, ocean freight consolidator, and steamship.
Other Institute Clauses

Transit Clause

 
It names the points of voyage (i.e., the commencement of the transit, continues during the ordinary course of transit and terminates on delivery) between which the insurance is in effect. It may incorporate the Warehouse to Warehouse Clause (see Duration of Insurance Coverage).

 
Termination of Adventure Clause

 
It provides for the insurance to remain in effect in the event that the contract of affreightment or the adventure is terminated at a port or place other than the named destination (i.e., before the named destination is reached), subject to prompt notice being given to insurer and to payment of an additional premium, if required.




 
Craft Clause

 
It provides for coverage including transit by craft, raft or lighter to or from the vessel.




 
Change of Voyage Clause

 
It provides for continuous coverage in case of change of voyage or of any omission or error in the description of the interest vessel or voyage, subject to payment of an additional premium.




 
Constructive Total Loss Clause

 
It gives the insurer the right to pay the assured for the total loss when the goods are so damaged that the cost of recovering and reconditioning would exceed their original value.




 
G.A. Clause
(General Average Clause)

 
It gives the rules to be followed to settle the general average claims and the salvage charges.




 
Seaworthiness Admitted Clause

 
It provides that in the event of loss the assured's right to recovery shall not be prejudiced by the fact that the loss may have been attributable to the wrongful act or misconduct of the shipowners or their crews, committed without the privity of the assured.




 
Bailee Clause

 
It requires the assured and their agents, in all cases, to take such measures as may be reasonable for the purpose of averting or minimizing a loss and to ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised---it obligates the assured to file a claim against third parties who may be liable for the loss or damage.




 
Not to Inure Clause

 
It prohibits the assured from assigning any right of recovery in the policy to the carrier or other bailee (warehouse owner, truck owner, etc.). Therefore, it prevents the carrier or other bailee from becoming the assured from such assignment of the right of recovery, otherwise the insurer could not bring action against them in case of loss or damage.




 
Both to Blame Collision Clause

 
It protects the assured against any claim that he/she may have as a result of collision.




 
F.C.&S. Clause
(Free of Capture and Seizure Clause)

 
It excludes coverage of risks against

 
  • the capture, seizure, arrest, restraint or detainment, and the consequences thereof or of any attempt thereat;

     
  • the consequences of hostilities or warlike operations, whether there be a declaration of war or not;

     
  • the collision or contact with a mine or torpedo; and

     
  • the consequences of civil war, revolution, rebellion, insurrection or civil strife arising therefrom, or piracy.





 

F.S.R.&C.C. Clause
(Free of Strikes, Riots and Civil Commotions Clause)

 
It excludes the loss or damage

 
  • caused by strikers, locked-out workmen, or persons taking part in labor disturbances, riots or civil commotions;

     
  • resulting from strikes, lock-outs, disturbances, riots or civil commotions.





 

Reasonable Despatch Clause

 
It requires the assured to act with 'reasonable despatch'---how the owner would act in case the goods are not insured---in all circumstances within his/her control.




 
Sue and Labour Clause

 
It provides for reimbursing the assured for the expenses to protect the interest insured from further loss or damage.




 
T.P.&N.D. Clause
(Theft, Pilferage and Non-Delivery Clause)

 
It covers theft, pilferage and non-delivery of goods, includes theft and pilferage by the crew.




 
Institute Malicious Damage Clause

 
It covers deliberate damage to or deliberate destruction of the property insured or any part thereof by the wrongful act of any person(s).




 
Institute Dangerous Drugs Clause

 
It provides that no claim will be paid in respect of drugs to which the various International Conventions relating to opium and other dangerous drugs apply unless: the drugs are expressly declared as much in the policy, the exporting and importing countries are specifically stated, the route by which the drugs were conveyed was usual and customary, and the proof of loss is accompanied by a license, certificate or authorization issued by the government of the exporting or the importing country, as the case may be.







Standard Cargo Insurance ---
Three Basic Policies (in the Old Cargo Clauses)



Institute Cargo Clauses (All Risks)

 
The term All Risks is misleading as not all the risks are covered. The All Risks (A.R.) is the broadest form of coverage commonly encountered in exporting. It covers all risks of physical loss or damage from any external causes irrespective of percentage.

If the assured wishes to be covered against the risks of war, strikes, riots, and civil commotions, the insurer deletes the exclusions in the Institute Cargo Clauses and endorses the special clauses, that is, the Institute War Clauses and Institute Strike Clauses, on the insurance policy and the assured pays an additional premium.




 

Institute Cargo Clauses (With Average)

 
The With Average (W.A.) is sometimes called the With Particular Average. In insurance parlance, the word "particular" means partial, and the word "average" means loss. As such, the words "with average" and "with particular average" mean including partial loss.

The With Average (W.A.) is a less inclusive form of coverage than the All Risks. It covers against total loss and partial loss caused by the perils of the sea (i.e., the vessel has been stranded, sunk, burnt or been in a collision with other vessels or external substances other than water, such as ice), jettison of cargo, barratry (i.e., negligence, fraud or wrongful acts of the ship's master and/or crew resulting in injury or loss to the ship's owner), and other like perils.

The partial loss, however, is subject to a franchise being written into the policy. The percentage of franchise can be 3% (or other percentage as specified) of the value of the shipment as agreed between the insurer and the assured. If the loss is less than the indicated franchise of 3% (or other percentage as specified) the assured cannot claim the loss. However, if the loss is equal to or more than the indicated franchise, the assured can claim the loss in full amount without any deduction from the insurer.

Instead of a franchise the insurer and the assured may agree on an excess (deductible). The percentage of excess can be 3-10%. If the loss is equal to or less than the indicated excess, the assured bears the loss, that is, cannot claim the loss. However, if the loss is more than the indicated excess, the assured can claim the loss minus the deduction of the percentage of excess specified. In other words, the assured will always shoulder a percentage of the loss regardless of the amount of the loss.




 

Institute Cargo Clauses (Free of Particular Average)

 
In insurance parlance, the words "free of" mean the insurer (the insurance company) is not liable for whatever follows the words "free of". The words "particular average" mean partial loss. As such, the words "free of particular average" mean excluding partial loss.

The Free of Particular Average (F.P.A.) is the narrowest form of coverage. It covers against total loss. When partial loss is specifically covered in the policy, it is recoverable from the insurer only if the loss is the result of the carrying vessel being stranded, sunk or burnt, on fire, or in collision.