Claim case sharing
Is damage caused by inherent nature of goods covered by a cargo policy?
Mr. Chan purchased insurance on Institute Cargo Clauses A on a shipment of leather gloves. The shipment was delivered by sea from Hong Kong to Hamburg. The sale was on CIF terms with an invoice value of USD100,000.
Upon arrival in Hamburg, the container carrying the shipment was delivered by truck to the consignee’s warehouse. The consignee appointed a marine surveyor to witness destuffing. The container was in sound condition externally. However, upon opening the container, the surveyor found that the majority of the leather gloves were affected by mould and/or wet damage. The surveyor could not find any hole or defect in the container through which external water could gain entry.
Is the damage to Mr. Chan’s goods recoverable from his cargo insurer?
According to the surveyor’s report, as the container was found in sound condition externally without any hole or defect, it constituted prima facie evidence that the mould and wet damage probably arose from the inherent nature of the leather gloves, as leather has a tendency to absorb surrounding moisture.
The loss could probably have originated from the usually high relative humidity in Hong Kong in March when the goods were stuffed in the container. During the voyage, the action of temperature variation during different times of the day led to the release of moisture from the goods. The moisture condensed inside the container panel and finally dropped into the goods.
According to Institute Cargo Clauses A, Exclusion 4.4 states “In no case shall this insurance cover loss, damage or expense caused by inherent vice or nature of the subject-matter insured.” So, Mr. Chan’s loss was excluded by his marine cargo policy.
It is very important to maintain a high level of quality control over the drying process when preparing leather products as they are easily damaged by moisture. When shipping these products, silicon gel should be put inside the container to absorb moisture to provide better protection for the products.