policies covering Shipments between Countries outside India

A.4 (i) Premiums on marine insurance policies covering shipments between countries out-

side India must ordinarily be received in foreign currency, but payment in rupees may be ac-

cepted provided a certificate from an authorised dealer in foreign exchange is produced to show

that the rupees are derived by a remittance from abroad in an approved manner.

NOTE: Overseas offices of the Insurers may grant marine insurance cover for trade between

China and third countries and receive premium/settle claims through foreign currency ac-

counts maintained by their overseas offices without prior approval of Reserve Bank.

Sometimes, firms and companies in India finance merchanting trade i.e. goods shipped

from one foreign country to another and financed by an intermediary in India. In

some of these cases goods may be purchased on f.o.b./c.& f. terms and/or sold on

c.i.f. terms, the marine insurance cover being arranged by the intermediary in India.

Insurance companies registered with IRDA may issue policies covering transit risks

between the loading and the destination ports in rupees or in any foreign currency

in such cases, against payment of premium in rupees by the intermediary, after sat-

isfying themselves that the contract provides for marine insurance being taken by

the intermediary.

VOLUME 1,ISSUE 6 Page 13

VOYAGE POLICY ON GOODS
Goods are almost invariably insured for a voyage in a policy incorporating either the ICC (A), (B) or
(C). As they generally have to travel on land before and after a sea voyage – to be conveyed from
the warehouse or place of storage to the port of loading, and from the port of discharge to the
warehouse or place of storage – they are usually insured for both land and sea risks. Provided that
the land risks are ‘incidental’ to the sea voyage, a policy of mixed sea and land

risks may be taken out. This is permitted by s 4(1) of the 1963 Act and, as will be seen, the transit
clause of the ICC is an example of such a policy.

The scheme of coverage set out in the ICC is complex and confusing. The duration of the cover is
governed by cll 8, 9 and 10. Briefly:

• clause 8.1 sets out the general rules relating to attachment and termination of the insurance;

• clause 8.2 covers the particular circumstance where a change of destination occurs after the
completion of the sea voyage;

• clause 8.3 in declaring that the insurance ‘shall remain in force’ confirms that the events listed
therein will not terminate the insurance – its purpose is to dispel any doubts which one might
have as regards the continuance of the cover should any one of the enumerated events arise;

• clause 9 relates specifically to a termination not of the contract of insurance, but of the contract of
carriage and its effects on the contract of insurance;

and,

• clause 10 – the ‘change of voyage’ clause – states that a change ordered by the assured is held
covered.

Attachment of insurance

Under the ICC, the period of cover is contained in the ‘transit clause,’ clause 8 –sometimes re-
ferred as the ‘warehouse to warehouse clause’ – which reads as follows:

‘This insurance attaches – from the time the goods leave the warehouse or place of storage at the
place named herein for the commencement of the transit …’

Though the provision is straightforward enough, nonetheless it is necessary to mention that the
word ‘leave’ clarifies that the insurance does not attach whilst the goods are in the process of be-
ing loaded, nor whilst they are being conveyed other than with the intention of commencing the in-
sured transit. The cover will only attach when the goods physically depart from the premises ‘at

the place named ... for the commencement of the transit’.

Page 14 N A V I G A TO R
.Continuance of insurance
By cl 8.3, the insurer agrees to maintain cover should any one of the following circumstances
arise: during delay beyond the control of the assured; any deviation; forced discharge; reship-
ment or transshipment during the voyage; and any permitted variation of the contract of carriage
arising from the exercise of a liberty granted to ship-owners or charterers under the contract of

affreightment.

The objective of this clause is to remove any doubts which one might have regarding the validity
of the cover should any one of these circumstances take place.

Delay beyond the control of the assured

A cargo owner does not, as a general rule, have control over the performance of the voyage. This
necessarily means that the effect of delay, as laid down in s 51 of MIA 1963,could prove to be
harsh on him. To mitigate the severity of this, cl 8.3 was inserted to preserve the cover during a
delay; provided that the delay is beyond the control of the assured, the insurance continues to
operate, presumably regardless of the period and the reasonableness or unreasonableness of
the delay, as none of these considerations is mentioned in the clause.

The converse to the rule in cl 8.3 is that the policy will terminate if the delay is within the control of
the assured. Thus, a cargo owner who has himself caused the delay (for example, in procuring or
loading the cargo) would not be able to plead the benefit of cl 8.3. Furthermore, he would also be
in breach of cl 18, the ‘avoidance of delay’ or ‘reasonable dispatch’ clause which declares that:

‘It is a condition of this insurance that the Assured shall act with reasonable dispatch in all cir-
cumstances within their control.’

