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Marine cargo insurance pitfalls: Understanding “Allocation or Distribution” for multiple consignees

When the container contains goods which will ultimately be distributed to several consignees, the insured may need to bear risks that he is unaware of. Several recent cases have highlighted the need for more careful consideration of such cargo insurance needs. So it is important to understand that cargo insurance will terminate “at the place of allocation or distribution”, which may be sooner than “warehouse to warehouse” coverage for a single consignee.

The proper way to arrange cargo insurance is dependent on the number of consignees or destinations. Where there is more than one consignee or destination under a Bill of Lading or Delivery Order, a separate cargo insurance is needed for each respective consignee or destination. If it is not arranged in this manner, the cargo insurance will automatically terminate once the cargo has arrived at any place of “allocation or distribution” in accordance with the Transit Clause of Institute Cargo Clauses no.

If the shipment involves more than one consignee or destination, this is one of the important material facts that need to be disclosed to the Underwriter, so that the Underwriter can give advice on the policyholder’s risk exposure.

To advise your customers on the most appropriate cargo insurance arrangements for their needs, we offer the following tips:

For a single shipment cargo policy:

  • Note that it will typically provide insurance for one consignee per destination in a single sale.
  • Note that it will terminate in accordance with the Transit Clause of Institute Cargo Clauses.
  • Please advise the Underwriter if any consolidation, allocation, distribution or storage will take place during the insured transit.
  • Please provide details of the insured voyage to the Underwriter for consideration when applying for insurance.
  • Please advise the Underwriter immediately of any change of plan that may occur during the insured voyage.

We hope the above tips can help your clients to enjoy full protection at the lowest cost, and avoid time-consuming claims disputes.

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