TYPICAL POLICY

A typical marine insurance policy reads as follows:

BE IT KNOWN THAT as well in their own name, as for and in the name and names of all and every other person or persons to whom the same doth, may, or shall appertain, in part or in all, doth make assurance and cause themselves and them and every of them, to be insured, lost or not lost, at and from upon any kind of goods and merchandises, and also upon the body, tackle, apparel, ordnance, munition, artillery, boat and other furniture, of and in the good ship or vessel called the whereof is master, under God, for this present voyage,

or whosoever else shall go for master in the said ship, or by whatsoever other name or names the same ship, or the master thereof, is or shall be named or called, beginning the adventure upon the said goods and merchandises from them loading thereof aboard the said ship as above upon the said ship, etc., as above and shall so continue and endure, during her abode there, upon the said ship, etc., and further, until the said ship, with all her ordnance, tackle, apparel, etc., and goods and merchandises whatsoever, shall be arrived at as above upon the said ship, etc., until she hath moored at anchor 24 hours in good safety, and upon the goods and merchandises until the same be there discharged and safely landed, and it shall be lawful for the said ship, etc., in this voyage to proceed and sail to and touch and stay at any ports or places whatsoever and wheresoever for all purposes without prejudice to this insurance. The said ship, etc., goods and merchandises, etc., for so much as concerns the assured, by agreement between the assured and assurers in this policy, are and shall be valued at

TOUCHING the adventures and perils which we, the assurers, are contented to bear and do take upon us in this voyage, they are, of the seas, men-of-war, fire, enemies, pirates, rovers, thieves, jettisons, letters of mart and countermart, surprisals, takings at sea, arrests, restraints, and detainments of all kings, princes, and people, of what nation, condition, or quality soever, barratry of the master and mariners, and of all other perils, losses, and misfortunes that have or shall come to the hurt, detriment, or damage of the said goods and merchandises and ship, etc., or any part thereof; and in case of any loss or misfortune, it shall be lawful to the assured, their factors, servants, and assigns, to sue, labor, and travel for, in and about the defense, safeguard, and recovery of the said goods and merchandises and ship, etc., or any part thereof, without prejudice to this insurance; to the charges whereof we, the assurers, will contribute, each one according to the rate and quantity of his sum herein assured. And it is especially declared and agreed that no acts of the insurer or insured in recovering, saving, or preserving the property insured shall be considered as a waiver or acceptance of abandonment. And it is agreed by us, the insurers, that this writing or policy of assurance shall be of as much force and effect as the surest writing or policy of assurance heretofore made in Lombard Street, or in the Royal Exchange, or elsewhere in London.

Warranted free of capture, seizure, arrest, restraint, or detainment, and the consequences thereof or of any attempt thereat (piracy excepted), and also from all consequences of hostilities or warlike operations whether before or after declaration of war.

Should the above clause be deleted, the following clause is to operate as part of this policy:

Warranted free of any claim based upon loss of, or frustration of, the insured voyage, or adventure, caused by arrests, restraints, or detainments of kings, princes, or peoples.

And so we the assurers are contented, and do hereby promise and bind ourselves, each one for his own part, our heirs, executors, and goods, to the assured, their executors, administrators, and assigns, for the true performance of the premises, confessing ourselves paid the consideration due unto us for this assurance by the assured, at and after the date of

In witness whereof we, the assurers, have subscribed our names and sums assured in London.

N. B.-Corn, fish, salt, fruit, flour, and seed are warranted free from average, unless general, or the ship be stranded; sugar, tobacco, hemp, flax, hides, and skins are warranted free from average under 5 pounds per cent; and all other goods, also the ship and freight, are warranted free from average under 3 pounds per cent, unless general, or the ship be stranded.

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(In the event of accident whereby loss or damage may result in a claim under this policy, the settlement will be much facilitated if immediate notice be given to the nearest agent.)

Such a policy, however, is not sufficient, and, in order to meet the requirements of special trades, such as lumber, certain additional clauses are required. It is these clauses with which the American lumber exporter is concerned, a brief résumé of the more important of which is covered in the succeeding paragraphs.

"With particular average" clause.-It is advisable that goods be covered W. P. A. (with particular average) and not F. P. A. (free of particular average), unless the latter terms are specifically agreed upon between the seller and buyer. The reason for this is that there is a definite risk of damage taking place while the goods are en route, which damage might not be attributable to negligence on the part of the carriers, and which might be attributable to "perils of the sea.

