TRANSPORT

INSURANCE
MODULE – 9
TRANSPORT
INSURANCE Module Objectives
o The student should be able to give information on the different possibilities
of insurance coverage and its characteristics.
o He/she should also in position to state briefly the liability of Carriers.
o His / Her knowledge should enable him / her to deal with simple insurance
issues.

Slide 2
 What is Insurance

4/26/2019 Slide 3
Key PRINCIPLES of Insurance
Utmost Good
Insurable Faith
interest (uberrima
fides)

Indemnity Subrogation

Sue & Labour Moral Hazard

4
Captain Win Naing Nyunt
Nomenclature – Terms Usage
RISK
PERIL
the
uncertainty of is the cause of PROBABILITY
a financial loss. loss or the LOSS
the chance of
hazard which a number of
may increase the
losses out of a unintentional
the chance of given number
loss. decline in or
of exposures. disappearance
of value.

5
Captain Win Naing Nyunt
4/26/2019 Slide 6
 TRANSPORT
INSURANCE
Chapter Annex
1. Liability Insurance 1. P & I insurance
2. Standard Condition Governing
2. Transport Insurance the FIATA Multimodal Transport
3. Duties of Freight Bill of Lading
Forwarder in case of 3. Forwarder Vs. Carrier and
Forwarder's Insurance Policy
Damage 4. Most Common Kinds of Policies
4. General Average in Cargo Insurance
5. Institute Cargo Clause
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 Chapter 1

LIABILITY INSURANCE
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 Liability
Insurance - Learning Objectives
• The student should know what liability insurance refers to, the different types of
liability and liability insurance policies.
• The student should understand the difference in coverage of various liability
insurance policies and in particular, the liability insurance for FIATA bill of lading.
• The student should also know the role of P&I clubs and TT clubs.
• The student shall be aware of the liabilities that different parties bear, including
the insurance company, forwarders, and carriers. Liabilities may be subject to
limitations, as in liability insurance.
• The student shall understand the concept of re-insurance.

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 Liability
Insurance
• Liability insurance is the type of insurance that pays and renders service on behalf
of an insured party, for loss arising out of his/her responsibility to others imposed
by law or assumed by contract.
• Liability insurance shields the insured from financial responsibility for injuries to
others or for damage caused to other people’s property.

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 Liability Insurance in Cargo Transport
• Cargo transport is a professional service
that the transport company deliberately
engages in against fees, offering service to
the public. Often seen is the public liability
involved, by being the employer and
transport operator, in accordance with the
compulsory national laws.
• Carriers also assume contractual liabilities
such as those they choose to enter with the
cargo interests or others. In offering the
services, the carrier can also incur liability to
a third party in tort.
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 Liability Insurance Policy Overview
• In a simple Liability risks Form of insurance
scheme, As industry for industrial activities, Liability insurance for industries (ALL)
the for employees, for safety, for
following environment etc.
table gives
an As forwarder for cargo Forwarder liability insurance
overview of As owner, possessor of motor 3rd Party Liability insurance for motor
the risks vehicles vehicles
and forms
of As owner, possessor of items like Equipment insurance with 3rd party liability
bulldozers, cranes etc. coverage
insurance
that are As hirer of items like lifters, trailers, Container, trailer, semi-trailer
commonly containers etc. liability insurance; 24-hour
seen in coverage under forwarder policy
cargo
transport. As storage holder, holder of Insurance on the basis of contract;
interests of third parties stipulations depending on the service
rendered
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 Liability Insurance for Industries (ALL)

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 Liability Insurance for Industries (ALL)
• Every company will need ALL insurance (liability insurance for industries). In
addition to other types of liability insurance depending on the specific company,
ALL insurance is always essential.
• ALL insurance covers the risks of a company that as an enterprise shall be
accountable for damage that its employees cause to third parties, as well as its
employees. Damage may also be caused to a third party as the owner/user of port
areas and buildings.

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 Liability Insurance for Industries (ALL)
Major differences between ALL and other liability insurance are the following:
• The ALL excludes matters under supervision, while other liability insurance
covers specific liability for damage that the insured has with regard to third
parties.
• Other liability insurance may protect only the contractual risk (e.g. forwarder
under FIATA conditions) of the insured.
• Legal liability risk is also applicable to ALL.

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 Protection & Indemnity Clubs (P&I Club)
• The P&I Clubs all operate on a
mutual or non-profit basis aiming at
calling up only sufficient money each
year to meet the costs, expenses and
claims for that year.
• There are no shareholders and the
ship owner members of the
Association insure each other.
• For detailed information about P&I
Clubs, including the covers it
provides and the services offered,
please refer to Annex 1 at the end of
this chapter
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 P & I - Covered Risks
• Various risks are covered by the P&I
associations.
• These will depend on the particular type of
association concerned.
• In marine insurance, the types of risks of
concern usually include the risks of a general
nature, war risks, freight and demurrage
risks, and through transit risks.
• Risks of a general nature include such as the
damages or compensation for the loss of life
or personal injury or illness; expenses
incurred under statute or collective or
special agreements with respect to loss of
life, personal injury or illness.
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 P & I - Covered Risks - Examples are:
1. Repatriation 10. Liability under towage contracts
2. Crew substitute expenses 11. Liability arising under indemnities and contracts
3. Loss of effects 12. Removal of wrecks
4. Distressed seamen’s expenses 13. Quarantine expenses
5. Port and deviation expenses 14. Liability for loss or shortage of cargo or other
6. Life salvage property
7. Collision liability 15. Liability for damage to or responsibility in respect
8. Fixed and floating objects of cargo or other property
9. Damage to vessels or property 16. General average
other than by collision 17. Fines
18. Legal expenses
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 P&I Uncovered Risks can be defined in :
1) the Laws
• e.g. The Marine Insurance Act 1906 in U.K sets out a number of exceptions
which apply to all policies unless they contain a term to the contrary; or

2) the Institute Clauses which are generally attached to the policy

• The Institute Clauses contain a number of clauses exempting the insurer
from liability where the loss of or damage to the subject-matter insured
arises from certain causes; or

3) the Policy
• Sometimes exceptions are found expressly stated in a policy.
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 P&I Uncovered Risks Exceptions under the MIA 1906
• Losses not proximately caused
by perils insured against
• Losses caused by the willful
misconduct of the assured
• Losses caused by delay
• Losses caused by ordinary
wear and tear
• Losses caused by inherent
vice, and
• Other losses e.g. those caused
by vermin
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 P&I Uncovered Risks
Exceptions under the Institute Clauses Cargo (A/B/C)
Various exceptions are to be found and their extent
depends on whether the particular set of clauses is
concerned with the insurance of cargo, or hulls or
freight. Slight difference exist among the Institute
Clauses Cargo A, B and C.

For example, Institute Clauses Cargo A contains:

❖ A general exclusions clause
❖ An un-seaworthiness and unfitness exclusion
clause
❖ A war exclusion clause and
❖ A strike exclusion clause

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 Liability Insurance for FIATA Bill of Lading
• The FIATA Bill of Lading (FBL) is a
negotiable marine ocean bill of lading,
subject to completion according to ICC
UCP 600 rules.
• It can also serve as a Forwarder House
Bill with a suitable endorsement or as
a multimodal transport document.
• The FBL is used worldwide under the
same set of conditions, offering the
customer a substantial degree of
protection. (It must be noted that with
effect from 1st July 2008, the ICC has
revised its publication to ICC UCP 600
rules which recognizes all Transport
Documents in general)
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 Liability Insurance for FIATA Bill of Lading
• The liability of the forwarder under the terms
of the FBL is based on the UNCTAD/ ICC
Rules for Multimodal Transport Documents
(ICC Publication 481).
• Full details on all forwarder’s liabilities and
limitations are listed in e.g. the Standard
Conditions Governing the FIATA Multi Modal
Transport Bill of Lading (Re. Annex 2 at the
end of the chapter).
• There are no specific insurance
requirements for the use of the FBL other
than the user having arranged appropriate
insurance with a first class insurance
company to cover their liabilities.
• A forwarder issuing a FBL must ensure that
all insurance arrangements related to these
liabilities have been clarified.
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 Brokers offering cover in the local market place
General
• Insurance business is usually conducted through intermediaries, i.e. insurance
brokers.
• Ordinary businesses normally lack the necessary expertise and insurance brokers
act on behalf of the buyers of insurance to assess the extent of cover which is
necessary, that which is available, and whether or not a particular premium rate is
reasonable.
• Insurance broker is the one who advises persons on their insurance needs
and negotiates insurances on their behalf with insurers, exercising professional
care and skill in so doing.
• Brokers “shop around” for insurance at competitive rates on behalf of their clients.
• Lloyd’s brokers are the only intermediaries who are permitted to place insurance
with Lloyd’s underwriters.

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 Brokers offering cover in the local market place
Through Transport Club (TT Club)

Logistics Co:

Ship Operator
Road, Air, Rail & Sea

Cargo Handling
Freight Transport

Authorities

Haullers
Risk covered

Facilities
Operation

Port
Liabilities for loss of or damage to cargo, customers’ equipment and x x x x x
ships
Loss of or damage to equipment including loss due to strikes, riots and x x x x x x
terrorist risks
General average and salvage guarantees and contributions for x
equipment
Liabilities arising from errors and omissions including delay and x x x x x
unauthorised delivery
Third party liabilities including impact and sudden accidental pollution x x x x x x
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 Brokers offering cover in the local market place
Through Transport Club (TT Club)

Port Authorities
Logistics Co:

Ship Operator
Road, Air, Rail & Sea

Cargo Handling
Freight Transport

Haullers
Risk covered

Facilities
Operation
Fines and duty x x x x x x
Property and business interruption risks x x x x x x
Fire Legal, Berth damage, Port blockage, Wreck removal costs x x
Investigation, defence and mitigation costs x x x x x x
Disposal, quarantine and disinfection costs x x x x x x
Misdirection costs x x
Political risks including war risks on land for equipment x
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 2. Liability of Different Parties
Objectives:
❖ The student shall be aware of the liabilities that different parties bear in legal
relationships they enter when offering professional services, including the
insurance company, forwarders, and carriers.
❖ The student shall further understand the different types of liability that the
carrier may incur.

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 Liability of Insurance Companies
• The insurance company should be providing insurance that properly
covers the risks involved and to the proper liability limits – and which
applies to the appropriate legislative regimes that may be involved in
any given transit.
• Insurance companies assume the risk associated with insurance policies
and assign the premiums to be paid for the policies.
• The premium charged for the policy is based primarily on the amount
to be awarded in case of loss, as well as the likelihood that the
insurance companies will actually have to pay.
• In order to be able to compensate policyholders for their losses,
insurance companies invest the money they receive in premiums,
building up a portfolio of financial assets and income-producing real
estate which can then be used to pay off any future claims that may be
brought.
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 Proper Risks Covered
• It is obvious that the insurance company shall
underwrite the proper risks involved by the
insured.
• Should an improper risk be covered by the policy,
the premium charged for the policy is then
misled which directly affects the cost
estimation on which the company operates.
• The improper risk covered may also involve such
an amount of compensation to the policyholders
that goes beyond the company’s budgeting.
• The negative influence on the company’s
business operation of the improper risks is
potentially huge and severe.

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 Proper Liability Limits
• Proper liability limits concern the proper
understanding and estimation of the liability
limitation that the insured are entitled to in the
circumstances where the insured is hold liable.
• The insurer assumes the part of risks that go
beyond the liability limitation which allegedly rest
on the insured, who in lieu of the insurance, will
have to bear it by himself.
• The consequence of improper estimation of
liability limitation is the same as in improper
risks covered.
• The premium against which the risk is undertaken,
would be wrongly calculated, which
consequently affects the company’s cost
estimation, budgeting and normal business
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operation. Slide 30
 Re-Insurance
• Due to commercial or marketing reasons,
the insurance companies may cover the
types of risk in its policy which the
company is actually not adept in, or lack
of experience or expertise.
• In such a case, the insurance company
may prefer to divest the risks covered in
the policies it issues.
• This is done in the re-insurance market.
• Re-insurance companies assume all or
part of the risk associated with the
existing insurance policies that are
originally underwritten by other insurance
companies.
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 Liability of freight forwarders
• The development of international
transport has changed the scope of
services of the traditional freight
forwarder.
• In the past, the freight forwarder was
basically acting as an agent.
• In recent years, a lot of freight
forwarders abandoned their
traditional role as “paper pushing
agents” and took the opportunity to
advance to the status of acting as
carrier (NVOCC and NVO-MTO).
• By doing so, the freight forwarder is
facing greater responsibility.
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 Liability of freight forwarders
As An Agent
• Freight forwarder takes the
traditional responsibility as an agent
for the cargo interests.
• In this case, the forwarding company
acts on behalf of the shipper or
consignee.
• The forwarding company does not
take in any transport related risks as a
carrier except the services he renders
pertaining to his agency agreement.
• Such agency agreement usually
covers ancillary services in relation to
the transport.

