The unexpected failure of a global container giant has been much in the news this quarter. When the shipping operator entered sudden bankruptcy, their ships were seized at sea. Many freight forwarders and shippers had already made advance payment for services, and have now suffered losses as a result. These same freight forwarders and shippers have also now incurred additional expenses for arranging re-delivery of the containers from the seized ships, and carriage by other operators.

To mitigate their losses in any other similar events in the future, customers may do a little more to protect themselves. Under the Institute Cargo Clauses (2009), the possibility of an extension of destination change as well as the reimbursement of incurred extra charges is allowed to the insured. In particular, it is important to remind your customers that time is of the essence in such circumstances, and that they should notify their insurer promptly. While the insurer may not be able to offer full reimbursement for any loss, they may be able to grant extended coverage.

Institute Cargo Clauses (2009):

Change of Voyage

10.1 Where, after attachment of this insurance, the destination is changed by the Assured, this must be notified promptly to Insurers for rates and terms to be agreed. Should a loss occur prior to such agreement being obtained, cover may be provided but only if cover would have been available at a reasonable commercial market rate on reasonable market terms.

10.2 Where the subject-matter insured commences the transit contemplated by this insurance (in accordance with Clause 8.1), but, without the knowledge of the Assured or their employees the ship sails for another destination, this insurance will nevertheless be deemed to have attached at commencement of such transit.

Forwarding Charges
12. Where, as a result of the operation of a risk covered by this insurance, the insured transit is terminated at a port or place other than that to which the subject-matter insured is covered under this insurance, the Insurers will reimburse the Assured for any extra charges properly and reasonably incurred in unloading storing and forwarding the subject-matter insured to the destination to which it is insured.

*If there is any inconsistency or ambiguity between the English version and the Chinese version of the above clauses, the English version shall prevail.

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