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© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute. Marine Insurance Freight Liability / Cargo Cover Leeds CII Lecture 15 th Oct 2019 Graeme Blackie | Head of Marine | Sedgwick

Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

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Page 1: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Marine InsuranceFreight Liability / Cargo Cover

Leeds CII Lecture 15th Oct 2019

Graeme Blackie | Head of Marine | Sedgwick

Page 2: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

2© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

What we hope to achieve

Opening the door into the world of Marine Insurance

Page 3: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

3© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Agenda

• Cargo cover overview

• Freight liability claims

• Stock throughout losses

• The future?

Page 4: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

4© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

What is Marine and Transit insurance?

• It is the insurance of the physical goods during transfer from points A to B.

• It is the insurance of carriers liability for losses arising.

• It includes transportation by sea, rail, road and air, storage in transit as well as warehousing.

Page 5: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

5© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Cargo cover

Page 6: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

6© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Cargo cover

• A property insurance of the goods.

• Set cover i.e. Institute Cargo Clauses, used by most insurers

• Widest insurance cover is provided under 'Institute Cargo Clause A', a more restrictive cover under 'Institute Cargo Clause B', and the most restrictive cover under 'Institute Cargo Clause C. Over 20 “plus covers” available.

Page 7: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

7© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Cargo owners

• Simply for the party who own the goods at the time and place of the loss, who are they on a long chain?

Page 8: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

8© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

INCO terms

• A universal term that defines a transaction between importer and exporter, so that both parties understand the tasks, costs, risks and responsibilities

• Inco terms are all the possible ways of distributing responsibilities and obligations between two parties

• It is important for buyer and seller to pre-define the responsibilities and obligations for transport of the goods

Page 9: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

9© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Common INCO terms

• Ex Works (EXW) – The seller makes the goods available at its location, the buyer can take over all the transportation costs and also bears the risks

• Delivered Duty Paid (DDP) –The seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination.

• Cost and Freight (CFR) –Seller must pay the costs and freight to bring the goods to the port of destination. Although the risk is transferred to the buyer when the goods are loaded on the ship.

• Cost, Insurance and Freight (CIF) –Like CFR except that the seller must in addition procure and pay for the insurance

Page 10: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

10© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Moving the goods – Freight Forwarder

• Freight forwarders “arrange the movement of the goods”

• Do they contract to move or do they contract to arrange the movement?

• Terms, BIFA:

• Limit of liability, 2 SDRs per KG (what is an SDR?)

• Time limit of 9 months applies

Page 11: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

11© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

It’s not just cars and trucks that crash!

Page 12: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

12© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Shipping line

• How do cargoes get from one side of the world to another?

• Big boats!

• Maersk Sealand, Evergreen, P&O Nedlloyd

Page 13: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

13© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Shipping line

Services Containers and vessels

• Our vessels are among the most modern, secure and environmentally friendly to sail the oceans. Your cargo is therefore assured a smooth and safe voyage.

Page 14: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

14© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Shipping line,

• Is it really as they say?

Page 15: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

15© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Common problems

• What are his recovery options?

• The cargo weight is 5,000 kg’s it’s value is £25,000

• Freight forwarder, 2 SDRS limit of liability £9,950

• Shipping line , 666.67 SDRS per package, what is a package?

Page 16: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

16© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Road carriers

Page 17: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

17© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Carriers and their issues. What do they do?

Page 18: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

18© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Carriers and their issues. What do they do?

• Collect

• Load

• Stow

• Transport

• Warehouse

• Re-load

• Deliver

Page 19: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

19© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Carriers and their issues

1. Trailer types

2. O-licences

3. Tachograph

4. Drivers

5. Warehousing

Page 20: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

20© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Carriers and their issues, Trailer types

Tautliner / curtain sided

Page 21: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

21© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Carriers and their issues. containers

Box container

Page 22: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

22© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Carriers and their issues. O-license

• What is an operators license?

Page 23: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

23© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Carriers and their issues. tachograph

• What is a tachograph?

• What are the main requirements?

• What information can be obtained?

