War risk cover on "hull all risks"
insurance cancelled,
writes Alan Peat
WITH WAR risk insurance now having been imposed by the insurance community, logistics managers need to check all their insurance policies, according to Shane Dwyer, partner in Shepstone & Wylie and specialist in maritime matters.
"They must check their policies in respect of property which is in, or likely to come into, the defined war zones and see whether the policy excludes cover for terrorism and war," he said.
"If so, they need to
take appropriate actions urgently."
The story to date (and it's all still in a state of flux) is that, effective from September 27, marine underwriters have issued a general notice of cancellation of war risk cover on "hull all-risks" insurance.
There are now 19 war excluded areas, including: The Persian/Arabian Gulf and adjacent waters including the Gulf of Oman North of 24oN, Israel, Lebanon, Libya, Pakistan, Oman, Syria, Algeria, Egypt, the Red Sea and the Suez Canal.
Shipowners now need to obtain new "hull war risks" cover for those areas with special war risk premiums for port calls.
"It is also possible to obtain an extension of cover under a cargo policy in order to deal with the exclusions of liability," said Dwyer. "Obviously this requires the payment of additional premiums."
This cargo cover would be provided in terms of the Institute War Clauses (Cargo), Dwyer added, which deal with the exclusions under the normal Institute Cargo Clauses.
Further cover
"This, however, will not be sufficient to deal with terrorist attacks which require further cover in terms of the Institute Strike Clauses, but with further premium implications, of course."
However, even under these extensions, there's a possible problem if there's "war" at the intended port of discharge, according to Dwyer. And one that could cost an unaware forwarder or shipper an enormous amount to sort out.
"That is if the carrier diverts to an alternate port short of the intended one and discharges the cargo there (assuming that the contract of carriage lets him do that).
"If that happens, then cover ceases upon discharge unless notice is given immediately to underwriters, and an additional premium paid if required. Cover will then continue for a maximum period of sixty days."
In the wake of the recent suicide attacks in the United States, and more particularly the response from that country and her allies with the counter response from the Taliban, those in the shipping industry are scuttling to cover their backs, especially those involved in shipments to and from the Middle East.
Any standard marine cargo insurance policy will normally cover risks described under the Institute Cargo Clauses (A), (B) and (C). However, war and terrorism risks in respect of cargo are excluded under the Institute Cargo Clauses.
Similarly the Institute Clauses related to the insurance of a vessels hull and other interests in a ship have such express exclusions.