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 Liability of freight forwarders
As Carrier/Consolidator
• Freight forwarders acting as carrier/consolidator
takes full responsibility of the whole transport.
• A house bill of lading is often issued by the
freight forwarders in such a position.
• Often, companies acting as non-vessel operating
MTO also sub-contract the ocean voyage or
even sub-contract the whole transport.
• This may even renders the forwarding company
be liable to a higher extent compared with any
subcontractors involved, including the shipping
line, whose liability may be protected by the
laws or conventions governing that particular
mode of transport.

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 Liability of freight forwarders
Dangerous Goods Transport
• The potential liability for a freight forwarder is even higher when the transport
involves dangerous cargo.
• It is very important to purchase the correct liability insurance coverage when
carrying dangerous cargo.
• The transport of dangerous goods entails the certificate with respect to the
specific type of goods, as well as the compulsory requirements for packaging,
labeling and handling of the goods.
• For detailed information in relation to the dangerous goods transport, please refer
to the Module on “Safety, Security and Dangerous Goods”.

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 Liability of Carriers
• According to the nature and the
underlining legal basis that
provoke the liability, liabilities
that a carrier assumes can be
either of the following categories
or a combination of two or more:
✓ Public liability (sometimes called
strict liability)
✓ Statutory liability
✓ Tort liability
✓ Contractual liability

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 Liability of Carriers
Public Liability, Tort liability
• Public liability and Tort liability concern the liability the carrier incurs with regard
to third parties.
• Liability to third parties includes the death or bodily injury caused to a third party,
including passengers.
• Insurance of such liability is usually compulsory according to national laws.
Without such an insurance or security the motor vehicle for example is not
allowed to drive on a road.
• Liability to third parties that a carrier may incur also includes the liability for
damage done to the property of third parties.
• Most national laws and regulations define explicitly the liabilities that the carriers
bear against third parties.
• Provisions in respect of liability to third parties may vary among different
countries.
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 Liability of Carriers
Contractual Liability
• Contractual liability deals with the
liabilities that the carrier assumes as
opposed to the other party or parties
bound by the transport contract.
• Often the other party or parties refers
to the cargo interests, i.e. the merchant
or respectively, the shipper or the
consignee.
• Contract liability is dependent on the
provisions of the specific contract, if not
overruled by explicit statutory liabilities.
• The concept of freedom of contract
applies.
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 Liability of Carriers
Statutory Liability
• Statutory liability is regulated by the stipulations of laws and
regulations.
• The laws and regulations, including international conventions
and agreements, are effectuated either by itself when
conditions satisfied, or by the choice of the contract parties.
• In the latter case, the liabilities defined by the statutes are
considered also as contractual.
• On the other hand, public liability in majority cases is clearly
defined in national laws, which is therefore a type of statutory
liability too.
• Next in this chapter the statutory liabilities of carriers are
briefed pertaining to different modes, i.e. roadway, railway,
sea, inland water, air, express services and logistics services

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 3. Carrier’s Statutory Liability in
International Conventions Objectives :
• The student shall understand the statutory/contractual liabilities that the carrier
may incur, particularly those resulting from applying international conventions in
different modes of transport.

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 3. Carrier’s Statutory Liability in
International Conventions
• Uni-modal transport is governed by
the respective international
conventions, and so is the carrier’s
liability:
✓ for rail - The CIM
✓ for road - The CMR
✓ for ocean - the Hague / Hague-Visby
/ Hamburg Rules
✓ for air - the Warsaw Convention; and
etc.

4/26/2019 Slide 41
 Chart illustrates the relationship between different modes of transport with
respect to the contractual/statutory liability that the carrier assumes:

4/26/2019 Slide 42
 3. Carrier’s Statutory Liability in
International Conventions
• These transport conventions may also apply to individual segments of
multimodal transport of goods.
• Based on the definition of multimodal transport, a multimodal
transport operator (MTO) assumes responsibility for the performance as a
carrier for more than one mode of transport.
• As such the MTO bears the liability for the entire transport according to the
contract with the merchant.

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 3. Carrier’s Statutory Liability in
International Conventions Railway networks
• The main railway conventions that apply are CIM (Uniform Rules concerning
the Contract of International Carriage of Goods by Rail) with most European
countries as members, and the SMGS (Agreement on International Railway
Carriage of Cargoes) with members from former USSR countries and its allies with
communism systems during the Cold War.
• According to CIM, the carrier is responsible for the loss of or damage to the goods
from the time that he accepts the goods to the time of delivery.
• Loss of goods shall be compensated at the price calculated according to,
sequentially, commodity exchange quotation, current market price, or normal
value of goods of the same kind and quality at the time and place of acceptance.
• Compensation for cargo damage is equal to the loss of the cargo’s value.

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 3. Carrier’s Statutory Liability in
International Conventions Railway networks
• The liability limit in CIM is 17 SDR per kilogram of gross
weight of the cargo plus rail freight.
• The time bar for cargo claim is one year.
• Different from CIM, SMGS does not set the maximum
liability limitation for the loss of goods.
• In this case, the compensation of the cargo loss and
damage is unlimited, up to the cargo’s value calculated
on the commodity exchange quotation or others.
• Besides, SMGS has a 9 month time bar, instead of one
year in CIM.
• More detailed information about railway operators can
be found in the Module “Rail Transport”.
4/26/2019 Slide 45
 3. Carrier’s Statutory Liability in
International Conventions Road transport operators
• Road transport operators carrying
goods for reward on international
road haulage journeys must comply
with the Convention on the
Contract for the International
Carriage of Goods by Road (CMR
Convention) which is effective since 2
July 1961.
• The Convention automatically applies
to the transport contract as long as
the carriage of goods is between
countries of which at least one is a
party to the Convention.

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 3. Carrier’s Statutory Liability in
International Conventions CMR Carrier’s Liability
The CMR defines the carrier’s liability as such:
Period of From the time that the carrier takes over the goods, to the time of delivery
responsibility
Liable for 1) total and partial loss of the goods
2) any damage to the goods
3) delay in delivery
Liability limit 1) 8.33 SDR per kilo of gross weight, in case of cargo damage and loss
2) carriage charge in case of delay
Time bar 1) 30 days from the end of the term of delivery, or 60 days after date
of taking over of the goods
2) one year from the date of taking over in case of delay
3) three years in case of willful misconduct of the carrier
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 3. Carrier’s Statutory Liability in International
Conventions Shipping Lines Inland Waterways
• For inland waterway transport, no worldwide
liability regimes exist. The two most important
international measures in Europe are:
✓ The CMNI Convention
✓ The Shipping and Transport Conditions (Verlade-
und Transport Bedingungen): general conditions
that apply to cross-border transport
• The purpose of the CMNI Convention (Convention
on the Contract for the Carriage of Goods by
Inland Waterway) is to develop uniform civil inland
shipping law.
• This means, amongst others, that a single liability
system will apply in all countries where inland
shipping is practiced.
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 3. Carrier’s Statutory Liability in International
Conventions Shipping Lines Inland Waterways
The major features of carrier’s liability in this convention are:
Period of responsibility from taking over until delivery
Contract of carriage consignment note required if requested
Liable for loss, damage and delay including cost for evaluating damage
Liability limit 1) 8.33 SDR/kg
2) Delay 3 x value of freight
Time bar 1) Apparent loss, damage - on delivery at latest
2) Non apparent loss, 7 days after delivery
3) Delay: 21 days after delivery

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 3. Carrier’s Statutory Liability in International
Conventions Shipping Lines Inland Waterways
• These are general conditions that apply to cross-
border transport.
• They have been in use for some decades and are
very favorable towards carriers.
• Practically all liability is excluded.

• The following supplementary conditions are used

in specific sub-markets:
✓ the General Ferry and Barge Shipping Conditions
in rotation systems
✓ the General Push-Towing Conditions of 1998 in
push-towing
✓ the General Towing Conditions in towing
services.
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 3. Carrier’s Statutory Liability in International
Conventions Ocean going traffic
• In the past, the point where responsibility is transferred (“critical point”) was the
ships rail.
• Goods were received by the shipping line at the port of loading, and delivered to
the port of destination.
• With the advent of containerization, shipping lines took responsibility of the goods
at an earlier stage, as well as a later stage in terms of delivery, whereby the
transfer of responsibility moved ashore. From CY/CFS to CY/CFS is normal.
• In line with this newly development, INCOTERMS and UCP (Uniform Customs
and Practice for Documentary Credits) both were revised to recognize this
movement of “critical point”, from the ships rail to the point where the goods are
taken in charge by the shipping line.

• The main international conventions in ocean traffic are the Hague Rules (1924),
the Hague-Visby Rules (1968), and the Hamburg Rules (1978).
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 3. Carrier’s Statutory Liability in International Conventions
Three Rules contain different provisions concerning the carrier’s liability.
Hague Rules (1924) Hague-Visby Rules (1968) Hamburg Rules (1978)

Period of Rail – Rail; open for Rail – Rail; open for contractual Acceptance of cargo – delivery
responsibility contractual agreement agreement of cargo
Liability Loss of or damage to goods Loss of or damage to goods 1) Loss of or damage to goods;
2) delay in delivery
Liability £100 per package or unit SDR666.67 per package or unit, or 1) loss or damage: SDR835 per
limitation SDR2/kg of gross weight, package or unit, or SDR2.5/kg of
whichever is higher gross weight, whichever is
higher;
2) delay: 2.5 times of the freight in
proportion of the cargo in delay,
but not excessive of the freight for
the entire consignment
Time bar 1 year, from delivery 1 year, from delivery; possibility to 2 years, from delivery; possibility
extend with agreement to extend with notice
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 3. Carrier’s Statutory Liability in International
Conventions Airlines
• Warsaw Convention 1929 and its Protocols are the main
international agreements in air cargo transport.
• Montreal Convention 1999 is the result of the increasing pressure
to enhance the air carrier’s liability, at an international level.
• Both the Warsaw Convention system and the Montreal
Convention set the carrier’s liability limit at 17 SDR per kilo-
gramme of gross weight.
• But the main difference between the two is that the Montreal
Convention adopts a strict liability system while the Warsaw
Convention follows a fault liability system.
• The strict liability system imposes liability on the carrier
regardless of his fault. Liability is not dependent on negligence or
intent.
• More detailed information about air carriers are referred to
4/26/2019 in Module on “Air Transport”. Slide 53
 3. Carrier’s Statutory Liability in International
Conventions Express Services (Integrators)
• An express integrator service is
another means for getting products
overseas.
• Particularly suited (but not limited) to
low-volume or time-critical delivery
services, express integrators can provide
a seamless door-to-door service across
the globe.
• Express Integrators also provide
customers with detailed product
tracking and can manage customs
requirements in a destination country.
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 3. Carrier’s Statutory Liability in International
Conventions Express Services (Integrators)
• Integrators are involved in international
multimodal transport, mainly by air and road.
• Which liability regime is applicable depends
on the mode of transport which is used at
the time the damage occurs.
• Where international carriage by air is
involved, international air conventions apply
(e.g. Montreal Convention, Warsaw
Convention).
• International carriage by road will be subject
to the provisions of the CMR Convention.
• Please refer to the respective transport
modalities for further information.

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 3. Carrier’s Statutory Liability in International
Conventions Logistics Service Providers
• Due to the ongoing trend of outsourcing
logistics activities, the role of logistics
service providers (LSPs) has become more
and more important in global transport.
• Traditional freight forwarders, by
expanding business upwards and/or
downwards the logistics chain, are
increasingly taking on more responsibilities
and function as logistics providers, and so
are the single mode carriers.
• A sea carrier, for example, can be defined
as a logistics service provider when its
service offered extends significantly
onshore, or to cover other modes of
transport.
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 3. Carrier’s Statutory Liability in International
Conventions Forwarder’s Liability
• Freight forwarders who, by expanding services take
the responsibility as logistics service providers,
involves the issue of determining whether he is the
carrier or agent in order to define correctly the liability
imposed on him.
• According to the FIATA Model Rules for Freight
Forwarding Services, if the freight forwarder
performed the service or carriage using his own
facilities or means of transport, he would be subject to
the contract with his own specific conditions (house
bill of lading) or the compulsorily applicable
conventions.
4/26/2019 Slide 57
 3. Carrier’s Statutory Liability in International
Conventions Forwarder’s Liability
• On the other hand, if the freight forwarder is
not engaged as carrier, his liability is based
on a duty to exercise due diligence and to
take reasonable measures in performing the
services.
• The monetary limit is 2 SDRs per kilo with
respect to loss of or damage to the goods.
Liabilities for valuables and for delay and
consequential loss other than direct loss are
exempted.
• The time limit for actions against the freight
forwarder is nine months from delivery of
the goods.

