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INSTITUTE CARGO CLAUSES (F.P.A.).
But one of these clauses differs from the (W.A.) set, namely, the last.
Thus, the following are common to both sets:
F.C. & S. clause;
Strikes, riots and civil commotions clause ;
Warehouse to warehouse clause;
Craft, etc., clause;
Bill of Lading, etc., clause.
Until recent years it was the practice to insure all goods not specially susceptible to particular average damage on free of particular average terms only. Nowadays, however, a tendency is apparent to cover all and every kind of commodities on with average conditions, often with ridiculous extension of policy clausing. Thus, it is not unknown for solids to be insured "including the risks of leakage," and for liquids to cover "including rust." It will therefore be readily understood that this set of clauses is not in as great demand as the (W.A.) set. Nevertheless, the cover under each set is very similar. The only loss or damage recoverable under the (W.A.) set which is not embraced by the (F.P.A.) set is that of "rough weather."
Thus the clauses cover :
Total and/or constructive total loss;
Total loss of an apportionable part, i.e., where several distinct species are insured under one policy, with or without separate valuations, and the whole of one species is lost, the policy pays the insured value thereof;
Total loss of any package in loading, transhipment or discharge;
General average (direct liability and contributions);
Particular charges; and
Sue and labour charges, it being specially agreed that the policy pays landing, warehousing, forwarding and special charges for which underwriters would be liable under a policy covering particular average.
Particular average, irrespective of percentage, when it would be so payable under the (W.A.) set of Institute Cargo clauses.
The clauses do not cover :
Particular average, except as indicated above;
INSTITUTE WAR RISKS CLAUSES.
As explained in connection with the S. G. Form of policy (page 248), it is the usual practice to cover war risks by expressing the policy to cover only those risks enumerated as excluded by the F.C. and S. and S. R. and C.C. clauses. This is perhaps undesirable, for there is some doubt in legal circles as to whether loss or damage caused by contact with a mine or torpedo is a loss by "" war or "marine " perils. There is little doubt that if the mine has been placed by a belligerent with the definite intention of causing damage to shipping, then any loss or damage is a consequence of hostilities," but some difficulty arises if the ultimate incidence of the mine is fortuitous, e.g., if it has been missed in sweeping operations, or has broken away from its moorings and has drifted into an unintended location. The application of the doctrine of proximate cause to such losses may have unexpected results in the Courts. The present Institute War Risks clauses do away with this difficulty, for not only is the policy expressed to cover the risks included by, say, Nos. 1 and 2 of the Institute Cargo clauses (q.v.), but also the risks of mines and/or torpedoes and/or bombs are specifically included. The Frustration, Deviation and Warehouse to Warehouse clauses appear as in the present Institute Cargo clauses are included, but the policy is war
ranted free of any claim arising from delay, subject to the agreement in the warehouse to warehouse clause to hold the subject matter covered at an additional premium, as long as the delay arises from circumstances beyond the control of the assured.
INSTITUTE U.S. ASSETS CLAUSE.
None but "admitted" companies can conduct business in the State of New York. If an office is opened in this State, returns of all American business must be made. The funds of the company in the United States must be held for the benefit of American policyholders, therefore it must be made clear in respect of policies on American business issued on this side, that any claim will be met only out of the assets of the company out of the U.S.A. This prevents complications, and is achieved by the use of this clause.
INSTITUTE THEFT AND PILFERAGE CLAUSE.
The ordinary form of policy covers "thieves," but the insurers are not liable unless the theft be committed with violence; i.e., the term does not cover petty theft by any member of the ship's company, as it is considered rightly that this is a type of loss which can be avoided by the exercise of due diligence on the part of the shipowner's servants. Thieves in a policy containing the "Warehouse to Warehouse" clause includes the depredations of robbers who forcibly effect an entrance into the warehouse where the goods are stored, it having been held that in such a case the violence need not necessarily include an assault upon the person. A prudent shipper would always prefer to have cover from an underwriter than to rely upon the contractual obligations of a shipowner in respect of such losses, and, moreover, it is usual for a limit to be fixed in contracts of affreightment to the ship's liability in respect of shortage, etc., in the delivery of goods. After the war a very marked increase was discernible in the theft
claims, and as a result insurers were forced to place a limit on the extent to which they would offer cover against losses by this cause. This limit was by Institute agreement fixed at 75 per cent. of the shipping value or insured value of the subject-matter, whichever was the less. This clausing seemed to have had a salutary effect, for, following an improvement in the loss ratio, the 75 per cent. agreement was abandoned and the Institute clause which is now generally utilised when it is desired to extend the policy to cover theft losses, extends protection to the full 100 per cent. of shipping or insured value, whichever is the less. Although subrogation naturally follows payment of a claim, it is expressly declared in the clause that the insurers are to be entitled to any recovery obtained from the carriers (less the cost of recovery, if any) in respect of the claim.
INSTITUTE NON-DELIVERY CLAUSE,
A bill of lading is prima facie evidence against the carrier of the receipt of the goods specified in the quantity and condition set forth therein, and conclusive evidence against the person signing it. For many reasons, the outturn of the cargo may not tally with the bills of lading, and the shipowner is responsible for any short- or non-delivery, Again, a limit is usually placed on the shipowner's liability for losses from such causes as mentioned in connection with theft and pilferage above. Insurers similarly restrict cover in the standard clause covering these risks to the shipping or insured value, whichever is the less (as above), and make the same stipulations with regard to recoveries from the shipowner. It will be observed that in this clause and the one previously described the present uncertainty with respect to subrogation is burked, the limit of insurers' subrogation rights being the amount of the loss paid. (It is a matter upon which there is a marked difference of legal opinion as to whether, on paying for a total loss, the insurer under a policy of marine insurance is entitled to the full sum which may be recovered in respect of that which remains
of the subject-matter of the insurance if this should exceed the amount paid in respect of the loss. The position is most often apparent where underwriters have paid as direct liability a loss by jettison and the amount made good exceeds the loss paid. It may be remarked that the Association of Average Adjusters have recently rescinded their Rule of Practice on the subject.)
ALEXANDRIA COTTON TARIFF CLAUSES.
The Institute Cargo clauses are not suitable for use in connection with cotton shipments. Two sets of clauses are in operation, the first being of recent adoption. Subject to the tariff ratings, under the first set, by arrangement :
I. Fire and country damage before shipment may be excluded;
2. Country damage alone may be excluded, and fire damage before shipment covered; or
3. Fire and country damage may both be included in the cover.
No provision is made for the inclusion of country damage without fire before shipment as such restriction would not be required. The risk does not commence until the time of leaving press and/or warehouse in Alexandria. (Country damage is damage caused by exposure to weather, a form of loss often apparent in Egypt, where shed accommodation leaves much to be desired, but still more prevalent, owing to defective baling, in the case of shipments from the U.S.A.)
The clauses pay average if amounting to 3 per cent. on the whole value of the consignment, or on each bale. If cotton arrives sea damaged, it is customary for that which is damaged to be "picked" from the sound at the landing warehouse. By the clauses it is agreed that on the cotton thus picked, after deducting the customary allowance for increase in weight by reason of the water retained (onethird) average shall be payable irrespective of percentage. Underwriters make this concession, as it is in their interest