cargo claim

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INTRODUCTION ON CARGO CLAIM

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CLAIM ON CARGO LOSS :

CLAIM ON CARGO LOSS COMPILED BY: Fx.Sugiyanto Sugiyanto.fx@cbn.net.id

INTRODUCTION:

INTRODUCTION Having a good risk management policy makes good business practice. By examining and evaluating risk of the carrier and the cargo owner are likely to be more careful and prudent since appreciating risk is one step closer to acting more cautious. Insurance is the most common form of risk management. In the following presentation we shall look at the risks of the carrier and cargo owner are exposed to, and the process of insurance in more detail.

WHENEVER GOODS ARE MOVED THEY ARE PRONE TO POTENTIAL HAZARDS:

WHENEVER GOODS ARE MOVED THEY ARE PRONE TO POTENTIAL HAZARDS Understanding what happens when and where goods are damage, who is at fault and how to claim from the responsible party enables carrier to safeguard the cargo owner/interest as well as handle claims expediently and competently.

WHAT IS INSURANCE?:

Insurance is essentially a contract between two parties. The first party is the assured, insured or policy holder: These terms are used interchangeably and are all synonymous with the person who wishes to transfer a risk. The second party is the insurance company, insurer or underwriter: Again these names are all used interchangeably and are all synonymous with the party agreeing to take on the risk of the assured in return for a premium. WHAT IS INSURANCE?

PRINCIPLES OF CARGO INSURANCE:

INSURABLE INTERESTS The insured must have an interest on the cargo insured. GOOD FAITH (UBERRIMA FIDES) Do utmost good faith, no hidden damage which had known prior to cover the insurance. PRINCIPLE OF INDEMNITY The Maximum of indemnity, will not exceed of the real loss/sum ageed insured value. PRINCIPLE OF RECOVERY/SUBROGATION If the insured had received the settlement for the loss from the insurer, he is obliged to submit his rights and authorise to the insurer to lodge claim recovery against the carriers or parties which supposed had caused the loss, by providing a subrogation right to the insurer. PRINCIPLES OF CARGO INSURANCE

WHAT IS THE IMPORTANT OF CARGO INSURANCE ??:

WHAT IS THE IMPORTANT OF CARGO INSURANCE ?? Insurance is a prudent undertaking of any cargo owner. Damage during cargo transportation is an everyday occurrence somewhere the world over. ‘Saving’ on insurance cost could be akin to gambling. The cargo owner may loose this cargo. Even if no damage is done to the owner’s cargo he may be liable in general average to pay for someone else’s damage. be Safe not Sorry

THE SHIPOWNER AND INSURANCE:

THE SHIPOWNER AND INSURANCE Shipowner’s Insurance Liability Insurance Placed with either a mutual Protection and Indemnity Club (P&I Club) or fixed premium insurer e.g. a syndicate at Lloyd’s of London Hull & Machinery Insurance Policies incorporating either Institute Time Clauses Hulls 1983 or 1995 or International Hulls Clauses 2003

HULL AND MACHINERY INSURANCE :

HULL AND MACHINERY INSURANCE Loss / Damage to ship, equipment or stores Salvage General Average 3/4 ths Collision Liability towards damage to the shipother Hull & Machinery Insurance

SHIPOWNER’S LIABILITY INSURANCE:

SHIPOWNER’S LIABILITY INSURANCE Loss / Damage to cargo Damage to 3 rd party property including 1/4 ths RDC* Compensation for illness/injury or death of crew, stevedores Shipowner’s Liability Insurance (Usually P&I Club) Oil Pollution Including clean up costs and fines

CARGO INSURANCE :

CARGO INSURANCE Cargo Owner’s exposure Shipper / Receiver Loss / Damage to goods Cargo owner’s contribution towards cost of: General Average Salvage

INSURANCE OF THE ROAD “HAULIER AND RAILWAY OPERATOR”:

INSURANCE OF THE ROAD “HAULIER AND RAILWAY OPERATOR” Insurance of the Road Hauler Insurance of the Railway Insurance for Truck Insurance for third-party liability Insurance for wagon Insurance for third-party liability Loss / damage to goods carried Loss / damage / injury to other property and persons Loss / damage to goods carried Loss / damage / injury to other property and persons