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 3. Carrier’s Statutory Liability in International
Conventions MTO Liability
• When a logistics service provider takes care of the transport of more than one
mode, and assumes the carrier’s position as opposed to the shipper, he is
essentially a multimodal transport operator (MTO).
• The MTO is responsible independently of the rules which apply to the actual
carrier.
• Attempts at international unification however, with regard to a workable liability
system for MTO were not successful.
• The UN’s Multimodal Transport Convention 1980 never entered into force.

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 3. Carrier’s Statutory Liability in International
Conventions MTO Liability
• The Rules for Multimodal Transport
Documents from UNCTAD and ICC
has limited application in practice.
• The latter is more successful in that it
has been reproduced in particular by
FIATA in the Negotiable FIATA
Multimodal Transport Bill of Lading
(FBL).

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 3. Carrier’s Statutory Liability in International
Conventions MTO Liability
• The fact that the MTO is fully liable to
the shipper, but on the other hand
might find it impossible to recover
fully from a subcontractor due to the
liability limitation applicable to that
specific mode, or the fact that the
mode of transport where the
damage took place cannot be
identified, represents a great risk to
the MTO.
• In order to cover this liability, it is
essential that the MTO arranges
adequate liability insurance cover for
its operation.

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 4. Limitation on Liability Objective :
• The student should
understand the different
forms of limitation that may
be set on liability under an
insurance contract.
• The student shall understand
the concept of re-insurance.

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 4. Limitation on Liability
Contractual, Single Incident Value and Total Claim Value
Contractual Claim Value Single Incident Value
• Contractual claim value is • The maximum amount may
the maximum amount set be defined in relation to an
in the policy that the individual claim.
insurance company is to • As a result, for each and
compensate to the insured, every claim the insurer’s
the claims arising out of the liability to the insured will
be limited to the maximum
latter’s contractual liability. amount.
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 4. Limitation on Liability
Contractual, Single Incident Value and Total Claim Value
Total Claim Value
• On the other hand, the maximum amount may be
in relation to all claims within a given period,
usually the duration of the policy.
• In this case, irrespective of the maximum amount
of any individual claim, there will be a maximum
amount on all payment by the insurer to the
insured, during that period.
• Such a provision is sometimes called an “aggregate
limit”. It is not uncommon for the maximum
amount payable under policy to be limited on each
and every claim and in the aggregate as well.

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 4. Limitation on Liability Re-insurance Concepts
Re-insurance Contracts
• A re-insurance is essentially an
independent contract of insurance
whereby the re- insurer agrees to
indemnify another (insurer) wholly or
partially against loss or liability by
reasons of a risk the latter has
assumed under a separate and
distinct contract as the insurer of a
third party (insured).
• Re-insurance by nature is a contract
of indemnity.
• The purpose of re-insurance is the
same as that of insurance: to
spread risk.
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 4. Limitation on Liability Re-insurance Concepts
Re-insurance Contracts
• By spreading risk within the
insurance industry, re-insurance is a
mechanism that enables the
insurance industry to function more
efficiently.
• As a separate contract of insurance,
re-insurance contains all the features
an insurance contract usually has,
and is subject to the general rules
governing the contract of insurance.
• Therefore, the prerequisite such as
insurable interest, duty of good faith
and duty of disclosure all apply to the
re-insurance contract.
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 4. Limitation on Liability Re-insurance Concepts
Types of Re-insurance
• Re-insurance can be written on either
a pro rata or excess-of-loss basis.
• Re-insurance on pro rata basis means
that the re-insurer shares the same
proportion of the premium and
losses of the ceding company (the
insurer).
• This also is called a proportional
agreement.

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 4. Limitation on Liability Re-insurance Concepts
Types of Re-insurance
• The operative relationship is one of sharing.
• Re-insurance on excess of loss means that subject to a specified limit, the re-insurer
indemnifies a ceding company against the amount of loss in excess of a specified
retention.

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 Chapter – 1 Liability Insurance
Q&A
4/26/2019 Slide 69
 Chapter - 2

TRANSPORT INSURANCE
4/26/2019 Slide 70
Transport
Insurance - Learning Objectives
• The student should understand the
general issues about cargo transport
insurance.
• The student should know the various
forms of transport insurance policies
available, some specific types of cover,
and the interrelation between the
covers in respect of risks covered and
excluded.
• The student shall also understand the
principle concepts in insurance, such as
insurable interest, insurable value, and
utmost good faith.
 1. General Insurance Policy
Objectives
• The student should understand how transport insurance is usually made, i.e.
standard policy plus endorsed Clauses.
• The student shall be aware of the difference between open policy and facultative
policy, and the most often used Institute Cargo Clauses.
• The student shall also understand the principle concepts in insurance, such as
insurable interest, insurable value, and utmost good faith.
• Under different INCOTERMS, the student shall be able to explain who has the
insurable interest and learn how to calculate the insurable value.

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 Cargo insurance policy (also blank endorsed)
Standard Policy Document and Endorsement
• An insurance policy is the evidence of a
contract, which defines the terms of the
agreement between the insured and the
insurer.
• In practice, a cargo insurance policy comes
in the form of a standard policy document,
which contains only the skeleton of a cargo
insurance contract.
• The essence of the contract will be
contained in the “Clauses” that are to be
incorporated into the policy. This is called
endorsement.
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 Cargo insurance policy (also blank endorsed)
Standard Policy Document and Endorsement
• The standard marine insurance 8. the value to be covered. This should
also include, for example, freight
policy contains the following
charges, import duty, anticipated profit
information: on the consignment, etc.
1. an agreement by the insurer to 9. the name or description of the vessel or
provide insurance cover in return for other conveyance
the payment of the premium
10. the scope of insurance cover, e.g. “all
2. the name(s) of the insurer(s) risks including war and strikes”
3. the policy number 11. the claims procedure including details of
4. the name of the assured where claims will be paid and in which
5. the subject matter insured currency reference to the clauses which
6. the premium amount are to apply.
7. the description of the voyage
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 Types of Cargo Insurance Policy
• There are two types of cargo
insurance policy.
• Depending upon the size and scope
of the shipper’s operation, the cargo
insurance policy can be in the form of
an open cargo policy or a facultative
policy.

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 Types of Cargo Insurance Policy
1. Facultative Policy
• Facultative policy is also known as one-off policy, or special marine
policy.
• A facultative policy covers a single shipment.
• Every risk is discussed separately and a premium agreed upon.
• This policy provides the same coverage available under the open cargo policy.
• However, it does not provide automatic coverage. Once the shipment has been
completed and coverage has ceased, this policy automatically terminates.

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 Types of Cargo Insurance Policy
2. Open Policy
• Open cargo policies are the most usual type of
cargo insurance, where a policy is drawn up to
cover a number of consignments.
• Often it is used when the shipper has a
continuous flow of goods being shipped over a
long period of time.
• The policy can be either for a specific value
that requires renewal once the insured
amount is exhausted or a permanently open
policy that will be drawn up for an agreed
period, allowing any number of shipments
during this time.
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 Types of Cargo Insurance Policy
2. Open Policy
• The open cargo policy provides automatic
coverage when the shipper must insure the
goods. Details of a particular shipment must,
however, be declared when they become
known.
• The policy is customarily issued on a
warehouse-to-warehouse basis which
provides the shipper continuous coverage
throughout the normal course of transit.
• It frequently happens that a transit
commences before the exporter and/or the
consignee becomes aware of it and, in such a
case, the open policy provides automatic
protection.
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 Types of Cargo Insurance Policy
2. Open Policy
• The shipper is required to submit a
monthly report of all
• shipments that have occurred under the
policy and to pay a premium on those
shipments at the agreed upon insurance
rates.
• Depending on the shipper’s needs, the
open cargo policy may offer the broadest
possible insurance terms for the lowest
price.
• (Source: http://www.ams.usda.gov)
• For an extensive reading about the types
of cargo insurance policy, please refer to
Annex 4 at the end of this chapter.
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 Insurance Certificate
• Insurance certificates are often, for convenience,
issued as evidence of the existence of policies.
• Even when insurance occurs on a continuous basis,
the insured can have a need for proof of insurance
for a separate transport.
• The bank, which regulates the payment traffic, often
requires such a document in export.
• Under an open policy, the issue of insurance
certificates is also an evidence of the cover for each
individual shipment insured. In certain
circumstances, insurance broker may also issue a
certificate in which he states that he has arranged
insurance according to the procedure explained in
the certificate.
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 Insurance Certificate
• In the certificate, the most important
particulars for the recipient (e.g. the buyer)
are mentioned, like the insured sum, goods,
ship or other means of transport, the
journey, the conditions of insurance and
what is to be done in the event of damage.
• A certificate may also be co-signed by the
authorized agent or the insurance company.
• In this case the certificate is sometimes
indicated as the “Underwriter’s Certificate.”

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 Institute Cargo Clauses
These institute clauses are widely used in the world in everyday business.

1) Institute Cargo Clauses, consisting

of
✓ Institute Cargo Clauses (A)
✓ Institute Cargo Clauses (B)
✓ Institute Cargo Clauses (C)
✓ Institute Cargo Clauses (Air)
2) Institute War Clauses
3) Institute Strikes Clauses
4) Institute Trade Clauses
5) Additional Clauses
6) Additional Terms
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 Institute Cargo Clauses (A) and Air
Institute Cargo Clauses (A)
• These cover the cargo for all risks of
physical loss or damage, subject to
exclusions.

Institute Cargo Clauses

(Air)
• These are similar in scope to the
Institute Cargo Clauses (A) except they
are used specifically for airfreight.

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 Insurable Value
Who has the insurable interests?
• In an export transaction, it is either the buyer(s) or the
seller(s) who has the insurable interests in the goods
in transit, who is also responsible for arranging
insurance cover for the goods.
• The arrangements made will vary with the agreed
trade terms (INCOTERMS) and will reflect the passing
of the insurable interest from one party to another.
• It is not necessary, however, for each party to take out
separate insurance cover - one party should always
take out the cover on a warehouse-to-warehouse
basis, and, in certain circumstances, will cede or assign
the policy to the next party.

4/26/2019 Slide 84
4/26/2019 Slide 85
 Insurable Value
The Seller
• Sellers of goods have an insurable interest in goods,
not only as owners but also, in some cases, as risk
bearers or as unpaid sellers having security rights, until
they have divested themselves of all rights and duties
relating to the goods.
• The person who has the legal ownership of property
has an insurable interest in that property, even if the
insured’s title is defensible because, for example, it is
subject to forfeiture.
• Such persons include co-owner, even though the value
of his interest is less than the value of the property.
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 Insurable Value
The Buyer
• On the other hand, he who has contracted to buy goods (buyers of
goods) does not have an insurable interest in the goods unless he
has them in his possession, or they are at his risk, or he has made
an advance in respect of the purchase.
• Possession of property, including constructive possession, gives an
insurable interest in that property, even though someone else has
a better right to the property (such as the owner) and even though
the possession is wrongful (subject to innocent possession).
❖ For example, the interest of an exporter who is selling on an F.O.B
basis, is transferred when the goods pass the ship’s rail; the risk
moves from the seller to the buyer, and the buyer becomes the
person who acquires an insurable interest and should therefore
arrange marine insurance for the voyage.
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 Insurable Value
Insurable Value
• The value of the insurable interest
which the insured has in the subject-
matter of the insurance is called
insurable value.
• Insurable value equals the amount to
be paid out by the insurer in the
event of total loss or destruction
(assuming full insurance).

4/26/2019 Slide 88
 Insurable Value
Insured Amount
• In the case of full insurance, the amount insured is equal to the insurable value. The
amount insured however, can be also lower or higher than the insurable value.
• The amount that the insured may recover from the insurer and that part of the sum
which he may retain are related but sometimes different amounts.
• If, the insured insures the property for an amount that exceeds the value of his interest
and recovers that amount, the excess must be held on trust for third parties whose
losses it represents.
• He must do this because his property insurance is a contract of indemnity – he must not
recover and keep for himself more than he has lost.
• It should be underlined that more than one person may have an insurable interest in
the goods at risk at any one time, e.g. the exporter, or confirming house or bank which
is advancing funds to the exporter under, say, a letter of credit.
• As a result, the aggregate value of their interests, which is the aggregate amount
insured, may exceed the value of the goods itself.
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 Insurable Value
Insurable Value Examples ; 1) Ex Works

4/26/2019 Slide 90
 Insurable Value
Insurable Value Examples ; 1) Ex Works
• An Ex Works sale represents the minimum
obligation for the seller, who has merely to make
the goods available at his premises for
collection by the buyer’s designated carriers.
• The risks and interests of the seller are
transferred when the cargo is delivered at his
premises.
• It is the buyer’s duty therefore to arrange the
transport as well as insurance.
• Insurable value under Ex Works is equal to the
product’s selling price (net factory cost + interest
+ profit).
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 Insurable Value
Insurable Value Examples ; 2) FOB

4/26/2019 Slide 92
 Insurable Value
Insurable Value Examples ; 2) FOB
• The interest of an exporter on an FOB basis is transferred
when the goods pass the ship’s rail, and so is the risk.
• Therefore, the buyer becomes the person who acquires an
insurable interest and should arrange marine insurance for the
voyage.
• Insurable value under FOB includes selling price, plus loading
cost to the first independent carrier named by buyer i.e.
depot, wharf
✓ Certification / legalization / inspection fee, if required
✓ export customs clearance fee
✓ additional packing / labor charges
✓ ship loading charges if by sea and if not included in freight
4/26/2019 Slide 93
 Insurable Value
Insurable Value Examples ; 3) Duty Paid (Delivered Duty Paid / DDP)
• Under the “D” terms
(DAF, DES, DEQ, DDU and
DDP), the seller (exporter
/ manufacturer) is
responsible for all costs
and risks associated with
bringing the goods to the
place of destination.
• Insurable interest in the
goods remains at the
seller during the transit so
that the seller is charged
with the insurance
arrangement.

