 "First, check what a policy covers")
Jyoti Ceramic Industries, an exporter, had received an order from Techno Ceramics. in Philadelphia, the US, for supply of 'zirconium oxide macro-micro grinding media'. The consignment, valued at $53,965, was covered with National Insurance Company under an open marine policy. The insurance covered risks during transit from the exporter's factory at Nashik to anywhere in the world.
The cargo was shipped. It reached Toronto, which was the port nearest to the importer. It was then transported by road to Eastern America Warehouse in Philadelphia, a customs-bonded one. Although the import of ceramic products was exempt from customs duty, the cargo had to undergo the formalities of clearance. After the procedure was over, an order was passed to release the goods. Before this could be done, a fire occurred in which the goods were destroyed.
An insurance claim was lodged. Ewig International Marine Corporation was appointed for the survey. A copy of the report was sent to the exporter after almost one and a half years. The claim was then repudiated.
The exporter and the importer challenged the repudiation by filing a complaint before the National Consumer Disputes Redressal Commission. They claimed that the policy covered transit risk anywhere in the world. They argued that the claim was payable, as physical delivery of the goods from the customs bonded warehouse had not been taken and also because the insurance contract provided coverage for a period of 60 days after discharge of cargo at the final port of destination.
The insurer argued the policy considered various alternative contingencies, and upon the happening of any of those contingencies, would come to an end. One of these contingencies was that coverage would cease when the goods reached their final destination. According to the insurer, in this case, the final destination was Eastern America Warehouse, as the goods were to be directly distributed from there to the exporter's customers. So, the transit risk ceased when the goods reached the warehouse. The policy covered transport till it reached the exporter but not the subsequent risk during storage. The claim had been rightly repudiated, in terms of Clause 8 of Institute Cargo Clauses (A) of the Marine Insurance Policy.
The Commission observed that the question was whether the policy continued to be in force or not when the fire occurred. It noted that one of contingencies stipulated in the policy was that coverage would terminate on delivery of the goods to the exporter or to any other final warehouse or place of storage at the destination named in the policy.
The invoice, bill of lading, shipping bill and the marine insurance policy all showed the destination was stated as Philadelphia, without mentioning specific place of delivery in that city. So, the coverage under the policy would come to an end as soon as the cargo reached Philadelphia. Merely because the cargo was stored in the customs bonded warehouse and had yet to reach the final warehouse would not make any difference, as the coverage came to an end immediately upon the cargo reaching Philadelphia.
Accordingly, the National Commission dismissed the complaint. Lack of understanding of the extent of coverage put the exporter and the importer to a loss, not only on the goods but litigation expenses. This loss could easily have been avoided if a separate policy had been taken to cover the storage of goods after reaching its destination. So consumers would do well to ascertain the scope of the coverage available under the policy.
The writer is a consumer activist
The cargo was shipped. It reached Toronto, which was the port nearest to the importer. It was then transported by road to Eastern America Warehouse in Philadelphia, a customs-bonded one. Although the import of ceramic products was exempt from customs duty, the cargo had to undergo the formalities of clearance. After the procedure was over, an order was passed to release the goods. Before this could be done, a fire occurred in which the goods were destroyed.
An insurance claim was lodged. Ewig International Marine Corporation was appointed for the survey. A copy of the report was sent to the exporter after almost one and a half years. The claim was then repudiated.
The exporter and the importer challenged the repudiation by filing a complaint before the National Consumer Disputes Redressal Commission. They claimed that the policy covered transit risk anywhere in the world. They argued that the claim was payable, as physical delivery of the goods from the customs bonded warehouse had not been taken and also because the insurance contract provided coverage for a period of 60 days after discharge of cargo at the final port of destination.
The insurer argued the policy considered various alternative contingencies, and upon the happening of any of those contingencies, would come to an end. One of these contingencies was that coverage would cease when the goods reached their final destination. According to the insurer, in this case, the final destination was Eastern America Warehouse, as the goods were to be directly distributed from there to the exporter's customers. So, the transit risk ceased when the goods reached the warehouse. The policy covered transport till it reached the exporter but not the subsequent risk during storage. The claim had been rightly repudiated, in terms of Clause 8 of Institute Cargo Clauses (A) of the Marine Insurance Policy.
The Commission observed that the question was whether the policy continued to be in force or not when the fire occurred. It noted that one of contingencies stipulated in the policy was that coverage would terminate on delivery of the goods to the exporter or to any other final warehouse or place of storage at the destination named in the policy.
The invoice, bill of lading, shipping bill and the marine insurance policy all showed the destination was stated as Philadelphia, without mentioning specific place of delivery in that city. So, the coverage under the policy would come to an end as soon as the cargo reached Philadelphia. Merely because the cargo was stored in the customs bonded warehouse and had yet to reach the final warehouse would not make any difference, as the coverage came to an end immediately upon the cargo reaching Philadelphia.
Accordingly, the National Commission dismissed the complaint. Lack of understanding of the extent of coverage put the exporter and the importer to a loss, not only on the goods but litigation expenses. This loss could easily have been avoided if a separate policy had been taken to cover the storage of goods after reaching its destination. So consumers would do well to ascertain the scope of the coverage available under the policy.
The writer is a consumer activist