Page 24: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

24© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Trends

• Aging

• Lack of availability

• Selection

• References

Page 25: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

25© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Warehousing

• Just how big do you think they are?

• Have you been in a warehouse?

• Do you know how they operate?

Page 26: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

26© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Warehousing

• Just how big do you think they are?

Page 27: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

27© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Automated warehouses

Page 28: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

28© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Warehousing

• What do they contain?

Page 29: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

29© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

The loss. then what?

• Theft

• Road traffic accident

• Wet damage

• Then so what?

• How do you know if you are to pay?

• How do you know how much to pay?

Page 30: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

30© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions

Page 31: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

31© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions, do they apply?

• On email

• On invoices

• On credit agreements

• By specific contract document

Page 32: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

32© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions

• Condition 9

• Liability/Defences

• Condition 9 (2) (b)

• Imposes liability on the carrier in “other circumstances”, allows defenses where the carriers has

• “used reasonable care to minimize the effects of”

Page 33: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

33© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions

• Condition 9

• Condition 9 (2) (b)

(iii) Seizure under legal process

(iv) Error or miss-statement by the customer

Page 34: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

34© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions.

• Condition 9

• Condition 9 (2) (b), (vi) Insufficient packing

Page 35: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

35© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions

• Condition 9

• Condition 9 (2) (b)

• (viii) Riot etc

Page 36: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

36© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions

• Condition 9

• Condition 9 (2) (b)

(ix) Cargo not being accepted

Condition 9 (3) “not in transit”

Page 37: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

37© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions

• So you have failed in the defence and need to pay, how much?

Page 38: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

38© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions. Limitation of liability

• Condition 11

• Condition 11 (1)

a) The value of the goods actually lost etc

b) Cost of repairing the goods

c) Limit of £1300 p/t (for lost goods)

Page 39: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

39© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions. What’s the time?

• Condition 13

• Claimants must comply with time limits or the carrier is not labile for loss, think 7 & 14!

Page 40: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

40© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

RHA conditions. What’s the time?

• Condition 13, (2)

• The most important time is 12!

1) Suit is brought against the carrier

2) Written notice is given of suit

Page 41: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

41© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

All Risks cover

• What is All Risk cover?

• Why have it?

• Setting the sum insured, premium and average

It does not affect legal liability

Al Risks is a type of insurance cover, it is not a contract term but may be!.

Page 42: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

42© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

All Risks cover

As follows

All Risks of loss of or damage to Property, (other than that which is subject to

the C.M.R Convention) where You can choose to have claims paid in full

regardless of Your legal liability.

Page 43: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

43© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

The policy response. Add on

• Sheets and ropes

• Recovery charges

• Cost of collecting from the accident location

Page 44: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

44© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

The policy response

Thief attractive target property

• Electronic audio and visual equipment

• Computer hardware and software and ancillary data storage equipment

• Non-ferrous metals in sheet, bar, tube, ingot, coil, scrap or similar form

Page 45: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

45© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Stock throughput cover

Page 46: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

46© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Stock throughput cover

• For large companies moving good on regular basis

• Cover is from start to finish of a journey

• No question “where did it happen”

• Limits for means of transit

• Limits for locations

Page 47: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

47© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Losses are often large!

Page 48: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

48© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

2020/2021/2022 and beyond?

Page 49: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

49© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Driverless trucks

Page 50: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

50© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Future developments?

Autonomous surface vessels

Page 51: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

51© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Remote control temperatures

Page 52: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

52© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Questions?

Page 53: Marine Insurance Freight Liability / Cargo Cover · Common INCO terms • Ex Works (EXW) –The seller makes the goods available at its location, the buyer can take over all the transportation

53© 2018 Sedgwick Claims Management Services, Inc. - Do not disclose or distribute.

Questions and close

Graeme Blackie ACII/ACILA | Head of MarineSedgwick International UKLowry House 17 Marble Street | Manchester | M2 3AW MOBILE +44 7768 965964 | EMAIL [email protected]/uk | Caring counts®