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 Utmost Good Faith
• In the formation of a contract of
insurance, the principle of utmost
good faith (“uberrima fides” in Latin)
must be observed by both the
insured and the insurer.
• Before a contract is concluded, the
insured must disclose to the insurer
all material facts of which s/he is
aware which could affect the risk
s/he is asking the insurer to bear.
• A failure to disclose, however
innocent, entitles the other party to
avoid the contract, and upon
avoidance it is deemed never to have
existed.
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 Utmost Good Faith
Time of Disclosure
• The duty of disclosure has to be performed whenever the insurer has the
decision to make - whether to make the contract of insurance and, if so, on
what terms - on new insurance, on renewal of insurance, and with respect
to any change in the current insurance.
• The duty of utmost good faith continues throughout the currency of the
policy.
• The strictness of the duty of disclosure however varies according to the
phase in the relationship at a level appropriate to the moment.
• Disclosure at the time of first contracting, renewal and, extension is
required in respect of all material information, whether or not the insured
was aware of it.
• Unless the contract stipulates otherwise, the insured has no duty to notify
changes of risk during the insurance period.
• But when the contract requires so, the insured must notify the insurer of
4/26/2019
any alternation in the risk. Slide 96
 2. Types of Coverage
Objectives
❖ The student should understand the most frequently used types of coverage in
cargo transport insurance, including FPA, WPA, All Risk, War Risks, and Strikes
Risks.
❖ The student shall be aware of the difference in respect of risks covered and
excluded, between the above mentioned coverage.

• According to the range of risks covered in the insurance contract, there are various
types of standard covers available from the market.
• The well known examples are such as Institute Cargo Clauses, Institute War
Clauses and etc.
• Each type of coverage refers to a specific group of risks that are covered in the
policy, and collarary, those excluded.
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 Free of particular average (F.P.A)
• The Free of Particular Average (F.P.A) is the narrowest form of coverage in cargo
marine insurance. Among the Institute Cargo Clauses, the counterpart of F.P.A is
Institute Cargo Clauses (C).
• F.P.A means the insurer is not liable for particular average suffered by the insured.
In another words, F.P.A covers only against total loss, caused by an insured peril.
• There is slight difference in respect of the coverage between the American
conditions and the English conditions of F.P.A.
• The FPAAC (Free of Particular Average, American Conditions) limits recovery of
partial losses under the Perils clause to those losses directly resulting from fire,
stranding, sinking, or collision of the vessel.
• The FPAEC (Free of Particular Average, English Conditions) is the same as FPAAC
except that partial losses under the Perils clause are fully recoverable if the vessel
has been stranded, sunk, burned, been on fire, or in collision, without requiring
that the damage actually be caused by one of these perils.
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 Free of particular average (F.P.A)
What is Particular Average?
• Particular average loss or damage
must be accidentally and fortuitously
caused by a peril insured against,
which affects a particular cargo
interested party only, such as the
owner of a crate which was dropped
during the loading of the vessel.
• Other examples of particular average
are the damage to the cargo as a
result of the sea water entering the
ship in heavy weather, or breakage of
cargo through the stowage breaking
adrift in heavy weather.

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 With Particular Average (W.P.A)
• W.P.A covers against total loss and
partial loss caused by the perils
insured against, such as the perils of
the sea (i.e. the vessel stranded,
sunk, burnt or been in a collision with
other vessels or external substances),
jettison of cargo and barratry (i.e.
negligence, fraud or wrongful acts of
the ship’s master or crew resulting in
injury or loss to the ship’s owner).
• Some ocean marine policy forms
provide limited coverage for a
particular average loss.

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 All Risks
• The All Risks Insurance (A.R.) is the
broadest form of coverage commonly
used in cargo transport insurance.
• It is used to mean insurance against
loss of or damage to property arising
from any fortuitous cause except
those that are specifically excluded.
• An insurance contract which provides
All-Risks Insurance is an All-Risks
policy.
• Among the Institute Cargo Clauses,
the counterpart of A.R. is Institute
Cargo Clauses (A).

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 All Risks
• The A.R. does not cover all the risks as the
name may refer to. It does cover however, in
respect of approved general merchandise,
all risks of physical loss or damage from any
external causes irrespective of percentage.
• The approved general merchandise includes
new, packaged goods without unusual
susceptibility to loss from breakage,
pilferage, or the nature of the goods
themselves.
• His counterpart, the Institute Cargo Clauses
A (all risks), does not cover risks of war,
strikes, riots, and civil commotions either.
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 All Risks
Typical exclusions in an A.R. policy are:
1. Improper packing 11. Losses in South America more than 60 days
2. Abandonment of cargo after discharge of cargo
3. Rejection of goods by customs 12. Barge shipments
4. Failure to pay or collect accounts 13. Goods subject to an on-deck bill of lading
5. Inherent vice (infestation or loss due to the 14. Losses caused by temperature or pressure
nature of product itself) (air shipments)
6. Employee conversion or dishonesty 15. Failure to notify air carrier of preliminary
7. Losses due to delay or loss of market loss in timely fashion:
8. Losses in excess of policy limits a. Obvious damage - 7 days
9. Losses at port city more than 15 days after b. Hidden damage - 14 days
discharge of cargo c. Non-delivery - 120 days
10. Losses inland more than 30 days after 16. Used goods
discharge of cargo

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 War risks
• In most sets of the Institute Clauses,
there is the “war exclusion clause”. It
may be desirable therefore to insure
against the risks of war, by :
✓ buying a war risks insurance
separately, or
✓ inserting the specific war risk clauses
into the policy.
• If one were shipping goods to a “war
zone”, the premium rate would be
very high.
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 War risks
Separate War Risks Insurance
• As far as separate war risks insurance
is concerned, war risk insurance is
undertaken by mutual insurance
associations such as P&I Club in
respect of vessels entered with them.
• The purpose of the war risks
insurance is to provide cover
against the risks of war/warlike
operations or activities.
• HRA special cover

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 War risks
War Risk Clauses : Institute War Clause
• An alternative insertion is the
Institute War Clauses. These clauses
are only applicable when goods are
being transported by sea or air or
international post. This cover does
not operate during land transit.
• The extent of the Institute War
Clause varies slightly depending on
whether the subject- matter insured
is cargo, hull or freight.

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 Risks covering Strikes and Civil Unrest
• As in the case of war risks, most
sets of the Institute Clauses also
contain the “strike exclusion
clause” and similar.
• It may be desirable therefore to
insure against the risks of strikes
and civil unrest by either
buying insurance separately for
this purpose, or inserting the
specific strikes and civil unrest
risk clauses into the policy.

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 Exclusions
• Normally, underwriters will indemnify
a cargo owner against certain
occurrences. There are types of risks
that the insurance company does not
want to insure against at certain
coverage, or those generally excluded
in majority of the cargo insurance
policies, so called the uninsurable,
such as nuclear incidents, inherent
vice, and Act of Gods.

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 Exclusions
The major exclusions in cargo transport insurance include:
1. Misconduct of the insured 9. Insolvency of ship owners
2. Ordinary leakage or loss in weight 10. Un-seaworthiness or unfitness of vessel,
3. Inherent vice container or conveyance
4. Insufficiency or unsuitability of packing or 11. Radioactive contamination arising from,
preparation for example, nuclear fuel or nuclear waste,
5. Delay or any weapon of war employing atomic or
nuclear fission
6. Nuclear weapons of war 12. Acts of God.
7. Wars • Inherent Vice refers to a characteristic in
8. Strikes, riots and civil commotions property that leads to its self-destruction
(e.g. fruit, which will naturally deteriorate).
Insurance contracts usually exclude such
damages.

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 Exclusions
The major exclusions in cargo transport insurance include:

4/26/2019 Slide 110

 Chapter – 2 Transport Insurance
Q&A
4/26/2019 Slide 111
 Reference Reading

TRANSPORT INSURANCE OF GOODS

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 Transport Insurance of Goods
Goods insurers concern themselves with many activities related to
transporting of goods. Such as:
• prevention of damage in the field of
export packaging;
• liability regulations in various
transport sectors;
• stipulations with regard to importing
and exporting of goods;
• delivery and payment conditions;
• credit stipulations of banks;
• storing possibilities in loading and
unloading ports;
• knowledge of commodities,
topographic knowledge and
knowledge of modern methods of
transport.
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 Transport Insurance of Goods
2. Transporters and liability
• Liability regulations for land transport and sea transport and
for national and international road transport differ.
Nevertheless, they have some points in common, namely:
✓ that the extent of the compensation duty is limited;
✓ that in a number of situations the transporter cannot be
blamed for damage to transported goods;
✓ that in the case of liability of the transporter, the
compensation by service insurers will take a long time.
• Many shippers do not arrange goods insurance because it is
assumed that the transporter would be accountable for all
damages.
• In practice, it is also often seen that the shipper are
recommended not to take the liability insurance, seeing the
above- mentioned reasons.
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 Transport Insurance of Goods
3. Insurance in General
• For a good understanding of transport insurance, it is
meaningful to mention a few main rules that are decisive
in an insurance agreement.
1. The incident against which one insures must be
uncertain. This means that the incident must be
unforeseen. The consequence of this is that goods that
are known to be damaged already with the conclusion
of the insurance cannot be insured anymore.
2. There must be an agreement. An agreement is
between the insurer and the interested party with the
goods. The written agreement is called a policy.
3. Opposite to the achievement of the insurer (duty to
compensate) is the counter achievement of the insured
(duty to pay premiums).
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 Transport Insurance of Goods
3. Insurance in General
• The insurer does the calculation of the risk and the
related premium. The insured will be able to more or
less influence this calculation by providing all unasked-
for information that can extend the knowledge of the
insurer with regard to the offered risk.
• Many factors play a role in calculating the premium,
including the specific qualities of the insured goods. As
a rule, these specific qualities will be best known to
the insured.
4. The damage or loss that one suffers and that
must be identifiable is compensated.
5. If the insured has no interest in the insured object,
the insurer is not obliged to compensate the
damage.
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 Transport Insurance of Goods
3. Insurance in General
6. A wrong or false account of or reference to
circumstances known to the insured that are of
such a nature that the insurer would not have
accepted the risk under similar circumstances
renders the insurance null and void.
• The aim of this is that the insured must inform the
insurer extensively about the nature and the extent
of the risk and submit all important particulars for
evaluation.
7. The insurance contract is an agreement in which
the insured and the insurer must observe the
utmost good faith in their mutual relationship.

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 Transport Insurance of Goods
4. The Premium
• In calculating the premium in • 1) The Nature of the Goods :
general, there are no uniform ✓ Vulnerability (chances to break or
tariffs in the insurance industry be damaged, sensitivity for
for goods transport insurance. dampness and smell)
However in practice, the insurer ✓ Durability (perish ability, for
takes the following into account: instance meat and foodstuffs)
✓ Desirability (with regard to theft,
for which high value of the goods
is not a requirement).

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 Transport Insurance of Goods
4. The Premium
2) The Packaging : The content and 4) Means of Transport : Sea ship, inland
packaging is regarded as one unit in vessel, motorcar, aero plane, train.
goods transport insurance. Goods
packed in a trunk will usually entail 5) Conditions : The conditions on which
less risk than the same goods packed the insurance is concluded.
in boxes. Paper bags will be much
more vulnerable than jute bags.

3) Journey En-route : Distance between

the beginning and end of the
journey; countries in which both are
situated; political circumstances and
the situation in ports.

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 Transport Insurance of Goods
5. Example - The Conditions on which the Insurance is concluded in Dutch law

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 Transport Insurance of Goods
5. Example - The Conditions on which the Insurance is concluded in Dutch law
• For goods transport insurance, e.g. Section 637 of the Dutch Law Book of
Commerce (LOC) is of special importance.
• For the account of the insurer are all losses and damage caused to the insured
articles by storm, bad weather, shipwreck, running aground, collision at sea,
collision or drifting against, forced changing of the course of the voyage or of the
ship through the throwing overboard of goods, fire, violence, flooding,
requisitioning, hi-jackers, robbers, detainment by order of higher authority,
declaration of war, deeds of vengeance, all damage caused by negligence, failure
or dishonesty of the captain or the ship's crew and, in general, through all
misfortunes coming from outside, however called, unless the insurer is exempt
from the course of any of these dangers by law or by a stipulation in the policy.