Slide 12:

ALL POLICIES (A,B &C) COVER: EXW SELLER FCA CPT CIP FAS FOB CFR CIF DDP BUYER v ² Bob's.ppt http://www.geocities.com/bkip20002/index.html Graphics by Bob http://home.att.net/~kip20002/ The cover commences from the time the goods leave the seller’s premises, and terminates upon arrival at the consignee’s warehouse, or upon expiry of 60 days after completion of discharge of the goods from the overseas vessel at the port of discharge, whichever first occurs. DAT DAP

Slide 13:

Container damaged and ‘repaired’ for this single voyage

CARRIAGE CONVENTIONS:

CARRIAGE CONVENTIONS

INSTITUTE CARGO CLAUSES :

INSTITUTE CARGO CLAUSES Institute cargo clauses As written by International Underwriting Association (IUA) Formerly known as: Institute of London Underwriters (ILU) The Institute Cargo Clauses were introduced on 1 January 1982. There are three main sets of these clauses depending of the level of cover required. (A) Known as All risks (AR). (B) Known as With average/With Particular average.( WA/WPA) (C) Known as Total Loss only (TLO)

INSTITUTE CARGO CLAUSES (A):

INSTITUTE CARGO CLAUSES (A) cover all risks of loss of or damage to the goods. Including malicious damage and piracy

Slide 19:

Institute Cargo Clauses (A) (B) & (C) Cover: 1.1. loss of or damage to the subject-matter insured reasonably attributable to:- 1.1.1. fire or explosion M/V Hanjin Pennsylvania 2002

INSTITUTE CARGO CLAUSES (A) (B) & (C) ….cont:

INSTITUTE CARGO CLAUSES (A) (B) & (C) …. cont 1.1.5. discharge of cargo at a port of distress 1.1.6. earthquake, volcanic eruption or lightning.

INSTITUTE CARGO CLAUSES (A) (B) & (C) ….cont:

INSTITUTE CARGO CLAUSES (A) (B) & (C) ….cont 1.2.1. general average sacrifice 1.2.2. jettison or washing overboard

EXCLUSIONS FOR A, B & C:

EXCLUSIONS FOR A, B & C 4.1. Wilful misconduct of the Assured 4.2 Ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear 4.3. Claims from insufficient/unsuitable packing

…cont EXCLUSIONS:

…cont EXCLUSIONS 4.4. Inherent vice 4.5. delay 4.6. Insolvency or financial default of the owners, managers, charterers or operators of the Vessel 4.7 (B & C) [4.8 (A)] loss, damage or expense arising from the use of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.

Exclusion (B) & (C):

Exclusion (B) & (C) 4.7 deliberate damage to or deliberate destruction of the subject- matter insured or any part thereof by the wrongful act of any person or persons N.B. But covered under (A) clauses

Further EXCLUSIONS FOR A, B & C:

Further EXCLUSIONS FOR A, B & C 5.1 Unseaworthiness of vessel or craft, unfitness of vessel, craft or conveyance, container or liftvan for the safe carriage of the subject-matter insured, where the Assured or their servants are privy to such unseaworthiness or unfitness NB. 5.2 The Underwriters waive any breach of the implied warranties of seaworthiness or the ship and fitness of the ship to carry the subject-matter insured to destination

Further EXCLUSIONS FOR A, B & C:

Further EXCLUSIONS FOR A, B & C 7.1 Strikes 7. 3 Terrorism

TRANSIT CLAUSE:

Regardless of whether cargo is insured under (A), (B) or (C) clauses, the cover commences from the time of cargo leaves the seller’s premises, continues during the ordinary course of transit and terminates upon arrival at the consignee’s warehouse. In transit Policy clause the cargo during the transit and the insurance will be terminate : After completion of discharge of the cargo from the overseas vessel at the port of discharge , or named place which stated in it policy, or from the cargo complete discharge from the ocean going vessel or upon expiry of 60 days whichever first occurs. In the Indonesian marine cargo Policy coverage, sometime the transit clause will be less, i.e. 21 days and especially for inter islands will be 15 days. In case of delay of the voyage, the insurance cover still valid until the cargo complete to be discharged at the destination port, where the delay was beyond the Insured control. i.e: in case of the devistion of the carrying vessel for temporary repair or other reasonable incidents where justified in the contract of carriage (Bill of Lading) TRANSIT CLAUSE