The scope of this cl is wider than s 48; it is not confined to the sea voyage, for the words ‘in all
circumstances’ include land transit. The penalty is presumably the same as that stated in s 48,
namely that the insurer is ‘discharged from liability as from the time when the delay became un-
reasonable’.

Loss proximately caused by delay

Clause 4.5 of the ICC (A), (B) and (C), which echoes the rule contained in s 55(2)(b), states:

‘In no case shall this insurance cover –loss damage or expense proximately caused by delay,
even though the delay be caused by a risk insured against (except expenses payable under
Clause 2 above).’

Though the policy may remain in force, any loss proximately caused by delay is not recoverable.

VOLUME 1,ISSUE 6 Page 15

‘Any deviation’

Clause 8.3 provides that the insurance shall remain in force during ‘any deviation’. By this clause, the as-
sured is neither required to give notice nor to pay any additional premium. Presumably, the reason for the
rule is that, in practice, the deviation of a ship must almost invariably be beyond the control of a cargo
owner.

Variation of the adventure

It is to be observed that cl 8.3 applies only when the variation of the adventure arises from the exercise of a
liberty granted to ship-owners or charterers under the contract of affreightment. Any unauthorized variation
would not be covered by the policy. As the insurance ‘shall remain in force,’ the assured is not required to
give notice to the insurer or to pay any additional premium.

Termination of insurance

Normal termination

In the normal course of events, the insurance will terminate when the goods arrive at any one of
the three termini enumerated in cll 8.1.1 to 8.1.3. The phrase ‘whichever shall first occur’ qualify-
ing all three clauses sets 60 days as the limit, or the cut-off point, of the cover. In the usual run of
cases, the insurance would have terminated in accordance with either cll 8.1.1, 8.1.2 or 8.1.3, be-
fore the expiration of the 60 days.

Premature termination

The ‘ordinary course of the transit’76 envisaged by cl 8.1 could, however, be shortened, or end
prematurely, by reason of the occurrence of an event stipulated in cll 8.2, 9 or 10. The statutory
laws on change of voyage (s 47);deviation (s 48); and delay during the voyage (s 50), described
above, apply to all voyage policies. A cargo owner, however, is generally not in control of the

voyage or of matters as to how it is to be prosecuted. A variation of the adventure, a change of

destination or voyage, delay, and deviation could occur; and any of these events could be caused
by the assured (the cargo owner) himself or, they could be beyond his control. Thus, clause 8.1
defining the duration of the risk – the points of attachment and termination – has to be read

with cll 8.2, 9 and 10, all of which could affect the duration of the cover.

Change of final destination

Clause 8.2 is an example of a particular circumstance of a premature termination of the cover.

For it to apply, the sea voyage must have terminated at the final port of discharge; the cargo dis-
charged over side from the oversea vessel; and the goods ‘forwarded to a destination other than

Page 16 N A V I G A TO R
that to which they are insured hereunder’. Strictly speaking, ‘change of final destination of the

cargo’ would be a more suitable name for this provision, which is necessary because of the cov-
erage for land transit. Whether such a change of destination is contemplated by s 47(which relates to
a change of voyage) is another question altogether. Section 47, it is observed, refers to the destination of
the ship and not of the cargo.

As was seen, cl 8.2 is limited in scope; and unlike cl 9 on termination of the contract of carriage, and cl 10
on a change of voyage ordered by the assured, there is no held covered provision for such a change of des-
tination. The clause provides for termination of the original insurance as from the time when the goods
commence transit to its new destination. It is interesting to note that the clause is silent as to the party who
has instructed the change of destination. It simply states that, ‘If … the goods are to be forwarded to a des-
tination other than that to which they are insured

hereunder, this insurance … shall not extend beyond the commencement of transit to such other destina-
tion’. It cannot apply to a change of destination (and of voyage) ordered by the assured, for this is specifi-
cally covered by cl 10.Clause 8.2, it has been said, is ‘intended to deal with the situation of a resale to a
customer of the assured, and to make it quite clear which insurance would be in force (that of the original
assured or his customer), the clause provides for

termination of the original insurance …’.If this is the objective of the clause, more positive language
should have been used to make this clearer. As it stands, it is not at all happily worded. that to which they
are insured hereunder’. Strictly speaking, ‘change of final destination of the cargo’ would be a
more suitable name for this provision, which is necessary because of the coverage for land tran-
sit. Whether such a change of destination is contemplated by s 47(which relates to a change of voy-
age) is another question altogether. Section 47, it is observed, refers to the destination of the ship and not of
the cargo. As was seen, cl 8.2 is limited in scope; and unlike cl 9 on termination of the contract of carriage,
and cl 10 on a change of voyage ordered by the assured, there is no held covered provision for such a
change of destination. The clause