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 Reference Reading - Transport Insurance of Goods

Q&A
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 Chapter - 3

DUTIES OF FREIGHT FORWARDER IN

CASE OF DAMAGE
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 Duties of Freight Forwarder in case of Damage-
Learning Objectives
1. The student shall understand that the
freight forwarder shall take prompt
and reasonable actions in case of
cargo damage.
2. The student shall be aware of the
chain of actions that the freight
forwarder is obliged and expected to
take, and the important points for
attention in doing so, in the event of
loss of or damage to the cargo.
3. The student shall learn how to put
these actions into practice in real life.

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 1. General
• As the agent of the cargo interests,
freight forwarder shall bear in mind the
actions he shall take to protect and
maximize his client’s interests, and his
own interests as well as liability
resulting from his forwarding service
contract.
• The forwarder shall take delivery of the
insured goods in good time upon their
arrival at the port of destination named
in the Policy.

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 1. General
• In the event of any damage to the goods, the
forwarder shall immediately apply for survey
to the survey and/or settling agent stipulated
in the Policy.
• If the insured goods are found short in entire
package or packages or to show apparent
traces of damage, the forwarder shall obtain
from the carrier, bailee or other relevant
authorities (Customs and Port Authorities
etc.) certificate of loss or damage and/or
short-landed memo.
• Apart from the actions above, there is a series
of activities a forwarder shall also take in case
of damages, explained in the next section.
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 2. Chain of Actions for Freight Forwarders
Objectives :
• The student shall be aware of the chain of actions that the freight forwarder is
obliged and expected to take in the event of loss of or damage to the cargo.
• The student shall bear in mind the important points for attention when taking
actions, and be able to put these actions into practice in real life.

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 2. Chain of Actions for Freight Forwarders
Place Carriers on Notice (all parties to contract), Request reserves
• Once the forwarder or consignee discovers
damage at delivery, he shall notes damage on
the delivery slip when slip is signed.
• Along with noting delivery receipts, it is also
vital to place all carriers “on notice”.
• While it is necessary to place the carrier on
notice within the given time frame, payment
from them should never be accepted without
first advising the insurance company.
• Accepting payment from the carrier without
notifying the insurance company prejudices the
insurance company’s right of subrogation and
violates a provision of the insurance policy
which may jeopardize the outcome of the
claim.
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 2. Chain of Actions for Freight Forwarders
Assessment of Damage
• Once the damage occurs, the assessment of
damage shall be made.
• If the damage is estimated at more than a
certain amount, such as USD 500, the
forwarder or consignee calls surveyor.
• A survey minimizes subsequent disputes on the
nature and extent of damage, and provides a
reliable estimate of the cost of repairs.
• If a claim is not settled administratively, the
survey report can eliminate questions of proof
during litigation.
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 2. Chain of Actions for Freight Forwarders
Joint Survey
• The survey is formal and technical, held by
representatives of the two (or more) parties
involved.
• The surveyor has the professional knowledge,
who acts independently, impartially and
objectively.
• Due to the different interests represented in
different parties (ship owners, cargo owners,
insurers), a joint survey is usually undertaken.
• The joint survey can be performed by either
one surveyor who represents both or more
parties, the cost being borne by both or all.

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 2. Chain of Actions for Freight Forwarders
Joint Survey
• It can be also more than one surveyor, where all the parties are
present or represented, so that they can defend their rights.
• For a formal joint survey of damage, each party normally appoints
its own surveyor who, with the other surveyor(s), examines the
damage and attempts to reach agreement on the extent of
damage from the casualty.
• The survey report lists items of damage and recommended
repairs. When all parties agree, the surveyors sign the report to
record their concurrence; surveyors normally sign without
prejudice as to liability.
• If there is disagreement, disputed points are specifically noted. No
surveyor subscribes to any statement in the survey report when he
disagrees.
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 2. Chain of Actions for Freight Forwarders
Determination of Damage
• The task of the expert or surveyor involves the
calculation of the damage amount to the best of
his knowledge.
• His report or expert survey report must also
contain everything required to give the insurer a
true picture of the nature and particulars of the
damage.
• In addition, the report contains all particulars
required to enable the broker to compile a
damage account.
• It must happen in such a manner that the insurer
can judge whether the claimed damage is for his
account or not.
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 2. Chain of Actions for Freight Forwarders
Calculation of Compensation
• To calculate the amount of
compensation, one question is DAMAGE
important, namely:
• Did the goods reach the destination FULLY
or not?
PARTIALLY
DISCOUNT
METHOD

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 2. Chain of Actions for Freight Forwarders
Ad. 1 Goods that do not reach the destination
• When the goods have not reached the destination, it amounts to total
loss and the insurer then pays the insured sum minus the eventual
expenses like cargo off-loading expenses and import duties.
• With partial loss, the damage settlement occurs in the same manner as
for total loss. The insurer pays the insured value of the part that has
been lost.
• No problems are encountered when goods of similar value are insured
for one amount under one policy.
• The damage percentage can then be applied to the insured sum.
• If the goods are not similar in value and the insured value of every part
is not given separately, then the damage, calculated on the basis of the
invoice value, is to be calculated over the insured value.
• Again, expenses like off-loading costs and import duties are subtracted.
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 2. Chain of Actions for Freight Forwarders
Sold En-route
• If the goods are sold en route
because they have been damaged or
due to a cause against which it is
insured, the insurer pays the insured
value (eventually reduced with the
saved expenses) minus the net
profit.

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 2. Chain of Actions for Freight Forwarders
Ad. 2 Damaged at Destination
• If the goods reach the destination
damaged completely or partially,
then the insurers do not pay the
difference between the value of the
damaged goods and the insured
value.
• If the damage settlement should take
place in this way, the insurer would,
with the lowered price of the insured
goods at the destination, also have to
pay the lower sales price of the
goods that has resulted.
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 2. Chain of Actions for Freight Forwarders
Ad. 2 Damaged at Destination
• On the other hand, in a bullish market, the insurer
would predict a higher profit of the damaged goods.
• According to this method, experts must calculate
what the value of the goods would have been, had
they arrived in an undamaged (sound) condition,
Furthermore what their value in the undamaged
condition is.
• The difference between both values must be
expressed in a percentage of the sound value, and
the insurer pays this percentage of the insured sum.
• This method of calculation is called the discount
method.
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 2. Chain of Actions for Freight Forwarders
Lodge a claim for damage
• In the event of an alleged cargo loss,
damage or shortage, the forwarder shall
notify all carriers of possible claim for
damage.
• Should the carrier, bailee (in custody) or
the other relevant authorities be
responsible for such shortage or
damage, the forwarder, representing
the cargo interests who is the insured,
shall further lodge a claim with them in
writing and, if necessary, obtain their
confirmation of an extension of the time
limit of validity of such claim.
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 2. Chain of Actions for Freight Forwarders
Claims Documentation and Supporting Documents as required by Insurer
• Usually, to facilitate quick handling of
the damage, the insured must
consider all available documents when
he submits the claim, for instance:
✓ original policy or insurance certificate;
✓ original invoice, specification and/or
weight lists;
✓ original bill of lading and/or other
contract of transport;
✓ supporting transport documents such as
packing list, tally sheet, consignment
note, delivery receipt or proof of delivery
noting damage;
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 2. Chain of Actions for Freight Forwarders
Claims Documentation and Supporting Documents as required by Insurer
✓ claim on carrier holding them liable;
✓ carrier’s reply form;
✓ survey report or other document that
serves as proof of the cause and extent of
the damage;
✓ off-loading reports and weight notes at
final destination;
✓ correspondence with shipping company
and/or his agents, regarding their liability
for the loss or damage;
✓ If any third party is involved,
documents relative to pursuing of recovery
from such party should also be included.

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 2. Chain of Actions for Freight Forwarders
Claims Documentation and Supporting Documents as required by Insurer
• All claims are unique and may
require special documents. Claims
Office of the insurance company will
notify of the information and
documents they require for each
precise claim.
• Immediate notice should be also
given to the insurance company in
cases when the cargo owner’s actual
responsibility in the damage
becomes known.

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 2. Chain of Actions for Freight Forwarders
Record of Claims and Settlement
• It is recommended that the forwarder
keep a record of his contact, throughout
the claims process, with the insurance
company as well as all other parties
related including the authorities.
• Make certain to keep track of the specific
information such as whom you talked to,
when, what was discussed, etc.
• It is also advised to follow verbal claim
notification up with written notice.
• The insurer must acknowledge claim
notifications within 10 working days.

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 2. Chain of Actions for Freight Forwarders
Duty to Minimize Loss
• Once the event of damage, loss or
delay of cargo occurs, the insured
and his forwarder shall, and the
insurer may also, take reasonable
measures immediately in averting or
minimizing loss to the remaining
cargo, taking proper care of the
damaged cargo as well as keeping
any salvage.
• It is the responsibility of the insured
and his agent or forwarder, to take
measures to avoid or minimize any
loss.
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 2. Chain of Actions for Freight Forwarders
Duty to Minimize Loss
• Where possible, the insured and his
forwarder/agent shall also reduce the
possibility of damage to goods, for
example, by removing goods threatened
with damage or loss from the source of
the risk, such as a burning warehouse, by
claiming promptly on every culpable
party, etc.
• The measures so taken by the insured
and his forwarder/agent or by the
insurance company shall not be
considered respectively, as a waiver of
abandonment or as an acceptance of
their rights and/or obligations from the
insurance contract.
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 2. Chain of Actions for Freight Forwarders
Contractual Time-Bar issue
• In the event of cargo damage, loss,
shortage or delay, the forwarder,
representing the cargo interests, shall
be also aware of the contractual
time bar issue.
• After this certain period of time, the
rights to lodge a claim against a liable
party and have it compensated
concerning the damaged cargo will
no longer be lawfully supported.
• There are two time bar issues for
attention.
• It is important to keep both in mind.
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 2. Chain of Actions for Freight Forwarders
Contractual Time-Bar issue
• One is the time bar to claim the insurance
compensation from the insurance company as
the insured, at and after which time the
coverage will be considered void.
• The other is the time limit to file lawsuits
against the carrier as stipulated in the
transport contract between the carrier and the
shipper/consignee.
• After paying the insurance, the insurer
subrogates this right from the insured (cargo
interests) against the carrier.
• The pass of time bar in the transport contract
will prejudice the rights of the insurer derived
from the insurance contract.
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 2. Chain of Actions for Freight Forwarders
Contractual Time-Bar issue
• The time of validity of a The following are time limitations for placing carriers “on
claim under transport notice” of the nature and extent of the claim, in accordance
insurance is dependent with the relevant international conventions:
on the provisions of the
insurance contract, such
Ocean carrier One year from date of delivery
as a period of two years
counting from the time of Air carrier Pilferage and obvious damage - 7 Days
completion of discharge Hidden damage - 14 Days
of the insured goods from Non-delivery - 120 Days
the seagoing vessel at the
*Air carrier’s tariff may provide different time limits that prevail
final port of discharge.
over a bill of lading or oral representation

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 Chapter – 3 Duties of Freight Forwarder in case of Damage

Q&A
4/26/2019 Slide 148
 Reference Reading
DAMAGE SETTLEMENT WITH INSURANCE OF
GOODS
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 Damage Settlement with Insurance of Goods
1. Introduction
• When damage has occurred, a chain of activities will need to be taken. Among
others examples are:
✓ Action by the insured who has to produce particulars and material proof.
✓ Action by an expert, if not via a damage agent, who has to assess the damage.
✓ Action by a broker, if any, who has to gather the data and see to it that the data
also come in, and who has to make up the damage account and submit it to the
insurers.
✓ Action by the insurer who checks the damage account and further documentation
and who must judge whether the damage is covered. And, if it is the case, has to
pay the damage.
• A damage settlement can be simple, but also very complex. Amongst others, it
depends on the nature of the damage: What kind of damage or a combination of
damages it is.
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 Damage Settlement with Insurance of Goods
Onus of proof (burden of proof)
• In the event of loss of or damage to
the insured goods, those who are
supposed to have the right to
compensation must prove:
1. that he represents the insured
interest;
2. what the cause of the damage is
(whether it is a covered danger);
3. what the extent of the damage is;
4. in the event of total loss and no
news of the ship, that the shipping
has taken place with the ship
mentioned in the policy.

