Cargo insurance - Universitetet i oslo Marine insurance 3 Overview o Duties of disclosure and due...
Transcript of Cargo insurance - Universitetet i oslo Marine insurance 3 Overview o Duties of disclosure and due...
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Cargo insurance
Professor Trine-Lise WilhelmsenScandinavian Institute of
Maritime Law
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Overview o What is cargo insuranceo The legal sources o The insurance contracto Insurable value and the sum insuredo Scope of cover
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Overview o Duties of disclosure and due careo The period of insuranceo The liability of the insurer
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1. What is cargo insurance
o Covers cargo under transport from A to B (normally seller to buyer)
o Casualty (damage and loss) insuranceo Includes buyer’s profit o But not
o loss of income in generalo owner’s liability
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Cargo insurance
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InsuranceLossDamage
Contract of sale
Cargo insurance
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Contract of sale - transfer of risk
InsuranceLossDamage income
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2 The legal sources
o FAL (ICA) 1989
o The Norwegian Cargo Clauses
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2.1 FAL (ICA) 1989o Starting point: Mandatory, § 1-3.1o But exception for insurance of
international transport of cargo, § 1-3.2 (e)
o Applies to national transport of cargo o The approach in the CICG:
o Follows ICA o with certain exceptions for international
transport
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2.2 Norwegian Cargo Clauses (CICG)
o Conditions relating to insurance for the carriage of goods
o Many of the same characteristics as NMIP
o Buto Less extensive commentarieso A stronger connection to the ICA
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3. The insurance contract
o The parties to the insurance contracto Interests covered by the insuranceo Effecting the contract
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3.1 The parties to the contract
Insurer
Person effecting the insurance
The assured
Right to
Compensation
Insurance contract
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Insurance of third party interest
Insurer
Person effecting the insurance
The assured
Right to
Compensation
Insurance contract
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Insurance of third party interest, CICG § 9
Company
Seller Seller
Insurance contract
Right to compensation
Buyer
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3.2 Concluding the Contract
o Insurance certificate, ICA § 2-2 o Insurance document , CICG § 1 nr. 4
o Single shipment = Insurance certificateo Open cover/floating policies =
o certificate for the whole periodo + document for each shipment
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Questiono A safety regulation is inserted in the
insurance certificate agreed between the insurer and mother company A of carrier B for a one year transport policy, but not in the insurance document for a transport performed by carrier B.
o May the safety regulation be invoked against B?
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4 Insurable value and sum insured
o Insurable value, CICG §29o Starting point for seller and buyer: o Unless otherwise agreed, the insurable value
shall be deemed to be the market value of the goods at the place of loading at the inception of this insurance. If the goods are sold, the market price shall be calculated on the basis of the invoice value.
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4 Insurable value and sum insured
If compensation for the goods is payable to the buyer, the insurable value shall, if applicable, also include:
(a) charges incurred by him in connection with the shipment,(b) customs duty and other ordinary costs related to the
transit,(c) the insurance premium which he is to pay,(d) freight which he has paid or will have to pay,(e) his anticipated profit. Unless otherwise agreed, the
insurable value of such anticipated profit shall be 10 per cent of the insurable value of the goods as such.
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Insurable value, § 29
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Buyer and seller:Market value at place of loading
Buyer:+ charges+ customs + insurance premium+ freight+ profit
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4 Insurable value and sum insured
o Sum insuredo Under-insurance, CICG § 30 o Over-insurance, CICG § 31o Limit; CICG §§ 32-33:
o Sum insured for casualties, § 32o + losses according to §§ 39-43, i.e. salvage
measures etc. o + interest according to § 49
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Under insurance, CICG § 30
Insurablevalue:1000
Sum insured:
500
Potential loss
Compensation
500/1000 = 50 %Of each damage
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Over insurance, CICG § 31
Sum insured:
1000
Insurablevalue:
660
Basis for premium
Max. compensation
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5. Perils insured againsto Perils insured against
o Three levels of coverageo International approach o Transport accident – C clauses, § 5 o Extended transport accident – B
clauses, § 4 o All risks coverage, A clauses, § 3
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Questiono A container of furniture was
transported by MS Ship. During loading MS Ship heeled over and the container fell overboard and was damaged. The owner of the furniture had transport insurance on C clauses. Is the damage to the furniture covered.
