Claim case sharing
Are “goods in trust” covered in cargo policy?
The sentence “...... including items held in trust ...... for which the Assured would be responsible.” is commonly seen in a cargo open policy. Are “goods in trust” automatically covered in a cargo policy in the absence of insurable interest?“
Let's use a simple example to study the marine cover:
Factory A takes out an Annual cover with Insurer X in its own name. The policy covers the interests of Factory A also “including items held in trust ...... for which the Assured would be responsible”. Insurer X charges an insurance premium based on the estimated annual turnover which Factory A declared to Insurer X.
One day, Factory A receives a request from Factory B who wishes Factory A to help to deliver one lot of cargo. Factory A agrees without obtaining prior agreement from Insurer X. Unfortunately, an accident occurs and the cargo is lost or damaged. Are the goods belonging to Factory B covered under Factory A's policy ?
The answer is “Not Covered”. The reason is that at the beginning of negotiation, Factory A only declared their “OWN turnover” to Insurer X and, in the absence of consideration/cargo premium for this extra risk, there will be no contract between Factory B and Insurer X.
How can we provide comprehensive coverage for you?
- Advise us prior to commencement of voyage and obtain acceptance; or
- Declare deliveries of this kind on a monthly basis even if the Declaration Clause is not required. These frequent declarations imply that you have auto cover from the insurer; or
- Estimate a separate turnover of this kind of “goods in trust” to the insurer if you frequently help others or you regularly ship cargoes on behalf of others.