Probably with particular average insurance in its ordinary formthat is to say, insurance against perils of the seas with a franchise of 3 per cent applied to each invoice and/or shipment would suffice to comply with the ordinary c. i. f. terms of sale. However, to a considerable extent the trade in the United Kingdom has become accustomed to insurance clauses which have come to be known as the Timber Trade Federation insurance clauses. Insurance in this form is being written by a number of companies in the United States, and a copy of these clauses is attached hereto. Such policies may be issued specifically to include a number of other than ordinary sea perils, notably fresh water, ship's sweat, theft, and pilferage. It is, however, to be borne in mind that no marine insurance, however broad in its terms, covers what is known as inherent vice—that is, damage arising from causes within the goods themselves.

Journey covered. It is essential that the policy include the warehouse to warehouse clause (and this will be found to be incorporated in the lumber clauses herewith). The effect of this clause is that the goods are covered continuously from the original point of shipment, whether in the interior or at the seaport, while they are in due course of transit, until arrival at warehouse or premises of the consignee.

War and strike risks. It is advisable to insure against war risk, which includes, also, floating or stationary mines. Although this risk is now very remote, the additional premium charged therefor is nominal. Many buyers will also expect to be covered against loss or damage caused by strikers, locked-out workmen, or persons taking part in riots or civil commotions, and this clause may be extended also to cover the cost of reforwarding to their proper destinations, shipments which because of strikes, riots, or civil commotions, it is impossible for the ship to deliver at the port originally intended. This extension of the strike risk clause is granted in consideration of an additional premium.

Deviation of voyage owing to strikes, riots, etc.-Another point which is of importance is that it is advisable to cover the expenses and charges incurred in the event of goods having been landed at a destination other than that shown in the bill of lading, owing to strikes or similar occurrences. All bills of lading permit a vessel, in the event of certain circumstances, to deliver its goods to a certain-named port or as close thereto as she may safely get. During the 1926 general

strike in Great Britain, which stopped vessels discharging at British ports, some took their cargoes to Rotterdam and landed them there, it being the nearest port to London where a vessel could safely land. It is, therefore, essential that the following or a similar clause be incorporated in the policy:

The underwriters agree

Including risks of strike, riots, and civil commotion. to pay landing, warehousing, forwarding, and other transportation expenses incurred by reason of merchandise being carried to a port other than called for in the bill of lading, which is due to causes covered in the strikes and riots clause.

Sweat damage. While goods can be discolored before being put on board the vessel, provided there is no notification on the bill of lading to this effect it may be possible to recover the damage caused by discoloration.

The ordinary policy does not include such a clause, and in order that he may be protected against loss on this account the shipper should insure against damage owing to "fresh water, sweat, steam of hold, hook damage, and contact with oil or other cargo," on "with average terms" or, if this is too costly, if amounting to a 3 per cent average franchise stipulated thereon. Under this form of policy it is possible to recover loss from such causes from the underwriters, leaving them to proceed against the carrier if a case for action lies against them.

Many heavy claims are paid in the course of a year by American lumber exporters for discoloration, but if steps were taken to see that a "sweat" clause were included in their marine-insurance policy many thousands of dollars would be saved.

LUMBER CLAUSES

Interior and/or shore risk.—Including all risks from the time of leaving the mill, warehouse, factory, yard, or premises in the interior while in transit by land and/or water to the port of loading; while awaiting shipment and until delivered on board the ocean-going vessel; while in shed or on wharf or quay after discharge at port of destination; and while in transit by land and/or water to the mill, warehouse, factory, yard, or premises at destination and until safely delivered therein. Risk in shed or on wharf or quay at port of destination not to exceed 30 days from the time the vessel has completed the discharge of her entire cargo, or held covered if required by assured at a premium to be arranged. Should clause No. 1 be deleted, clause No. 2 is to operate as part of this policy.

Including all risks while in due course of transit by land and/or water from the time of leaving mill, warehouse, factory, yard, or premises at the place from which the goods are conveyed to the oceangoing vessel; while awaiting shipment and until delivered on board the ocean-going vessel; while in shed or on wharf or quay after discharge at port of destination; and while in due course of transit by land and/or water to the mill, warehouse, factory, yard, or premises at destination and until safely delivered therein. Risk in shed or on wharf or quay at port of destination not to exceed 30 days from the time the vessel has completed the discharge of her entire cargo, or held covered if required by assured at a premium to be arranged. In the event of this interest or any portion of it being carried on beyond the port of destination, it is agreed to hold the assured covered until final arrival at port of destination.

Including all risks of transshipment and/or of landing, while on shore, and of reshipment, wherever incurred.

Including all risks incidental to steam navigation.

Including all risks of craft and raft to and from the vessel. The assured are not to be prejudiced by an agreement, exempting lightermen from liability.

Including risks of theft and pilferage, irrespective of percentage To include risk of jettison and washing overboard.

