What is the meaning of war clauses?
A: Under the Institute Cargo Clauses, war is excluded. This excludes cover for any hostile act from a nation or group intending to cause political instability. This does not mean a declaration of war needs to be declared or a declaration needs to be issued. The insurance definition of war is very broad and includes most regional disorders.
Can this cover be included?
A: A war extension has been endorsed under most of our policies. This means insurers agree to cover loss or damage to cargo associated with war or associated risks. Check your policy under conditions to see if War is included: “Institute War Clauses (Cargo) CL385 dated 01.01.2009.”
Does insurance cover delays caused by war or re-routing?
A: Cargo insurance does not cover delay, even if the policy includes the war extension. Delays caused by cargo being blocked or rerouted are excluded. The same exclusions still apply.
In case of War, will cargo insurers pay for re-directing or forwarding cargo to the destination?
A: Insurers will not cover the cost of forwarding cargo to its destination under the Institute Cargo Clauses in case of war. The war extension offers cover for loss or damage to the cargo, but this does not extend to forwarding costs.
If a voyage is redirected from the Red Sea around the Cape of Good Hope, do I need to inform insurers?
A: You should always notify insurers of any deviation from the normal course of transit. Any extended travel time or route change has risk implications, so you should inform insurers about any changes.
Are Israel, Palestine, and other regional countries now excluded?
A: Most insurers have added Israel to their referral list of countries. Since the situation is changing, it is best to always double-check with the broker.
Will insurers cover losses if the vessel is hijacked in the Red Sea?
A: Piracy is not excluded under war clauses, so those losses would be covered. However, these are excluded if a government seizes a vessel for political reasons. A War Extension Clause may cover loss or damage. The goods need to be in peril, and delay would be excluded.
Can the carrier declare General Average because of War?
A: “General Average” is the deliberate actions inflicted by the shipowner to save the vessel. GA can be declared by actions arising from war if the vessel was in peril and the costs were for the benefit of all. General Average must be successful, so the carrier cannot claim if the vessel sank. War extension covers GA contributions.
Recommendations
1. Check your policy to see if it contains war extension clauses. This will protect you from losses arising from these circumstances. Most of our cargo policies are endorsed to include war.
2. Notify insurers of any change of route or transit. It is better to be safe than sorry.
3. Delay is generally excluded under any circumstance. Never agree to time frames or routes outside your control. This can be costly and/or commercially damaging.
4. Be prepared for changing conditions and rates in certain regions. Never agree to terms before checking with insurers.
5. Always ask your client to check the insurance certificate for specific conditions. There may be specific requirements or changes in conditions at any time.
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