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 Damage Settlement with Insurance of Goods
Ad. 1 Interest
• Somebody has an interest in the cargoes or the subject-matter insured.
• When the damage happens he suffers damage to his means, which compensation
the insurer has taken upon him, at the moment the damage occurs.
Example:
• Mr Jansen sells a consignment wood to Mr Versteeg. At the moment of selling, the
wood is on a ship under way from Columbia to Amsterdam. If the wood gets lost
after the sale, Mr Versteeg has interest in the consignment wood. Not Mr Jansen,
because his means have not been reduced by the contingency. At the moment of
selling, the property interest goes over from Mr Jansen to Mr Versteeg. Mr
Versteeg is the interested party.
• His means have been reduced, because before the contingency he was the owner
of a consignment wood with a particular value and because after the contingency
he had no consignment wood anymore. Only Mr. Versteeg is therefore entitled to
damage compensation, but he will have to indicate his interest as owner.
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 Damage Settlement with Insurance of Goods
Ad. 2 Onus of proof of the insured with damage
• The general rule that everyone who makes a statement
must be able to prove it is also applicable to the insured.
• When he claims damage from the insurer, the onus of
proof that the cause of the damage is what he has been
insured against, rests on him.
• The insured must indicate that:
✓ he has suffered real damage and what the extent of the
damage is;
✓ the damage was caused by an incident that had been
uncertain at the time of taking out the insurance;
✓ the damage has occurred within the insurance period;
✓ the cause of the damage is a contingency covered by the
policy.
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 Damage Settlement with Insurance of Goods
Ad. 3 The extent of the damage
• The goods insurance agreement is a compensation contract.
• It aims to compensate the insured for the material loss that
he has suffered.
• Through the compensation received from the insurers, he
must be brought materially to the condition in which he
found himself before the disaster.
• The legislator has seen to it that the insured cannot obtain
any advantage from the insurance.
• Therefore, if the insured wants to claim damages under his
goods policy from the insurers, he will have to prove that he
has really suffered the damage and what the extent of the
damage is (for example by means of a report from an
expert).
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 Damage Settlement with Insurance of Goods
Ad. 4 Proof of shipping
• Proof that the shipping has occurred
with the ship mentioned in the policy
can be rendered by means of bill of
lading. The insured should also
consider the document to prove his
interest.
• Packaging and content form one
whole, so that insufficient packaging
can be regarded as “own
insufficiency” of the insured goods

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 2. Parties involved in damage of goods
Interested Parties
• Interested parties with damage of
goods can be:
✓ the insured (for example the
manufacturer, the exporter, the
wholesale dealer, the importer)
✓ the recipients of goods
• Only one of the two parties can claim
damages, namely the party who is
the interested party to the goods at
the time of the damage.

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 2. Parties involved in damage of goods
Other Parties ; The Insurer
• He assesses the damage, pays
compensation to the insured or
rejects the damage for reasons that
he must make known to the insured.

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 2. Parties involved in damage of goods
Other Parties ; The Insurance Broker (or Intermediate)
• When the insured reports the damage, the broker informs the insurer
about it.
• In the event of domestic damage, the insurer instructs him to appoint an
expert (provided by the insurer) to determine the cause and extent of the
damage or (in the event of little damage) make up the account of the
damage.
• In the event of damage abroad, the broker prepares the account of the
damage on the basis of the expert report and/or the Lloyd’s Survey report
and/or damage documents.
• He sends these documents to the particular insurers for approval or
payment of the damage.
• When he receives these back, he finalizes the claims settlement approved
by the insurers with the insured or other interested parties.
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 2. Parties involved in damage of goods
Other Parties ; The Expert
• The task of the expert involves the calculation of
the damage amount to the best of his knowledge.
• His report or expert survey report must also
contain everything required to give the insurer a
true picture of the nature and particulars of the
damage.
• In addition, the report contains all particulars
required to enable the broker to compile a
damage account.
• It must happen in such a manner that the insurer
can judge whether the claimed damage is for his
account or not.
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 2. Parties involved in damage of goods
Other Parties ; The Damage Agent
• With insurance of goods that must go
abroad, a stipulation is brought into the
policy that in the event of damage one has
to approach a person or firm mentioned by
name.
• This “damage agent” is in charge of
managing the interests of the insurer, and
his task is to determine the eventual
damage or have it determined by an expert
appointed by him.
• The damage agent has a great
responsibility. Exclusively according to his
report, the insurer must judge whether he
must pay the claimed damage or not.
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 2. Parties involved in damage of goods
Other Parties ; Claims Settling Agent or Claims Paying Agent
• Sometimes, the damage is made payable
abroad.
• In such cases, the agent mentioned in the
policy must not only initiate an investigation
into the cause of the damage and calculate
the extent thereof, but he also has the
authority to pay the damage.
• His responsibility is then even greater,
because he instead of the insurer must
decide independently whether damage is
payable under the policy or not.
• The damage agent, who has the authority
of the insurer, is called a “claims settling
agent” or “claims paying agent”

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 Reference Reading –
Damage Settlement with Insurance of Goods
Q&A
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 Chapter - 4

GENERAL AVERAGE
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 General Average
Learning Objectives :
• The student should understand the implications of general average, and gain
some knowledge about the most distinguished general average clauses York-
Antwerp Rules.
• The student should also have knowledge on the actions to be taken in case of
general average.

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 General Average
• General Average is the system whereby a ship owner can recover the extraordinary
expenses that he necessarily incurred following some maritime accident, in protecting
the cargo and/or preserving the ship.
• The costs are apportioned between the ship, its fuel and stores and the cargo (including
containers) in proportion to their values.
• General Average is almost as old as maritime transport itself and is well recognized in all
major shipping and trading jurisdictions.
• Thankfully, however, modern standards and technology make it comparatively rare, so
traders and forwarders are often unaware of the steps they have to take when
confronted by a GA situation.
• “The ancient principle of equity in which all parties in a sea adventure (ship, cargo, and
freight) proportionately share losses resulting from a voluntary and successful sacrifice
of part of the ship or cargo, to save the whole adventure from an impending peril, or
extraordinary expenses necessarily incurred for the joint benefit of ship and cargo”.

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 1. Basics of General Average
Objectives :
• The student should understand what
general average loss refers to, what
constitutes general average acts, and
what the conditions are to claim as
general average.
• The student should also gain some
knowledge about the most
distinguished general average clauses
York-Antwerp Rules.

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 What is General Average?
General Average Loss
• General average loss refers to deliberate
partial loss incurred as a result of the voluntary
actions of the ship-owner, or the ship’s master,
to save the voyage if it is in danger.
• If property is deliberately sacrificed for the
general benefit of the common adventure in
time of peril – say, for instance, cargo is
jettisoned to lighten a stranded ship, so
enabling her to be re-floated and saved,
together with the cargo remaining on board –
then the loss of the cargo jettisoned would be
a general average loss, to which the owners of
the property saved would contribute.
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 What is General Average?
General Average Act
• There are two types of general
average acts:
✓ Voluntary Sacrifice of a part of the
vessel or a part of the cargo, e.g.
jettison of property to stabilize the
vessel during heavy weather.
✓ Extraordinary Expense necessarily
incurred for the joint benefit of vessel
and cargo, e.g. towing charges
incurred to assist a disabled vessel to
a port of refuge.

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 What is General Average?
General Average Conditions
• General average requires three elements which are clearly stated by Mr. Justice
Grier in the case of “Barnard v. Adams”:
✓ First : A common danger: a danger in which vessel, cargo and crew all
participate; a danger imminent and apparently “inevitable,” except by
voluntarily incurring the loss of a portion of the whole to save the remainder.
✓ Second : There must be a voluntary jettison, jactus, or casting away, of some
portion of the joint concern for the purpose of avoiding this imminent peril or, in
other words, a transfer of the peril from the whole to a particular portion of the
whole.
✓ Third : This attempt to avoid the imminent common peril must be successful.

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 What is General Average?
General Average Condition

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 What is General Average?
General Average Clauses
• The various average clauses in the
insurance policy determine when
partial losses due to a named peril in
the policy are covered.
• Average clauses include general
average clauses and particular
average clauses i.e. F.P.A and W.P.A.
• In contrast to partial losses, a total
loss of an entire vessel or an entire
cargo shipment due to any one of the
perils listed in the insurance policy is
covered in full.

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 What is General Average?
Development of GA Clauses
• The first general average rules were agreed upon in
1860 as the Glasgow Rules.
• These were followed by the York Rules of 1864 and the
York/Antwerp Rules of 1877, subsequently revised in
1890, 1924, 1950, 1974 and 1994.
• Claims for general average were originally for jettison
of cargo, cutting away of the mast or cutting of anchor
cables or any acts carried out for the common safety
in order to avoid imminent shipwreck caused by a peril
of the sea.
• The need for an imminent peril was stressed.
• Since 1890, step by step the general average
expands to cover more losses and expenses.
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 What is General Average?
Development of GA Clauses
• More losses and expenses as listed below are considered as general average:
✓ the cost of discharging cargo, at a port of loading, call or refuge, when the
discharge was “necessary for the common safety” or to permit repairs “necessary
for the safe prosecution of the voyage” (Rule X(a))
✓ costs of “handling on board”, as well as actual discharge, including the handling of
fuel and stores, as well as cargo (Rule X(a))
✓ expenses of entering a port of refuge, where “necessary for the common safety”,
as well as charges for leaving such a port (Rule X(a))
✓ ship’s detention in a port of refuge when it was “necessary for the common
safety” or to permit repairs “necessary for the safe prosecution of the voyage”, and
wages and maintenance of the crew during that “extra period of detention” (Rule
XI(b))
✓ loss of or damage to cargo incurred in the act of discharging, storing, reloading
and stowing (Rule XII); etc.
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 What is General Average?
York-Antwerp Rules
• Briefly the York-Antwerp Rules
consist of two sets of rules, lettered
rules (A, B, C, etc.) and numbered
rules (I, II, III, etc.).
• The lettered rules define general
average, and the circumstances in
which a loss, damage or expense
can be counted as a general average
loss.
• The numbered rules then go on to
deal with most of the situations
leading to a “general average”
situation.

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 What is General Average?
York-Antwerp Rules, Number Rules
• These include rules about:- • The Interpretation Rule in York-
✓ the jettison of cargo, Antwerp Rules 1950 gives the
✓ sacrifice of part of the ship, numbered rules precedence
over the lettered rules. The
✓ damage caused by the extinguishing of lettered rules were to be applied
fires on shipboard, only where the numbered rules
✓ voluntary stranding, did not fully cover a particular
✓ salvage remuneration, case.
✓ expenses of lightening a ship,
✓ ship’s materials and stores used as fuel,
✓ expenses at a port of refuge,
✓ wages and support of a crew for a voyage
prolonged because of the need to shelter,
etc.
4/26/2019 Slide 175
 What is General Average?
York-Antwerp Rules
• The Interpretation Rule of 1950
reads:
• “In the adjustment of general
average the following lettered and
numbered Rules shall apply to the
exclusion of any Law and Practice
inconsistent therewith.”
• “Except as provided by the numbered
rules, general average shall be
adjusted according to the lettered
Rules.”

4/26/2019 Slide 176

 What is General Average?
York-Antwerp Rules
• The Interpretation Rule has been amended by the
York/Antwerp Rules 1994, to provide that the Rule Paramount
(requiring any sacrifice or expenditure to be reasonably made
or incurred), as well as the numbered rules, take precedence
over the lettered rules in cases of conflict between them.
• In general, however, the numbered rules continue to override
the lettered rules to the extent of any inconsistency between
them.
• Thus, detail was placed before principle. In consequence,
general average may now be declared whether or not, as
normally required under Rule A, there is
a) an extraordinary sacrifice or expenditure made for the
common safety or
b) a peril, unless the numbered rule under which the claim is
4/26/2019 made so stipulates. Slide 177
 2. General Average Adjustment
Objectives :
• The student should be aware of the
actions to be taken in the event of
general average

4/26/2019 Slide 178

 Declaration of General Average
• The process of adjusting a general average
loss begins with the “declaration” of
general average, which is ordinarily made
by the ship owner through his
underwriters.
• General average claims must be
submitted in writing to the average
adjuster within 12 months of the date of
termination of the common maritime
adventure.
• Failing such notification, or evidence of
the claims, the average adjuster may
estimate the allowance or the
contributory value on the basis of
information available to him.
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 Average Adjuster
• Average adjuster is a marine claims
specialist who prepares statements
of Particular or General Average, etc.
concerning claims for losses,
expenses and contributions.
• The person is usually appointed by
the vessel owner and is usually a
member of the Association of
Average Adjusters.

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 Requirement for General Average Bond
• Before an average adjustment
can be prepared, in particular
where cargo has been sacrificed,
a general average bond or general
average agreement is usually
required by the ship owner, which
binds the owner of the goods to
pay a proportion of the general
average.

