Civil commotion and damage to goods in transit who covers what?

Claims arising out of the loss of or damage to goods following last month’s civil unrest have been taxing the minds not just of road hauliers, freight operators, bailees and the owners of the goods themselves – they have also been providing challenges to marine insurers, brokers and lawyers. ANDREW ROBINSON sheds some light.

In most instances, the claims will follow the usual course: cargo interests will first look to the contracts that they have for those responsible for taking care of the goods (road hauliers and bailees) and for those responsible for insuring them.

Where the insurance includes SASRIA cover, claims under that cover will be lodged too.

However, in some cases, cargo interests will find that goods insured “in transit” that include the Institute Strikes Clauses may form part of a SASRIA “carve out” – where the SASRIA Transit Regulations require that where goods are lost or damaged whilst in transit, the cargo interest must first claim under its marine transit policy. The Strikes Clauses are stand-alone clauses often incorporated into marine insurance cover. They include cover for loss or damage caused by riots and civil commotion, similar to the cover provided by SASRIA. If so, the insurer, having indemnified the cargo interest under the marine insurance policy, may then seek a contribution from SASRIA.

Storage risks fall outside of this carve out – that means storage other than storage “in the usual course of transit”. Goods are generally regarded as being in transit (even while stored) where the storage is incidental to the moving of the goods in accordance with the duration clause in the policy. For example, where goods are being moved from a warehouse in Beijing to a warehouse in Johannesburg, the goods will remain insured even when being stored at intermediary warehouses or terminals, so long as that storage is in the ordinary course of the transit of the goods. Were the goods to be stored for the insured’s benefit (for example, holding the clearance of the goods back until funds have been raised to clear the goods through customs), the cover is temporarily suspended until the goods continue with their ordinary course of transit.

There may well be some policies (especially stock throughput policies) that extend the “in transit” definition to include non-transit storage. These policies will need to be carefully considered to see what cover they provide while being stored – if the transit extension cover does not include an extension of the Strikes Clauses duration clause, there may be no cover under the marine clauses, and a claim may well only lie under the SASRIA cover.

As always, the wording of the marine policy, and the facts surrounding the loss or damage, will need to be considered in order to determine how best to proceed.

A different approach will be required when considering claims under policies insuring a haulier or warehouseman’s liability. We imagine that most contracts of carriage or storage would exclude liability for losses of this nature.