Including risks of negligence, default, or error in judgment of the pilot, master, mariners, engineers, or others of the crew, or stevedores or other persons employed by the shipowner, or for those acts, he is responsible.

Including all liberties, clauses, and conditions as per bill or bills of lading and/or charter party or contract of affreightment.

Seaworthiness admitted.

With leave to call at any port or place, in or out of the customary route in any rotation for any purpose, to sail with or without pilots, to tow or to be towed, to assist vessels in all situations or to render salvage services.

Any deviation from the terms and conditions of this policy, or change of voyage, or additional risk not specified, or any omission or error in the description of the interest, vessel, or voyage, to be held covered at a premium to be arranged.

Cargo on deck is warranted free from particular average, and cargo under deck is warranted free from particular average under 3 per cent, but both these warranties are subject to the following exceptions:

(a) Unless the vessel or craft or raft be stranded, sunk, or burned. (b) To pay the insured value of any portion of the cargo which may be totally lost in loading, transshipment, or discharge.

(c) To pay any loss of or damage to the interest insured which may reasonably be attributed to fire, collision, or contact of the vessel and/or craft and/or raft and/or conveyance with any external substance (ice included) other than water, or to discharge of cargo at a port of distress.

(d) To pay any loss irrespective of percentage arising from jettison or washing overboard or partial loss from raft, or craft and/or from slings.

(e) To pay landing, warehousing, forwarding, and special charges if incurred.

Each craft and/or raft and/or deck load and/or each bill of lading or deck load of each bill of lading to be deemed a separate insurance if required by assured.

In consideration of the declaring of a separate amount of insurance sufficient to cover freight and charges payable on delivery, and the payment of a premium thereon at a rate equal to one-half of the rate charged on the merchandise itself, it is agreed that in the event of a claim for particular average same is to be based on a comparison of the net sound and damaged values after deduction of freight and charges payable at destination. It is distinctly understood and agreed, however, that this clause is only operative in event of claim for particular average, and in event of a claim for total loss this company is only to be liable for the insured value of the merchandise insured, as provided herein and expenses, and in no event is this clause to be operative unless a separate amount, sufficient to cover the freight

and charges payable on delivery, is declared at the time the certificate covering the shipment is issued.

Losses hereunder to be settled according to English law and custom. General average and salvage charges payable according to (a) foreign statement if so claimed, or (b) as per York and Antwerp rules, or as per York and Antwerp rules, 1890, if in accordance with the contract of affreightment, or (c) as per York and Antwerp rules, or York and Antwerp rules, 1890, excluding rule 1, if in accordance with the contract of affreightment.

Warranted free of capture, seizure, arrest, restraint of detainment, and the consequences thereof or of any attempt thereat (piracy excepted) and also from all consequences of hostilities or warlike operations whether before or after declaration of war.

Warranted free of loss or damage caused by strikers, locked-out workmen, or persons taking part in labor disturbances, riots, or civil commotions. Should the clause of capture, seizure, arrest, etc., be deleted, the frustration clause as stated below to operate as part of this policy.

Warranted free of any claim based upon loss of, or frustration of, the insured voyage, or adventure, caused by arrests, restraints or detainment or kings, princes, or peoples.

Conclusions. While the matters discussed do not cover the entire insurance problem, they do cover the main points on which a lumber exporter should be protected. The premium is so small that it seems poor business judgment for any shipper to carry an insurable risk when he can at little cost pass it on to his underwriters.

Insurance in the form heretofore described will, no doubt, be acceptable to buyers in the United Kingdom, but as an extra precaution it would, of course, do no harm if American lumber exporters submitted their policies to their British agents and obtained their approval thereof.

CLAIMS

As long as lumber is exported there will probably be claims, and this fact might just as well be recognized at the start. Lumber is a natural product and does not grow according to rules, neither is its grading an exact science, but the application of such rules must be largely a matter of judgment of the inspector who, qualified by knowledge and experience, has been selected to do the work.

Contract stipulations to be avoided.-There are, however, certain claims that can be avoided if the shipper refuses to agree to stipulations where personal opinion is involved or promises impossible of fulfillment agreed to.

In these classes are such clauses frequently inserted in contracts as "reasonably dry and bright," "equal in quality to shipment per S. S. "dry,' ""a fair shipment of the season's aver

age, etc.

In this connection, a prominent London agent told the writer of once being asked to act as arbitrator in a dispute that had arisen over a shipment of American hardwood lumber. On examining the contract he noticed a clause stating the quality was "to be equal to the shipment per S. S. On going into the matter it developed that about two years previously the importer had purchased a carload of oak lumber with which he had been very pleased, ever