4/26/2019 Slide 181

 General Average Bond
• General average bond is a guarantee by the owner of the cargo (usually the consignee)
to pay that proportion of the general average contribution, salvage, or special charges
owed by the shipment, and to give information about its value so an average
adjustment can be prepared.
• The vessel owner will not release cargo for delivery to the consignee until the cargo
owner signs this average bond, which is prepared by the general average adjuster.
• The adjuster uses the carrier’s records (usually the “ocean bills” or manifests) to
identify from whom they should be demanding GA Bonds.
• The adjuster then will send a letter to interested parties demanding a bond in respect
of the cargo.
• The letter will normally give brief details of the incident and will ask for a declaration of
the value of the cargo and also request the party to sign (and get countersigned) the
GA Bond form.
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 General Average Bond
Below is an example of the General Average Bond

4/26/2019 Slide 183

 General Average Bond
What to do as Forwarder
• As a forwarder, when the letter from the adjuster arrives, it is important to know
that it’s a matter of the cargo owners and their insurers, and there is no need for
the forwarder to sign the GA Bond or GA Guarantee forms.
• The forwarder shall however, let his clients know what has happened and send
each of them a copy of the letters from the adjuster.
• Explain that they have a responsibility for the GA contributions.
• If the cargo is sold on Ex-Works, FOB or CAF terms, they should pass the letters
onto their customers (the buyers/ consignees).

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 General Average Bond
What to do as Forwarder
• Standard marine cargo policies cover the
costs of GA contributions so that the
insurers will take over the detailed work
of providing the guarantee and dealing
with the adjuster.
• If the cargo is uninsured the evidence of
the value and guarantee will need to be
signed by an appropriate guarantor, such
as a bank.
• The forwarder shall further make clear to
his clients that he will not be able to
release the cargo until the guarantee has
been returned and accepted.
4/26/2019 Slide 185
 General Average Bond
What to do as Forwarder
• The forwarder’s agent at destination
may be able to assist in obtaining the
declarations and guarantees.
• The forwarder shall ask for the signed
guarantee to be returned to him.
• Check that everything is received for
all the cargo in the container and
send the documents to the adjuster,
who will then arrange for the cargo
to be released at destination.

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 General Average Bond
General Average Adjustment
• If a GA situation arises, the ship
owner will normally “declare GA” and
appoint a firm of Average Adjusters
to collect the GA contributions from
all the parties liable to pay.
• The adjuster works out how much
each party is liable to contribute by
establishing the total value of the
property rescued and the values of
the sacrifices and expenditure.
• This process takes a long time
(typically two years).

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 General Average Bond
General Average Adjustment
• Absent any clause on general average
in the contract of carriage, general
average is ordinarily adjusted at the
place where the voyage terminates,
according to the law applicable
there.
• The contract, however, usually
provides that the adjustment is
conducted according to the
York/Antwerp Rules, unless the
parties choose another mode of
adjustment.

4/26/2019 Slide 188

 General Average Bond
General Average Adjustment
• Rule G of the York/Antwerp Rules
1994 provides in part:
• “General average shall be
adjusted as regards both loss and
contribution upon the basis of
values at the time and place when
and where the adventure ends.”
• “This rule shall not affect the
determination of the place at
which the average statement is to
be made up.”

4/26/2019 Slide 189

 General Average Bond
General Average Adjustment
• The value of property sacrificed for
the common safety and the
corresponding contributory values of
the ship and remaining cargo are
measured as at the date of discharge
at the port of destination or as of
the date on which the voyage was
broken up.
• The same rule applies to
expenditures.
• More detailed provisions are given in
York/Antwerp Rules 1994.

4/26/2019 Slide 190

 General Average Bond
General Average Adjustment
• Provisions
➢ on computing the value of cargo lost or
damaged by sacrifice are at Rule XVI,
➢ on the assessment of damage to the ship, at
Rule XVIII.
➢ Contributory values are calculated according
to Rule XVII.
➢ Special rules also deal with undeclared or
wrongfully declared cargo (Rule XIX)
➢ with mails, passengers’ luggage, personal
effects and accompanied private motor
vehicles (Rule XVII, last para.), as well as
➢ with commissions and interest (Rules XX and
XXI).
4/26/2019 Slide 191
 Chapter 4 – General Average
Q&A
4/26/2019 Slide 192
 Annex - 1

P & I INSURANCE
4/26/2019 Slide 193
 Annex - 2
STANDARD CONDITIONS GOVERNING THE FIATA
MULTIMODAL TRANSPORT BILL OF LADING
4/26/2019 Slide 194
 Standard Conditions Governing the
FIATA MULTIMODAL TRANSPORT BILL OF LADING

4/26/2019 Slide 195

 Standard Conditions Governing FBL
Definitions
«Freight Forwarder» means the «Consignee» means the person entitled
Multimodal Transport Operator who to receive the goods from the Freight
issues this FBL and is named on the face Forwarder.
of it and assumes liability for the «Taken in charge» means that the goods
performance of the multimodal transport have been handed over to and accepted
contract as a carrier. for carriage by the Freight Forwarder at
«Merchant» means and includes the the place of receipt evidenced in this
Shipper, the Consignor, the Consignee, FBL.
the Holder of this FBL, the Receiver and «Goods» means any property including
the Owner of the Goods. live animals as well as containers, pallets
«Consignor» means the person who or similar articles of transport or
concludes the multimodal transport packaging not supplied by the Freight
contract with the Freight Forwarder. Forwarder, irrespective of whether such
property is to be or is carried on or under
deck.
4/26/2019 Slide 196
 Standard Conditions Governing FBL
1. Applicability
• Notwithstanding the heading «FIATA
Multimodal Transport Bill of Lading
(FBL)» these conditions shall also
apply if only one mode of transport is
used.

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 Standard Conditions Governing FBL
2. Issuance of this FBL
2.1. By issuance of this FBL the Freight Forwarder
a) undertakes to perform and/or in his own name to
procure the performance of the entire transport, from
the place at which the goods are taken in charge (place
of receipt evidenced in this FBL) to the place of delivery
designated in this FBL;
b) assumes liability as set out in these conditions.

2.2. Subject to the conditions of this FBL the Freight

Forwarder shall be responsible for the acts and omission
of his servants or agents acting within the scope of their
employment, or any other person of whose services he
makes use for the performance of the contract
evidenced by this FBL, as if such acts and omissions were
his own.
4/26/2019 Slide 198
 Standard Conditions Governing FBL
3. Negotiability and title to the goods
3.1. This FBL is issued in a negotiable form unless it is marked
«non negotiable». It shall constitute title to the goods and
the holder, by endorsement of this FBL, shall be entitled to
received or to transfer the goods herein mentioned.

3.2. The information in this FBL shall be prima facie evidence

of taking in charge by the Freight Forwarder of the goods as
described by such information unless a contrary indication,
such as «shipper’s weight, load and count», «shipper-
packed container» or similar expressions, has been made in
the printed text or superimposed on this FBL. However, proof
to the contrary shall not be admissible when the FBL has
been transferred to the consignee for valuable consideration
who in good faith has relied and acted thereon.
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 Standard Conditions Governing FBL
4. Dangerous Good and Indemnity
4.1. The Merchant shall comply with rules which are mandatory according to the
national law or by reason of International Convention, relating to the carriage of
goods of a dangerous nature, and shall in any case inform the Freight Forwarder in
writing of the exact nature of the danger, before goods of a dangerous nature are
taken in charge by the Freight Forwarder and indicate to him, if need be, the
precautions to be taken.

4.2. If the Merchant fails to provide such information and the Freight Forwarder is
unaware of the dangerous nature of the goods and the necessary precautions to be
taken and if, at any time, they are deemed to be a hazard to life or property, they may
at any place be unloaded, destroyed or rendered harmless, as circumstances may
require, without compensation. The Merchant shall indemnify the Freight Forwarder
against all loss, damage, liability, or expense arising out of their being taken in charge,
or their carriage, or of any service incidental thereto. The burden of proving that the
Freight Forwarder knew the exact nature of the danger constituted by the carriage of
the said goods shall rest on the Merchant.
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 Standard Conditions Governing FBL
4. Dangerous Good and Indemnity
4.3. If any goods shall become a danger
to life or property, they may in like
manner be unloaded or landed at any
place or destroyed or rendered harmless.
If such danger was not caused by the
fault and neglect of the Freight
Forwarder he shall have no liability and
the Merchant shall indemnify him
against all loss, damage, liability and
expense arising therefrom.

4/26/2019 Slide 201

 Standard Conditions Governing FBL
5. Description of Goods and Merchant’s Packing and Inspection
5.1. The Consignor shall be deemed to have
guaranteed to the Freight Forwarder the accuracy,
at the time the goods were taken in charge by the
Freight Forwarder, of all particulars relating to the
general nature of the goods, their marks, number,
weight, volume and quantity and, if applicable, to
the dangerous character of the goods, as
furnished by him or on his behalf for insertion on
the FBL. The Consignor shall indemnify the Freight
Forwarder against all loss, damage and expense
resulting from any inaccuracy or inadequacy of
such particulars. The Consignor shall remain liable
even if the FBL has been transferred by him. The
right of the Freight Forwarder to such an
indemnity shall in no way limit his liability under
this FBL to any person other than the Consignor.
4/26/2019 Slide 202
 Standard Conditions Governing FBL
5. Description of Goods and Merchant’s Packing and Inspection
• 5.2. The Freight Forwarder shall not be liable for
any loss, damage or expense caused by defective
or insufficient packing of goods or by inadequate
loading or packing within containers or other
transport units when such loading or packing has
been performed by the Merchant or on his
behalf by a person other than the Freight
Forwarder, or by the defect or unsuitability of the
containers or other transport units supplied by
the Merchant, or if supplied by the Freight
Forwarder if a defect or unsuitability of the
container or other transport unit would have
been apparent upon reasonable inspection by
the Merchant. The Merchant shall indemnify the
Freight Forwarder against all loss, damage,
4/26/2019
liability and expense so caused. Slide 203
 Standard Conditions Governing FBL
6. Freight Forwarder’s Liability
6.1. The responsibility of the Freight Forwarder for the goods under
these conditions covers the period from the time the Freight
Forwarder has taken the goods in his charge to the time of their
delivery.

6.2. The Freight Forwarder shall be liable for loss of or damage to the
goods as well as for delay in delivery if the occurrence which caused
the loss, damage or delay in delivery took place while the goods were
in his charge as defined in Clause 2.1.a, unless the Freight Forwarder
proves that no fault or neglect of his own, his servants or agents or
any other person referred to in Clause 2.2. has caused or contributed
to such loss, damage or delay. However, the Freight Forwarder shall
only be liable for loss following from delay in delivery if the
Consignor has made a declaration of interest in timely delivery which
has been accepted by the Freight Forwarder and stated in this FBL.
4/26/2019 Slide 204
 Standard Conditions Governing FBL
6. Freight Forwarder’s Liability
6.3. Arrival times are not guaranteed by the Freight
Forwarder. However, delay in delivery occurs when
the goods have not been delivered within the time
expressly agreed upon or, in the absence of such
agreement, within the time which would be
reasonable to require of a diligent Freight
Forwarder, having regard to the circumstances of
the case.

6.4. If the goods have not been delivered within

ninety consecutive days following such date of
delivery as determined in Clause 6.3., the claimant
may, in the absence of evidence to the contrary,
treat the goods as lost.
4/26/2019 Slide 205
 Standard Conditions Governing FBL
6. Freight Forwarder’s Liability
6.5. When the Freight Forwarder establishes that, in the circumstances
of the case, the loss or damage could be attributed to one or more
causes or events, specified in a – e of the present clause, it shall be
presumed that it was so caused, always provided, however, that the
claimant shall be entitled to prove that the loss or damage was not, in
fact, caused wholly or partly by one or more of such causes or events:
a) an act or omission of the Merchant, or person other than the Freight
Forwarder acting on behalf of the Merchant or from whom the Freight
Forwarder took the goods in charge;
b) insufficiency or defective condition of the packaging or marks
and/or numbers;
c) handling, loading, stowage or unloading of the goods by the
Merchant or any person acting on behalf of the Merchant;
d) inherent vice of the goods;
e) strike, lockout, stoppage or restraint of labour.
4/26/2019 Slide 206
 Standard Conditions Governing FBL
6. Freight Forwarder’s Liability
6.6. Defenses for carriage by sea or inland waterways
Notwithstanding Clauses 6.2, 6.3. and 6.4. the Freight
Forwarder shall not be liable for loss, damage or
delay in delivery with respect to goods carried by sea
or inland waterways when such loss, damage or delay
during such carriage has been caused by:
a) act, neglect or default of the master, mariner, pilot
or the servants of the carrier in the navigation or in
the management of the ship,
b) fire, unless caused by the actual fault or privity of
the carrier, however, always provided that whenever
loss or damage has resulted from unseaworthiness of
the ship, the Freight Forwarder can prove that due
diligence has been exercised to make the ship
seaworthy at the commencement of the voyage.
4/26/2019 Slide 207
 Standard Conditions Governing FBL
7. Paramount Clauses
7.1. These conditions shall only take effect to the extent that they are not contrary to the
mandatory provisions of International Conventions or national law applicable to the contract
evidenced by this FBL.