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5. Perils insured againsto Risks excluded, § 18
o Inherent nature of goods and ordinary loss in weight and volume (1 and 2)
o Illegal activity (4)o Delay (5) o War and similar perils (3, 6, 7, 8-11)
o Other exclusions, § 17 and § 19.
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Question o A package containing jewellery and
pearls were imported to Norway by Ms Glitter without payment of VAT. The package was insured by AS Transport insurance. The package was stolen.
o Can AS Transport insurance avoid liability?
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Questiono A package containing fresh food was
delayed because there was no room in the ferry the truck was supposed to have taken. The fruit was already destroyed when the delay took place. Is this loss covered under the transport insurance?
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Question o A ship was captured by pirates
outside Nigeria. The pirates stole the oil cargo on board. The shipment was insured. Is the theft covered by CICG?
o Does it matter whether insurance was effected on A, B or C clauses?
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6. Duty of disclosure and due care
o Introductiono Duty of disclosureo Safety regulationso Identification
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6.1 Introduction o Follows ICAo But:
o Stricter safety-regulation for international transport
o Suspension of insurance in case of delay
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6.2 Duty of disclosure
o What and whoo Wheno Sanctions
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6.2.1 What and who o CICG § 12/ICA § 4-1:
o Answering questions (Passive duty of disclosure)
o At the time of conclusion of contracto But: duty to make correctionso Addressed to person effecting the
insuranceo CICG § 13: Special rule for the
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6.2.2 When: time of the duty of disclosure
Factual circumstances Good faith
When contract is entered All the timeBut: Only for factual circumstances at Contract point
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6.2.3 Sanctions o Fraud, ICA § 4-2 and § 4-3:
o No liabilityo Termination
o More than a little to blame, ICA § 4-2 and § 4-3o Reduced liability o Cancellation, 14 days notice
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6.2.3 Sanctions o Less than a little to blame
o Full liabilityo But: Cancellation, 14 days notice, ICA §
4-3o Conditions to invoke, ICA § 4-4
o No knowledgeo Significanceo Notification
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Question o A effected insurance for transport of several
containers without informing the insurer that the carrying vessel did not have a valid ISM certificate. No questions were asked during the negotiations. The cargo was damaged during the transport due to heavy weather.
o Can the insurer invoke breach of the duty of disclosure?
o If so; what sanction may be used?
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6.3 Safety regulation o Concept; National transport: § 21.1.1:
o § 22 – unsuitable means of transporto § 23 – marking and packing of goods o § 24 – Goods carried in thermo
regulated means of transport
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6.3 Safety regulationo Concept; International transport: §
21.1.2: o As aboveo + “all regulations and injunctions
concerning measures for the prevention of loss issued by public authorities”
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6.3 Safety regulationo Sanction: § 21.2: No liability (# ICA)
providedo Causationo Fault: “Cannot be imputed” (# ICA) o Burden of proof: shifted
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6.4 Casualties caused by the assured
o ICA § 4-9o Intent
o No liabilityo Without fraud: part liability possible
o Gross negligence – reduction in liability
o Ordinary negligence – full liability
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6.5 Identificationo The problemo Between the assured and his helperso Between the assured and the policy
holder/former ownero Extended identification for breach
of safetyregulation
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6.5 Identifcation between the assured and his helpers
o CICG § 10, 1 (a): Management personnel employed by one of the assured parties responsible for the transport of the goods
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IDENTIFICATION BETWEEN THE ASSURED AND HIS HELPERS
Assured
Own/co-assured’s Managementresponsible for transport
Insurer
Identification
No liability
Breach of duty of disclosure/
due care
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6.5 The assured and the person effecting the insurance
o CICG § 10.1 (b)o Person effecting the insurance and
former owner of the goods o Either owner at the time of the omission
oro Goods were in his charge
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CICG § 10 (b)
Assured
Person effectingFormer owner
Insurer
Identification
No liability
Breach of duty of disclosure/
due care
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6.5 Extended identification
o CICG § 10 2 subparagrapho Breach of safety regulation by other
persons engaged to organize the transport
o Ex freight forwarders etc
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CICG § 10 (2)
Assured
Other persons engaged to
organize transport
Insurer
Identification
No liability
Breach safetyRegulation
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7. Period of insuranceo Period of insurance in this context:
When does the insurance attach for each separate consignment of goods?
o When does the period commence?o When does the period terminate?o Suspension of the insurance
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7.1. Commencement of the period of insurance
o CICG § 14.1: where the insurance is effected by the seller,
o The insurance period starts when the goods are moved for direct loading into the means of transport which shall convey them from the warehouse or place where the insured transit shall commence
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Questiono Goods were damaged when the fork lift
hit the goods to hard when it inserted itself into the pallet inside the workhause to move the goods for transport.
o Is the damage covered?o Does it matter whether insurance was on
A-, B-, or C clauses?