provides for termination of the original insurance as from the time when the goods commence transit to its
new destination. It is interesting to note that the clause is silent as to the party who has instructed the
change of destination. It simply states that, ‘If … the goods are to

be forwarded to a destination other than that to which they are insured hereunder, this insurance … shall
not extend beyond the commencement of transit to such other destination’. It cannot apply to a change of
destination (and

VOLUME 1,ISSUE 6 Page 17

of voyage) ordered by the assured, for this is specifically covered by cl 10. Clause 8.2, it has been said, is
‘intended to deal with the situation of a resale to a customer of the assured, and to make it quite clear which
insurance would be in force (that of the original assured or his customer), the clause provides for termina-
tion of the original insurance …’. If this is the objective of the clause, more positive language should have
been used to make this clearer. As it stands, it is not at all happily worded.

Termination of contract of carriage clause

Whether cl 9 applies to a change of destination which has been ordered not by the assured
(cargo owner), but by the ship-owner (or carrier) is the question which has to be considered, es-
pecially in the light of the fact that there is now no longer a held covered clause dealing directly
with a change of voyage, as was previously available in the 1963 version of the ICC. The relevant
parts of cl 9 read as follows:

‘If owing to circumstances beyond the control of the Assured … the contract of carriage is termi-
nated at a port or place other than the destination named therein … then this insurance shall also
terminate unless prompt notice is given to the Underwriters and continuation of cover is re-
quested when the insurance shall remain in force …’Two elements have to be satisfied before a
termination of the insurance can take place:

• ‘the contract of carriage is terminated at a port or place other than the destination named
therein’; and

• the circumstances are beyond the control of the assured.

A typical scenario contemplated by cl 9 is probably the case where a ship, unable to continue
with the voyage because she has suffered severe damage, discharges her cargo at an intermedi-
ate port thereby causing a termination of the contract of carriage.

A carrier (ship-owner or charterer) who has, under a contract of carriage, agreed to carry cargo
from A to B, for which the cargo owner (the assured) has accordingly insured them for the said
voyage could, after the commencement of the voyage from A, terminate the contract of carriage
by voluntarily sailing to C, a port other than the destination named in the said contract of carriage.
Such a change of destination ordered by the carrier, though ‘beyond the control of the Assured’,
would result not only in a termination of the contract of carriage, but also of the insurance ‘unless
prompt notice is given to the Underwriters and continuation of cover is requested …’. As worded,
cl 9 appears to be wide enough to embrace a change of voyage, with or without good reason, or-
dered by the carrier.

Page 18 N A V I G A TO R
, It is to be observed that, unless prompt notice be given with a request for a continuation of cover
and the payment of an additional premium, if so required by the underwriters, the policy will termi-
nate. Admittedly, the policy is not held covered, but the assured could prevent the termination of
the insurance by issuing prompt notice with a request for a continuation of cover. Unlike a held
covered clause, here, the assured has to take steps to forestall the termination of the insurance.
Further, it should be

noted that cl 9 covers not only a termination of the contract of carriage, but also any termination
of transit before the delivery of the goods as provided by cl 8.Like the sea voyage, land transit
can also be terminated by circumstances beyond the control of the assured. The continuation of
cover granted is limited and will terminate as provided by either cll 9.1 or 9.2

Change of Voyage clause

Clause 10 is a departure from the general rule on change of voyage declared in s 47, by which
the insurer is discharged from liability as from the time of change. Clause 10 states:

‘Where, after attachment of this insurance, the destination is changed by the Assured, held cov-
ered at a premium and on conditions to be arranged subject to prompt notice being given to the
Underwriters.’

Though named the ‘change of voyage’ clause, nevertheless it uses the word ‘destination’, and
not ‘the destination of the ship’ as in s 47(1). As ‘destination’ is unqualified, it can refer to the des-
tination of the ship at the named port, and also to the destination of the cargo which is to be deliv-
ered at the ‘final warehouse or place of storage’. It has to be emphasized that this clause is

applicable only when the ‘destination’ is changed by the assured himself. It clearly has no appli-
cation to a change of voyage and/or destination which is beyond the control of the assured; such
events are covered by cll 9 and possibly 8.2.