GENERAL AVERAGE:

There is a “General Average act where an extraordinary sacrifice or expenditure voluntarily and reasonably made or incurred in time of peril for the purpose of preserving the property imperilled in the common adventure” (Marine Insurance Act 1906 s66) GENERAL AVERAGE

THE FOLLOWING MUST BE PRESENT::

Sacrifice must be extraordinary There must be a common adventure The common adventure must be in peril There must be a sacrifice (of property) or expenditure (of money) The sacrifice must be made reasonably and intentionally The sacrifice must be made for the sole purpose of preserving the adventure from immediate peril THE FOLLOWING MUST BE PRESENT:

EXAMPLES OF GENERAL AVERAGE ACTS INCLUDE:-:

EXAMPLES OF GENERAL AVERAGE ACTS INCLUDE:- Putting into a port of refuge Voluntarily stranding to avoid sinking Working of engines (i.e. repairs) Further damage to hull through efforts to refloat vessel Repair costs incurred in efforts to refloat vessel Essential temporary repairs from grounding damage, needed for vessel to get to destination Slipping of anchor and cable Salvage

General Average expenditure (costs) includes:-:

General Average expenditure (costs) includes:- Cost of discharging cargo to assist in refloating Hire of tug to assist refloating Wages and provisions of crew during period of delay at the port of refuge

PARTIES WHO MUST CONTRIBUTE IN G/A:

Shipowner (for value of ship saved) Cargo owner (for value of cargo saved) Shipowner (in respect of freight payable) Charterer (under Time Charter in respect of freight) PARTIES WHO MUST CONTRIBUTE IN G/A

PARTICULAR AVERAGE:

PARTICULAR AVERAGE Damage to ship and cargo from fire will be borne by the shipowner and cargo owner (loss lies where it falls). A particular average loss is a partial loss of the subject-matter insured, caused by a peril insured against, and which is not a general average loss. It is also the expenses incurred by or on behalf of the assured for the safety or preservation of the subject-matter insured, other than general average and salvage charges, and are called particular charges.

Institute Strikes Clauses (Cargo) Cover::

Institute Strikes Clauses (Cargo) Cover: 1.1. strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions 1.2. any terrorist or any person acting from a political motive.

INSTITUTE WAR CLAUSES (CARGO) COVER::

INSTITUTE WAR CLAUSES (CARGO) COVER: 1.1. war, civil war, revolution, rebellion, insurrection, or civil strike arising there from, or any hostile act by or against a belligerent power 1.2. capture, seizure, arrest, restraint or detainment, arising from risks covered under 1.1 above, and the consequences thereof or any attempt thereat 1.3 derelict mines, torpedoes, bombs or other derelict weapons of war. M/V Limburg - rammed by a boat packed with explosives 2002

INSTITUTE CARGO CLAUSES (AIR):

INSTITUTE CARGO CLAUSES (AIR) Similar to Institute Cargo Clauses (A) 30 days (not 60) to reach final destination Excludes deliveries by post

Slide 38:

Risk A B C Cargo Handling √ √ χ Wet Damage (saline) √ √ χ Theft √ χ χ Contamination (from other cargo) √ χ χ Fire/Exp √ √ √ Stranding/sinking √ √ √ Overturning of land Conveyance √ √ √ Heavy Weather √ χ χ Piracy √ χ χ Summary

STEPS TO LODGE A CLAIM:

STEPS TO LODGE A CLAIM Notice of claim Investigation Asessment Settlement of claim Loss Prevention Recourse/Recovery Never admit liaibility neither acknowledge that the loss was your fault/negligence

NOTIFICATION AND THE SUPPORTING DOCUMENTS :

