By Richard Kamppari-Baker, Claims Director, World Insurance
We’ve had numerous queries regarding shipments to Israel and other Middle East countries affected by the Israel/Hamas war. Notably, whether these shipments are excluded and what happens in the event of an incident.
If your shipments are not going to sanctioned areas, there should be no absolute exclusion per se. Always check your certificate wording to make sure each shipment complies with your policy requirements and whether there are any additional warranties.
Under cargo insurance, most insurers consider Israel and Gaza to be referred countries. As such, the insurers will consider the merits of each shipment before agreeing or rejecting the terms.
This will increase the premium, and shipments will incur additional processing time while they are being referred for consideration. Current shipments already agreed to should be unaffected.
Also Read: What Is Breakbulk Cargo in Shipping?
Israel’s Ministry of Transport and Road Safety insists that all ports are open and running at full capacity. However, this seems to be an exaggeration because the state has imposed restrictions on dangerous materials, and ports are operating on an emergency basis.
In the event of a loss resulting from a hostile action or terrorist act, coverage of your cargo insurance will depend on whether your policy includes “War clauses.” The Institute Cargo clause excludes hostile acts unless, of course, your policy includes coverage. Check your policy for War Clauses or ask your broker if you are unsure.
If the cargo has been restricted for entry into Israel, you must seek advice from the carrier. They will probably terminate the voyage at a safe port, and the shipper must decide whether to return or ship to a new destination. The forwarder/carrier could rely on force majeure to minimize any delay or forwarding claims.
We would like to remind members who have taken out the WCA Forwarder Protect (Freight Forwarders Liability) policy about Exclusion 12.6 (“War”) when shipping to this region. Any claim would be excluded if it falls under the 12.6 Exclusion. We recommend contacting your current insurance service provider or referring to your policy regarding this War exclusion.
Also Read: What Does Cargo Insurance Cover and How Does It Work?
The Exclusion would extend not only to loss or damage to cargo but also to incidents that might result in delay or abandonment. If the cargo is restricted from entering Israel and results in re-routing, insurers would not cover losses resulting from this, including defense cover.
A carrier/forwarder should be able to rely on force majeure defenses, but this can depend on your terms and conditions. Therefore, we strongly recommend that any members who enter a service contract within this area consult legal contract review prior to entering into any agreement.Azure Risk provides a nominated legal adviser to review contracts and offer assistance at competitive rates. For any inquiries, please email [email protected] or contact Azure Risk directly.