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Questiono Goods were lifted from the shelf in the
warehouse into a container. Due to a mistake the container was not immidiatly transported to the ship for carriage to the buyer. The delay lasted for 24 hours and resulted in temperature damage to the goods.
o Has the period of insurance started?
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Commencement of the period of insurance
o CICG § 14.2: Where the insurance is effected by buyer, or
o Where the insurance only covers buyer’s risk
o Period of insurance commences when, in accordance with sales contract:o The risk passes to buyero Insurance effected by seller terminates
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Commencement of the period of insurance
o CICG § 14.3: Insurance period extended where the insurance covers only buyer’s interesto Covers buyer’s loss because no
information in transport document on shortage or damage incurred after start of transport
o Provided buyer’s good faith
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7.2. Termination of the period of insurance
o CICG § 15: Five possible termination points in time given
o Decisive: Which point in time occurs first
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7.2. Termination of the period of insurance
o First alternative: goods safely unloaded from means of transportthat brought them to consignee’s warehouse at named place of destination
o Second alternative: goods deliveredto consignee or placed at his disposal
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7.2. Termination of the period of insurance
o Third alternative: Risk passed to buyer where carrier has sold the Goods in accordance with contract
o Fourth alternative: 30 days after completion of discharge at named place of destination
o Fifth alternative: 60 days after discharge from the carrying vessel
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Questiono Goods were discharged at the buyers
warehouse and was damaged when lifted by a forklift for transport to the storage facilities within the warehouse.
o Is the damage covered under insurance effected by the buyer?
o What if the insurance was effected by the seller for his interest only?
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7.3. Suspension of the insurance
o CICG § 16.1: Delay in one place for more than 15 days due to circumstances within the assured’s control
o CICG § 16.2: Delay in transit in one place for more than 3 months, unless exceptions nr. 1, 2, 3 or 4 apply
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7.3 Suspension and ICA § 4-6
o The company can reserve the right to disclaim or limit its liability if a specific circumstance with a material bearing on the risk is changed. Such a reservation can not be invoked if the insured party neither knew nor ought to have known that the circumstance had been changed, or if the insurance event is not due to the changed circumstance.
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8. Liability of the insurero Two main questions:o Under what circumstances does the
assured have a right to compensation?o Total loss, shortage, damage
o How is the compensation decided?o Total loss, shortage, damage
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8.1. Total losso The concept ”total loss”, CICG § 35.1
o The entire consignment is destrøyedo The assured deprived of the goods
without possibility of retrieving ito Transit to destination abandonedo Severe damage (90% of value lost)
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8.1. Total losso The settlement of a total loss, CICG
§ 35.2o Main rule: sum insured, but not more
than insurable valueo No deduction for previously incurred
damage, whether covered or not
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8.2. Shortageo The concept ”shortage”, cf. CICG §
36.1o Part of the insured consignment totally
lost, cf. CICG § 35.1o Compensation, cf. CICG § 36.2
o Right to proportion of sum insured corresponding to the goods lost
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8.3. Damageo The concept ”damage”: not defined in
CICGo The compensation:
o The insurer may always require repair, and cover the costs of repair, CICG §37.1
o But: If repair results in unreasonable loss or inconvenience
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8.3 Damageo If damage not repaired, the insured
entitled to cash settlement based on damage percentage, CICG § 37.2o But: If damage percentage for goods
intended for resale is above 50%, the insurer may demand sale, CICG § 37.3.1
o With perishable goods, right to sale even where damage percentage is below 50%, CICG § 37.3.4
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8.3 Damageo Special rules to apply for procedure
and limits to the right of sale o Request must come without undue delay
after survey report, CICG § 37.3.3o Perishable goods: not necessary to wait for
survey report, CICG § 37.3.4o Right to sale to take due account of the
interest of the assured, CICG § 37.3.5, cf. § 52
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Thank you for your attention
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