‘Note’ on ‘held covered’ clause

It is to be observed that in all the ICC, there is, at the end of the policy, a ‘Note’(in italics) empha-
sizing that:

‘It is necessary for the Assured when they become aware of an event which is “held covered” un-
der this insurance to give prompt notice to the Underwriters and the right to such cover is de-
pendent upon compliance with this obligation.’ Unlike cl 9, where the policy will automatically ter-
minate unless it is prevented from so doing by prompt notice, a held covered clause has the

VOLUME 1,ISSUE 6 Page 19

opposite effect. The assured remains covered by the policy until such time as he becomes aware
of the event for which he is ‘held covered’ and, on becoming aware of the event, fails to give
prompt notice to the underwriters. For completeness, it is necessary to refer to the case of Simon
Israel Co v Sedgwick, where the goods insured were intended to be shipped to Madrid

when, by a blunder, they were shipped to Carthagena. Even though the policy in question con-
tained a held covered clause, it did not help the assured, as the risk had not attached

Buyer/Sellers/Contingent Clause
Interest sold by the Assured without benefit of insurance under this Policy is covered to the extent that the Assured is
unable to collect payment for lost or damaged interest provided that such loss or damage would have been recover-
able hereunder but for the existence of other insurance. Interest purchased by the Assured without benefit of insur-
ance under this Policy is covered to the extent that the Assured is unable to collect claim for lost or damaged interest
from other insurers provided that such loss or damage would have been recoverable hereunder but for the existence
of other insurance.

This Policy shall also pay for loss or damage in the event that, and to the extent that other parties responsible to in-
sure fail to do so or where such insurance fails to respond to the extent that such loss or damage would have been
recoverable hereunder but for the existence of other insurance.

Subject to the following:

1. Warranted that cover under this clause shall be for the benefit of the named Assured only and cover ceases to
operate in event that there be any other insurance covering the said goods.

2. Warranted that the existence of this contingency insurance shall not be disclosed to the customer, or any other
party interested in the consignment.

3. The Insured is free from any liability caused by any other party/ies are unintentional and/or inadvertent omission or
error to fulfill the responsibility of insurance.

4. It is a condition of this clause that the Assured must give immediate notice to the Company of any occurrence
whereby the risk and/or property in the goods remains with, or reverts to, the Assured.

5. It is a condition of this clause that evidence of the terms and conditions of the contract of sale shall be submitted in
substantiation of any claim made hereunder.

6. It is a condition of this clause that the Assured must use all reasonable and usual care, skill and forethought and
take all practical measures, including measures which may be required by the Company, to enforce the contract of
sale, and in the event that the legal ownership and or property in the goods remains with or reverts to the Assured to
prevent or minimize loss.

7. All rights and benefits against any other party/ies or person/s are to be subrogated to the Company.

Page 20 N A V I G A TO R
 TRANSOCEAN
ADDRESS TELEPHONE PERSONNEL CELL NUM- E MAIL ID
BERS
713,7th floor,vindhya 27562013( F) A.M.Gawarikar 9820338650 transmgsa@vsnl.com
commercial com-
27578337 Varun Gawarikar 9833910066 varun.gawarikar@gmail.com
plex,CBD Be-
lapur,Navi Mumbai
400614
Room no.11 & 17,3rd 23437534 Bharat Sohoni -
floor & 4th floor Dholi
23434707 Dyaneshvar Duraphe 9892685074
Bhavan,9/11 Garibdas
street,Mumbai 400003

Saraswati Sadan 079 25507728 Bharat Gawarikar 09925010987 bharattrans@yahoo.com

Vasant chowk Bhadra
Ahmedabad 380001 079 25506494 (F) Parshuram Kanade 09825607068 kanade24@indiatimes.com

Amrut Bhalerao tekadi 0265 2428603 Yogesh Phadnis 09825306433 radiantenergy@rediffmail.com

Vadodara
telefax

7,shrinathnaji appts. Sidddie Abbas 09727869867

242, lilasha nagar
Gandhidham

TRANSOCEAN MARINE &

GENERAL SURVEY AGENCIES

Vindhya commercial complex

Sector 11,CBD Belapur
Navi Mumbai 400604
Phone: 27578337
Fax: 27562013
E-mail: transmgsa@gmail.com

INTEGRITY KNOWLEDGE &

EXPERIENCE

Disclaimer: This bulletin is based on our surveyors own experience own re-
search, knowledge and reading in the subject matter and should only be used
for reference rather than being taken as a legal advice for any particular case
or used for any other purpose.

Page 22 NAVIGATOR