Claim case sharing

Cargo insurance for recycled items

Mr. Chan is the owner of a metal recycling company. His major business is to collect recycled metal which is then sold to collectors in China. Last month, he transported two containers of recycled metal to China by sea as usual. However, unfortunately, despite the calm sea voyage, one of the containers exploded and some other cargoes were also affected by fire caused by the explosion.

After the incident, Mr. Chan filed his claim with his cargo insurer for damages, but it was rejected. Why did Mr. Chan’s insurer decline his claim?

There are various reasons why cargo might explode and be damaged. For the above example, cargo of scrap metal for recycling, one of the reasons for the explosion could be mishandling of the recycled metal, such as leaving gas residue in lighters or fuel residue in motors etc. Damage by such causes is excluded from cargo insurance policy.

Although self-explosion of the above example is excluded by cargo insurance and the value of recycled metal is not high, it is still suggested to take out cargo insurance at the minimum cover of Clause C. This is because if a case of “General Average” should happen, the cargo owner is still protected by cargo policy in “Contribution”.

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