Immediately notice to the insurer and at same time to the carriers as well. Appoint an independent surveyor in order to indentify who are liable and to ascertain the extent of loss and or conduct a join survey with the carriers. Alternatively ask the cargo underwriter to appoint a surveyor. Preparing the relevant supporting documents, including but not limited. The original of the Policy; Original of the B/L; copy of the commercial invoice and the packing list.; other relevant evidence of the incident. Ask from the carrier of the evidence of the incident, i.e. Statement of Facts, accident report etc. Estimation/claim calculation detail. NOTIFICATION AND THE SUPPORTING DOCUMENTS

IF INDEPENDENT SURVEYOR ATTENDS:

IF INDEPENDENT SURVEYOR ATTENDS If the surveyor is on behalf of the cargo owner, ask him conducting a joint survey with the carrier, and ask to take as much Photographs and skecth of the cargo damage. 2. Take note and record names and what is the position of the persons who attend in the join survey, record the date, place and time when the joint inspection conducted. 3. Put note the condition of the packing/pallet and the equipment for loading/discharge used by the stevedore. 4. Check in which warehouse the cargo stored and check when the accident happened, who handling the cargo 5. Take litigate measurement by separating the damage cargo with the sound cargo.

Slide 42:

Please record weather condition whilst the discharge operation, whether it contributes to the incident Check The master/CO, whether he made Note of Protest Check Mate’s receipt, whether was there any remarks ? And what Bs/L clause ?? Is there any LOI ? If there attend other party of interest, check and put in the report name and from which party did they attend.

General Average (GA) and Particular Average (PA):

Illustration one Fire takes place in the ships engine room and spreads to the cargo holds. A cargo of rice stowed in hold number one is partly damaged by fire. Fire also damages part of the engine room. The master uses foam and water to extinguish the fire. There is further damage to cargo and the ship by the extinguishing efforts. The fire is finally extinguished and the ship arrives at destination. The shipowner declares General Average. General Average (GA) and Particular Average (PA)

Slide 44:

Illustration two Ship runs aground (error in navigation) and suffers hull damage. Water enters one of the cargo holds and a cargo of machinery spare parts is damaged by sea water. The Master attempts to refloat the ship through its own power but this leads to further hull damage. Master then calls for help and a salvage company provides assistance and tows the vessel to a port of refuge. Vessel is repaired and completes the voyage. The Shipowner declares Particular Average.

Slide 45:

Date : Our Ref: PRO-FORMA CLAIM To : _________________ _________________ _________________ _________________ Attention : The Claims Officer Dear Sir/Madam, Please be advised that on behalf of our customer/principal, ………………………, and the consignees, it is our intention to lodge a formal claim on your company with respect to the undermentioned goods. Please advise if you wish to appoint an independent surveyor. MAWB or OB/L HAWB of HB/L FLT/date or VSL/Voy Origin Pcs/Wt: Consignee Shipper: Package involved …………………of……………….. Value (if known) ……………. Nature of Goods : ______________________________________________________ Reason : ______________________________________________________ _____________________________________________________________________ Claims Department Received : __________________________ Date : __________________________

Risk Management:

Risk Management 1 st identified potential risks These may be situations or places where damage to goods can be the fault of the freight forwarder or actions that the he may be required to perform but does so badly.

…cont Risk Management:

… cont Risk Management 2 nd record a detailed operational flow of goods, documents or procedures so that every risk has a beginning point and an end point. Circulate the report to management – create a culture of awareness

…cont Risk Management:

… cont Risk Management 3 rd mitigate those identifiable risk by adopting procedures to handle them better e.g. give responsibility to individual employees to look after specific tasks. By giving responsibly of goods or procedures to employees they become more ‘attached’ to the task as if anything goes wrong they can be held accountable. N.B. be careful not to pass blame. The freight forwarder cannot delegate his liability to another party.

…cont Risk Management:

…cont Risk Management 4 th take adequate procedures to cover the liabilities identified. Establish financial reserves to meet claims. Take out liability insurance to cover potential claims N.B. Even is insurance cover is purchased financial reserves must be present in order to meet the deductible/excess (i.e. the part which is not covered by insurance).

CONCLUSION:

CONCLUSION Liability and risk are facts of life, identifying, recording, mitigating and managing risk is a serious business. The rest of this training manual will help the participants in managing these risks.

Slide 51:

THANK YOU

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