Claim case sharing
Temporary storage in warehouse
Mr. A ordered goods on CIF Hong Kong, cover ICC (A) from the United States and planned to export to Shenzhen, China, again on CIF Shenzhen. When the goods arrived in Hong Kong, they were sent to the carrier's warehouse to prepare for the ongoing transit to Shenzhen the next day. Nevertheless, because of some unknown reasons, the goods were kept in the warehouse rent-free for 1 week before shipment to China. However, the goods were stolen during that week. Would this loss be covered by the seller's insurance policy (covered from the US to Hong Kong) or Mr. A's policy (covered from Hong Kong to China)?
Both insurers were not liable for covering the loss. The seller's insurance policy provided protection from the shipper's warehouse to a warehouse designated by Mr. A and was located in Hong Kong. As long as the goods had arrived at the designated warehouse regardless of the ownership of the warehouse, the insurance policy would then be expired. On the other hand, Mr. A's policy had not yet commenced as the goods were still in the carrier's warehouse and the transit to China had not yet started. Under such circumstances, both policies would not cover any loss occurring during the temporary storage period at the Hong Kong warehouse. In this situation, Mr. A could do little but to pursue the loss from the carrier. This will normally take a long time and yet the result is uncertain.
Instead of simply providing cover between two specified locations only, you are recommended to:
- CHECK the country of origin of the goods to identify pre-shipment/pre-existing damage.
- ENSURE that there is sufficient coverage for any possible storage.
- CONFIRM that all areas during the process of delivery are well protected.
Possible measures to prevent loss in the above scenario:
- Mr. A should take out one-off pre-shipment storage protection;
- He should take out an annual property insurance policy if pre-shipment storage is always needed
- He should ask the seller to extend his insurance cover for storage in-transit;
- He should arrange shipment to China instantly after the goods are discharged in Hong Kong