7.2. The Hague Rules contained in the International Convention for the unification of certain
rules relating to Bills of Lading, dated Brussels 25th August 1924, or in those countries where
there are already in force the Hague-Visby Rules contained in the Protocol of Brussels, dated
23rd February 1968, as enacted in the Country of Shipment, shall apply to all carriage of
goods by sea and also to the carriage of goods by inland waterways, and such provisions shall
apply to all goods whether carried on deck or under deck.

7.3. The Carriage of Goods by Sea Act of the United States of America (COGSA) shall apply to
the carriage of goods by sea, whether on deck or under deck, if compulsorily applicable to this
FBL or would be applicable but for the goods being carried on deck in accordance with a
statement on this FBL.
4/26/2019 Slide 208
 Standard Conditions Governing FBL
8. Limitation of Freight Forwarder’s Liability
8.1. Assessment of compensation for loss of or
damage to the goods shall be made by reference
to the value of such goods at the place and time
they are delivered to the consignee or at the
place and time when, in accordance with this
FBL, they should been so delivered.

8.2. The value of the goods shall be determined

according to the current commodity exchange
price or, if there is no such price, according to
the current market price or, if there are no such
prices, by reference to the normal value of
goods of the same name and quality.
4/26/2019 Slide 209
 Standard Conditions Governing FBL
8. Limitation of Freight Forwarder’s Liability
8.3. Subject to the provisions of sub-clauses 8.4. to 8.9. inclusive, the
Freight Forwarder shall in no event be or become liable for any loss
of or damage to the goods in an amount exceeding the equivalent of
666.67 SDR per package or unit or 2 SDR per kilogramme of gross
weight of the goods lost or damaged, whichever is the higher,
unless the nature and value of the goods shall have been declared
by the Consignor and accepted by the Freight Forwarder before the
goods have been taken in his charge, or the ad valorem freight
(freight base on value of goods) rate paid, and such value is stated in
the FBL by him, then such declared value shall be the limit.

8.4. Where a container, pallet or similar article of transport is loaded

with more than one package or unit, the packages or other shipping
units enumerated in the FBL as packed in such article of transport
are deemed packages or shipping units. Except as aforesaid, such
4/26/2019 article of transport shall be considered the package or unit. Slide 210
 Standard Conditions Governing FBL
8. Limitation of Freight Forwarder’s Liability
8.5. Notwithstanding the above
mentioned provisions, if the multimodal
transport does not, according to the
contract, include carriage of goods by sea
or by inland waterways, the liability of
the Freight Forwarder shall be limited to
an amount not exceeding 8.33 SDR per
kilogramme of gross weight of the goods
lost or damaged.

4/26/2019 Slide 211

 Standard Conditions Governing FBL
8. Limitation of Freight Forwarder’s Liability
8.6. a) When the loss of or damage to the goods occurred during one
particular stage of the multimodal transport, in respect of which an
applicable international convention or mandatory national law would
have provided another limit of liability if a separate contract of
carriage had been made for that particular stage of transport, then the
limit of the Freight Forwarder’s liability for such loss or damage shall
be determined by reference to the provisions of such convention or
mandatory national law.
b) Unless the nature and value of the goods shall have been declared
by the Merchant and inserted in this FBL, and the ad valorem freight
rate paid, the liability of the Freight Forwarder under COGSA, where
applicable, shall not exceed US$ 500 per package or, in the case of
goods not shipped in packages, per customary freight unit.
4/26/2019 Slide 212
 Standard Conditions Governing FBL
8. Limitation of Freight Forwarder’s Liability
8.7. If the Freight Forwarder is liable in
respect of loss following from delay in
delivery, or consequential loss or damage
other than loss of or damage to the
goods, the liability of the Freight
Forwarder shall be limited to an amount
not exceeding the equivalent of twice
the freight under the multimodal
contract for the multimodal transport
under this FBL.

4/26/2019 Slide 213

 Standard Conditions Governing FBL
8. Limitation of Freight Forwarder’s Liability
8.8. The aggregate liability of Freight
Forwarder shall not exceed the limits of
liability for total loss of the goods.

8.9. The Freight Forwarder is not entitled to

the benefit of the limitation of liability if it is
proved that the loss, damage or delay in
delivery resulted from a personal act or
omission of the Freight Forwarder done with
the intent to cause such loss, damage or delay,
or recklessly and with knowledge that such
loss, damage or delay would probably result.
4/26/2019 Slide 214
 Standard Conditions Governing FBL
9. Applicability to Actions in Tort
These conditions apply to all claims
against the Freight Forwarder
relating to the performance of the
contract evidenced by this FBL,
whether the claim be founded in
contract or in tort.

4/26/2019 Slide 215

 Standard Conditions Governing FBL
10. Liability of Servants and other Persons
10.1. These conditions apply whenever claims relating to the
performance of the contract evidenced by this FBL are made against any
servant, agent or other person (including any independent contractor)
whose services have been used in order to perform the contract,
whether such claims are founded in contract or in tort, and the
aggregate liability of the Freight Forwarder and of such servants, agents
or other persons shall not exceed the limits in clause 8.

10.2. In entering into this contract as evidenced by this FBL, the Freight
Forwarder, to the extent of these provisions, does not only act on his
own behalf, but also as agent or trustee for such persons, and such
persons shall to this extent be or be deemed to be parties to this
contract.
4/26/2019 Slide 216
 Standard Conditions Governing FBL
10. Liability of Servants and other Persons
10.3. However, if it is proved that loss of or such loss or
damage to the goods resulted from a personal act or
omission of such a person referred to in Clause 10.1.,
done with intent to cause damage, or recklessly and with
knowledge that damage would probably result, such
person shall not be entitled to benefit of limitation of
liability provided for in Clause 8.

10.4. The aggregate of the amounts recoverable from the

Freight Forwarder and the persons referred to in Clauses
2.2. and 10.1 shall not exceed the limits provided for in
these conditions.
4/26/2019 Slide 217
 Standard Conditions Governing FBL
11. Method and Route of Transportation
Without notice to the Merchant,
the Freight Forwarder has the
liberty to carry the goods on or
under deck and to choose or
substitute the means, route and
procedure to be followed in the
handling, stowage, storage and
transportation of the goods.

4/26/2019 Slide 218

 Standard Conditions Governing FBL
12. Delivery
12.1. Goods shall be deemed to be delivered when
they have been handed over or placed at the
disposal of the Consignee or his agent in accordance
with this FBL, or when the goods have been handed
over to any authority or other party to whom,
pursuant to the law or regulation applicable at the
place of delivery, the goods must be handed over, or
such other place at which the Freight Forwarder is
entitled to call upon the Merchant to take delivery.

12.2. The Freight Forwarder shall also be entitled to

store the goods at the sole risk of the Merchant, and
the Freight Forwarder’s liability shall cease, and the
cost of such storage shall be paid, upon demand, by
the Merchant to the Freight Forwarder.
4/26/2019 Slide 219
 Standard Conditions Governing FBL
12. Delivery
12.3. If at any time the carriage under this FBL is or is likely to be
affected by any hindrance or risk of any kind (including the condition
of the goods) not arising from any fault or neglect of the Freight
Forwarder or a person referred to in Clause 2.2. and which cannot be
avoided by the exercise of reasonable endeavors the Freight
Forwarder may: abandon the carriage of the goods under this FBL
and, where reasonably possible, place the goods or any part of them
at the Merchant’s disposal at any place which the Freight Forwarder
may deem safe and convenient, whereupon delivery shall be deemed
to have been made, and the responsibility of the Freight Forwarder
in respect of such goods shall cease.

In any event, the Freight Forwarder shall be entitled to full freight

under this FBL and the Merchant shall pay any additional costs
resulting from the above mentioned circumstances.
4/26/2019 Slide 220
 Standard Conditions Governing FBL
13. Freight and Charges
13.1. Freight shall be paid in cash, without any reduction or
deferment on account of any claim, counterclaim or set-off, whether
prepaid or payable at destination. Freight shall be considered as
earned by the Freight Forwarder at the moment when the goods
have been taken in his charge, and not to be returned in any event.

13.2. Freight and all other amounts mentioned in this FBL are to be
paid in the currency named in this FBL or, at the Freight Forwarder’s
option, in the currency of the country of dispatch or destination at
the highest rate of exchange for bankers sight bills current for
prepaid freight on the day of dispatch and for freight payable at
destination on the day when the Merchant is notified on arrival of
the goods there or on the date of withdrawal of the delivery order,
whichever rate is the higher, or at the option of the Freight
Forwarder on the date of this FBL.
4/26/2019 Slide 221
 Standard Conditions Governing FBL
13. Freight and Charges
13.3. All dues, taxes and charges or other expenses
in connection with the goods shall be paid by the
Merchant. Where equipment is supplied by the
Freight Forwarder, the Merchant shall pay all
demurrage and charges which are not due to a
fault or neglect of the Freight Forwarder

13.4. The Merchant shall reimburse the Freight

Forwarder in proportion to the amount of freight
for any costs for deviation or delay or any other
increase of costs of whatever nature caused by war,
warlike operations, epidemics, strikes, government
directions or force majeure (unforeseeable
circumstances that prevent someone from fulfilling
a contract).
4/26/2019 Slide 222
 Standard Conditions Governing FBL
13. Freight and Charges
13.5. The Merchant warrants the correctness of the declaration of contents, insurance,
weight, measurements or value of the goods but the Freight Forwarder has the liberty
to have the contents inspected and the weight, measurements or value verified. If on
such inspection it is found that the declaration is not correct it is agreed that a sum
equal either to five times the difference between the correct figure and the freight
charged, or to double the correct freight less the freight charged, whichever sum is the
smaller, shall be payable as liquidated damages to the Freight Forwarder for his
inspection costs and losses of freight on other goods notwithstanding any other sum
having been stated on this FBL as freight payable.

13.6. Despite the acceptance by the Freight Forwarder of instructions to collect freight,
charges or other expenses from any other person in respect of the transport under this
FBL, the Merchant shall remain responsible for such monies on receipt of evidence of
demand and the absence of payment for whatever reason.
4/26/2019 Slide 223
 Standard Conditions Governing FBL
14. Lien
The Freight Forwarder shall have a lien
on the goods and any documents relating
there to for any amount due at any time
to the Freight Forwarder from the
Merchant including storage fees and the
cost of recovering same, and may
enforce such lien in any reasonable
manner which he may think fit.

Lien : - a right to keep possession of

property belonging to another person
until a debt owed by that person is
discharged.

4/26/2019 Slide 224

 Standard Conditions Governing FBL
15. General Average
The Merchant shall indemnify the Freight
Forwarder in respect of any claims of a
General Average nature which may be
made on him and shall provide such
security as may be required by the
Freight Forwarder in this connection.

4/26/2019 Slide 225

 Standard Conditions Governing FBL
16. Notice
16.1. Unless notice of loss of or damage to the
goods, specifying the general nature of such loss
or damage, is given in writing by the consignee
to the Freight Forwarder when the goods are
delivered to the consignee in accordance with
clause 12, such handing over is prima facie
evidence of the delivery by the Freight
Forwarder of the goods as described in this FBL.

16.2. Where the loss or damage is not apparent,

the same prima facie effect shall apply if notice
in writing is not given within 6 consecutive days
after the day when the goods were delivered to
the consignee in accordance with clause 12.
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 Standard Conditions Governing FBL
17. Time bar
The Freight Forwarder shall, unless
otherwise expressly agreed, be
discharged of all liability under these
conditions unless suit is brought within 9
months after the delivery of the goods,
or the date when the goods should have
been delivered, or the date when in
accordance with clause 6.4. failure to
deliver the goods would give the
consignee the right to treat the goods as
lost.

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 Standard Conditions Governing FBL
19. Jurisdiction and applicable law
• Actions against the Freight
Forwarder may be instituted only
in the place where the Freight
Forwarder has his place of
business as stated on the reverse
of this FBL and shall be decided
according to the law of the
country in which that place of
business is situated.

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 Standard Conditions Governing FBL
18. Partial Invalidity
If any clause or a part thereof is held
to be invalid, the validity of this FBL
and the remaining clauses or a part
thereof shall not be affected.

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 Standard Conditions Governing the
FIATA MULTIMODAL TRANSPORT BILL OF LADING
The ICC logo denotes that this
document has been deemed by the
ICC to be in conformity with the
UNCTAD/ICC Rules for Multimodal
Transport Documents. The ICC logo
does not imply ICC endorsement of
the document nor does it in any way
make the ICC party to any possible
legal action resulting from the use of
this document.

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 Annex - 3
FORWARDER VS. CARRIER AND FORWARDER’S
LIABILITY INSURANCE POLICY
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 Annex - 4

MOST COMMON KINDS OF POLICIES IN

CARGO INSURANCE
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 Annex - 5

INSTITUTE CARGO CLAUSES

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 Thank You

MODULE – 9
TRANSPORT INSURANCE
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