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Cargo insurance coverage of piracy
The seizure of the giant super tanker, "Sirius Star", owned by a Saudi Arabia oil company and thought to be carrying two million barrels of oil worth around US$200 million, proved that pirate boats are well-armed. Instead of hijacking cargoes, modern pirates tend to ask for ransom.
Most of you are well aware that as Institute Cargo Clause A (ICCA) provides all risks cover, it also provides coverage of piracy. It should be noted, however, that piracy is not listed in the area of coverage of Institute Cargo Clauses B and C (ICCB/ ICCC), and customers may not be protected by cargo insurance if their cargoes are hijacked. However, this may not be the case if the pirates are not hijacking the goods but instead holding the ship, its cargo and its crew as hostages for ransom. Shipping companies may call for reimbursement of the ransom from all parties concerned, including cargo owners. Ship owners may claim these extra expenses from cargo insurers, in accordance with the General Average Rules.
As pirates become more heavily-armed and rampant, as well as avoiding the use of dangerous shipping routes, customers are advised to choose a reliable shipping company in addition to insuring with ICCA for more comprehensive protection.