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No insurance coverage for damage on goods

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Legal news
calendar 14 August 2020
globus Denmark

After damages occurred on used military vehicles during transit, the court had to rule if the claim was covered by the carrier’s insurance on ICC(B) terms. The court also had to determine if  the insurer had given the carrier a legitimate expectation that the insurance covered the damage.

A carrier had taken the task of handling the carriage of military vehicles from the Netherlands to Mali for the UN. The carriage was by ship from the Netherlands to the Ivory Coast and from there it was carried by truck. The cargo was inspected when it arrived at the Ivory Coast, and no damages were observed at this point. When the cargo arrived at the final destination, damage was found to the machine gun towers fitted on the top of the vehicles, which was thought to have been caused by collision with a bridge, tree branches or something similar.

The carrier was covered by a goods in transit liability insurance, but the insurance did not cover military equipment. It was a requirement from the UN to have the cargo insured against damage, and so the carrier took out cargo insurance for the equipment.

The damaged cargo was used equipment and was covered on limited  ICC(B) terms, therefore, a disagreement emerged   between the carrier and the insurer whether the damage was covered or not

The carrier insisted that the claim was covered since the damage had occurred during the carriage. Also, the carrier claimed that the insurer had given the carrier a legitimate expectation that the insurance would cover, since the parties had agreed to refrain from certain surveys and the insurer’s processing time  had lasted since spring 2014 when the damage occurred, until it was finally rejected in the autumn of 2017.

The Maritime and Commercial High Court: Not proven that the claim was covered

The Court agreed with the insurer and found that as the insurance covered named perils, the insurer succeeded. The Court also found that the carrier could not  prove how the damages had occurred. Also, the court did not find that the insurer had given the carrier a legitimate expectation that the insurance was  covering.

IUNO’s opinion

The case shows what it takes to trigger cover under a named perils policy and it may be assumed that it is insufficient to show that a type of damage is likely caused by a covered peril. Cover will take further information or proof of a certain event.

The case is also in line with recent court practice showing that it takes  a lot for the court to conclude  that the conduct of an insurer is to be seen as an implicit  confirmation of cover.

Insureds are recommended to seek all-risk cover whenever possible and when a loss occurs, insurers and insureds should strive to clarify which of the parties does what in terms of proving the loss, and to clarify early on whether the insurer has sufficient information to handle the claim.

[The Maritime and Commercial High Court’s ruling in case BS-42889/2018-SHR]

A carrier had taken the task of handling the carriage of military vehicles from the Netherlands to Mali for the UN. The carriage was by ship from the Netherlands to the Ivory Coast and from there it was carried by truck. The cargo was inspected when it arrived at the Ivory Coast, and no damages were observed at this point. When the cargo arrived at the final destination, damage was found to the machine gun towers fitted on the top of the vehicles, which was thought to have been caused by collision with a bridge, tree branches or something similar.

The carrier was covered by a goods in transit liability insurance, but the insurance did not cover military equipment. It was a requirement from the UN to have the cargo insured against damage, and so the carrier took out cargo insurance for the equipment.

The damaged cargo was used equipment and was covered on limited  ICC(B) terms, therefore, a disagreement emerged   between the carrier and the insurer whether the damage was covered or not

The carrier insisted that the claim was covered since the damage had occurred during the carriage. Also, the carrier claimed that the insurer had given the carrier a legitimate expectation that the insurance would cover, since the parties had agreed to refrain from certain surveys and the insurer’s processing time  had lasted since spring 2014 when the damage occurred, until it was finally rejected in the autumn of 2017.

The Maritime and Commercial High Court: Not proven that the claim was covered

The Court agreed with the insurer and found that as the insurance covered named perils, the insurer succeeded. The Court also found that the carrier could not  prove how the damages had occurred. Also, the court did not find that the insurer had given the carrier a legitimate expectation that the insurance was  covering.

IUNO’s opinion

The case shows what it takes to trigger cover under a named perils policy and it may be assumed that it is insufficient to show that a type of damage is likely caused by a covered peril. Cover will take further information or proof of a certain event.

The case is also in line with recent court practice showing that it takes  a lot for the court to conclude  that the conduct of an insurer is to be seen as an implicit  confirmation of cover.

Insureds are recommended to seek all-risk cover whenever possible and when a loss occurs, insurers and insureds should strive to clarify which of the parties does what in terms of proving the loss, and to clarify early on whether the insurer has sufficient information to handle the claim.

[The Maritime and Commercial High Court’s ruling in case BS-42889/2018-SHR]

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Mads

Poulsen

Partner

Aage

Krogh

Partner

Lars

Rosenberg Overby

Partner

Mads

Christopher Whitta-Jacobsen

Associate

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