The introduction of some form of marine liability insurance in the South African market could be on the cards, Carol Holness, senior associate in the transport department at law firm, Norton Rose Fulbright, told FTW.
This was one of several key issues discussed at a recent Marine Forum held in Pretoria where insurers considered introducing cargo liability insurance.
“This is particularly given the fact that recent instances of on-board fires, such as the case of last February’s blaze on the APL Austria near Cape St Francis, may have stemmed from damage caused by mis-declared goods in one of the carrier’s holds,” she said.
And although most of the cargo was bound for other ports, “South African receivers and their insurers face potential general average claims in the region of R65m.” Also, while insurers realised that there might be a gap in the market for liability insurance, Holness said there was a distinct lack of awareness among cargo owners about the need for it. “Most cargo owners incorrectly assume that marine insurance covers them against the possibility of being held liable if their cargo causes damage to the property of another.”
She explained that cargo owners generally believed they were insured for all loss or damage when they signed up for Institute Cargo Clauses (ICC) and that even though these obligatory clauses were adequate in most instances, they did not cover all loss or damage that a cargo owner might suffer.
“Essentially the ICC clauses cover you for the damage to your cargo as well as your liability for salvage and general average charges. “However, they do not cover you for loss or damage you incur because of any delay in the cargo reaching its destination or consequential losses you may suffer such as currency fluctuations or contractual penalties that you may face if you don’t deliver to your customers on time.
“The ICC clauses also do not cover your liability to third parties if your cargo causes loss or damage to the property of another.”
In the case of the APL Austria, for example, the South African receivers had to wait months while the vessel sat at Port Elizabeth. Ultimately the ship owner cancelled the voyage. Cargo owners were not able to recover any losses they may have suffered due to the delay in their cargo getting to Cape Town, nor were they able to claim for consequential losses for failing to timeously deliver cargo.
Nevertheless, cargo owners who are aware of the risk of not being properly insured against liability tend to shy away from the costs related to 3rd party cargo insurance.
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Most cargo owners incorrectly assume that marine insurance covers them if their cargo causes damage to the property of another. – Carol Holness
