QUESTION;
When a Credit calls for an Insurance document covering ALL RISKS, is an Insurance document covering Institute Cargo Clauses ‘A’ acceptable? And if so, would any exclusion clauses render the document discrepant.
Your comments appreciated.
Exclusion Clauses on Insurance Policies/Certificates
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MichaelFlanagan
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- Joined: Fri Apr 05, 2019 5:14 pm
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larryBacon
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Exclusion Clauses on Insurance Policies/Certificates
An "All Risks" policy is something of a misnomer, as it does not cover all risks. ICC "A" is acceptable generally as evidence of "All Risks" cover. This usually incorporates certain exclusions. Whether or not your case detracts from this cover will depend on the exact nature of the exclusions.
Laurence
[edited 1/3/03 12:06:32 PM]
Laurence
[edited 1/3/03 12:06:32 PM]
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DimitriScoufaridis
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Exclusion Clauses on Insurance Policies/Certificates
Michael,
The answer to your first question is Yes. One of the basic limitations of insurance is that it cannot cover all risks. There are certain legal, commercial and other considerations which make it impossible to insure every conceivable kind of risk. In ICC’s Pub. No. 511 on Documentary Credits / UCP 500 & 400 Compared, p. 98 (Comments on Article 36) states that “the traditional ‘all risk’ insurance cover does not cover what some parties may consider to be extension to all types of risks. The ‘all risk’ cover is not what it appears to be since not all risks are covered.” In short, the provision made in Art. 36 was meant to avoid any issues with Lloyd's Institute Cargo Clauses (1/1/82) which came into effect a decade before UCP 500.
Institute Cargo Clauses (A) replaced the old “All Risks” clauses and covers nearly all particular average losses (piracy, theft, earthquake, storms, bad winds, entry of water into vessel & washing aboard). However, there are standard exclusions listed under Articles 4 (willful misconduct of the Assured., ordinary leakage, ordinary loss in weight or volume, wear and tear, insufficient or unsuitable packing, inherent vice, delay, insolvency of financial default of owners, managers, charterers or operators of the vessel, atomic or nuclear weapon of war), 5 (unseaworthiness and unfitness of vessel), 6 (war risks – piracy excepted) & 7 (strikes, riots & civil commotions) ) of the said insurance cover. If demanded in the DC, risks like wars and SRCC may be also be covered against payment of additional premium so to answer your second question, it all depends on which exclusions you are referring to.
Dimitri
The answer to your first question is Yes. One of the basic limitations of insurance is that it cannot cover all risks. There are certain legal, commercial and other considerations which make it impossible to insure every conceivable kind of risk. In ICC’s Pub. No. 511 on Documentary Credits / UCP 500 & 400 Compared, p. 98 (Comments on Article 36) states that “the traditional ‘all risk’ insurance cover does not cover what some parties may consider to be extension to all types of risks. The ‘all risk’ cover is not what it appears to be since not all risks are covered.” In short, the provision made in Art. 36 was meant to avoid any issues with Lloyd's Institute Cargo Clauses (1/1/82) which came into effect a decade before UCP 500.
Institute Cargo Clauses (A) replaced the old “All Risks” clauses and covers nearly all particular average losses (piracy, theft, earthquake, storms, bad winds, entry of water into vessel & washing aboard). However, there are standard exclusions listed under Articles 4 (willful misconduct of the Assured., ordinary leakage, ordinary loss in weight or volume, wear and tear, insufficient or unsuitable packing, inherent vice, delay, insolvency of financial default of owners, managers, charterers or operators of the vessel, atomic or nuclear weapon of war), 5 (unseaworthiness and unfitness of vessel), 6 (war risks – piracy excepted) & 7 (strikes, riots & civil commotions) ) of the said insurance cover. If demanded in the DC, risks like wars and SRCC may be also be covered against payment of additional premium so to answer your second question, it all depends on which exclusions you are referring to.
Dimitri
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DimitriScoufaridis
- Posts: 85
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Exclusion Clauses on Insurance Policies/Certificates
Michael,
I would also like add to my previous posting that there are instances where the insurance certificates do not include all terms and conditions of the contract between the insurer and the assured which is not the case with insurance policies. You might therefore have a certificate showing that the risk covered is ICC (A) but it may not have the “all risks” statement on the face of the document. Some expert lawyers seeking perfection recommend that a DC calling for an insurance certificate bearing an “all risks” statement to also state that reference to Institute Cargo Clauses (A) is acceptable.
In an insurance policy covering ICC (A), such an issue does not arise since the statement “This insurance covers all risks…” appears under the section of Risks Covered (Art. 1).
Dimitri
I would also like add to my previous posting that there are instances where the insurance certificates do not include all terms and conditions of the contract between the insurer and the assured which is not the case with insurance policies. You might therefore have a certificate showing that the risk covered is ICC (A) but it may not have the “all risks” statement on the face of the document. Some expert lawyers seeking perfection recommend that a DC calling for an insurance certificate bearing an “all risks” statement to also state that reference to Institute Cargo Clauses (A) is acceptable.
In an insurance policy covering ICC (A), such an issue does not arise since the statement “This insurance covers all risks…” appears under the section of Risks Covered (Art. 1).
Dimitri
Exclusion Clauses on Insurance Policies/Certificates
The question regarding 'all risks' - ICC(A) is covered in ISBP. It's point 184 (last sentence) in draft 4 which, with a few amendments, I believe was adopted at the last ICC Committee on Banking Technique & Practice meeting.
If ‘Institute Cargo Clauses (A)’ = an ‘‘all risks’ notification or clause’ per Article 36, as ISBP seems to suggest, personally it would appear to me logical that ‘banks will accept [such] an insurance document …… even if the insurance document indicates that certain risks are excluded’.
[edited 1/7/03 10:05:03 AM]
If ‘Institute Cargo Clauses (A)’ = an ‘‘all risks’ notification or clause’ per Article 36, as ISBP seems to suggest, personally it would appear to me logical that ‘banks will accept [such] an insurance document …… even if the insurance document indicates that certain risks are excluded’.
[edited 1/7/03 10:05:03 AM]
Exclusion Clauses on Insurance Policies/Certificates
I agree with Jeremy as above - if the L/C calls for "all risks cover" then the Insitute Cargo Clauses (A) evidencing certain exclusions would be acceptable.
With best regards,
Pavel Andrle
With best regards,
Pavel Andrle