Duration of Risk : Time Policies And Voyage Policies

1. Time and Voyage Policies Defined

Section 25 MIA provides as follows:-

(1) Where the contract is to insure the subject-matter “at and from,” or from one place to another or others, the policy is called a “voyage policy,” and where the contract is to insure the subject-matter for a definite period of time the policy is called a “time policy.” A contract for both voyage and time may be included in the same policy.

2. Reasons Why The Distinction is Important

There are different considerations in applying the time policies as compared to the voyage policies 

3. Practical Considerations Affecting The Use Of Time And Of Voyage Policies 

At the beginning most marine insurance, if not all, used a voyage policy. This changed drastically in the 19th century when time policy overtook the voyage policy. In the case of hull and machinery policies, freight or disbursement. The use of the voyage policy for the coverage of these have diminished to a certain extent in the modern context of marine insurance. Insurance cover provided by P & I clubs often use time policies. 

Cargo insurance still predominantly use voyage policies. 

4. Duration Of Risk In Time Policies

The Risk from the time the policy attaches i.e. when the vessel departs the port of discharge from the allocated date of commencement of the cover until the final date of the policy. The commencement of the time policy can start from a certain hour of the commencement date.

In the even the vessel is still at sea at the completion date, the vessel will be covered for the insured perils until it arrives at the port of discharge wherever that may be. This is usually covered by a continuation clause (Charlesworth v Fletcher).

5. Proof Of Time Of Loss In Case Of Missing Ship

Section 58 MIA provides as follows:-

Where the ship concerned in the adventure is missing, and after the lapse of a reasonable time no news of her has been received, an actual total loss may be presumed.

The burden of proving this loss is on assured and there is no presumption in the case of a missing ship that the loss took place at a particular time. The onus is on the assured to show that the loss occurred in the duration of the time policy. 

6. Loss Within Time : Damage Ascertained Later

This is allowed as the decision of the Court in Knight v Faith. It was much later acknowledged in the case of Wasa International Ins Co v Lexington Insurance by the House of Lords.

The case of Hough v Head was similar but held differently because the freight was paid in the duration of the policy.

7. Mixed Policies

This occurs when the time and as well as a local termini has been named in the policies (Way v Modigliani, Robertson v French and Marit Ins Co v Alianza Ins Co).

In such policies the underwriters are not liable unless the loss occurs during that time frame provided in the policy and the underwriters will not be liable for any loss unless the loss happened originally sailed on the voyage described in the policy.

8. Localised Time Policies

This term is used to describe policies containing express provisions whereby the vessel is covered while at a specified locality or within a specified area, or while engaged in specified operations or activities in some local area (Pearson v Commercial Union Assurance Co). 

When the vessel leaves and return to the locality of the assured, the policy will re-attach until the end of the duration of the policy.

9. Port Risks Insurance

The general understanding of this type of cover is that it ends the minute the vessel unmoors from the port or harbour and also to moor within the ambit of the port or harbour (Hunting v Boulton, Mersey Mutual Underwriting Association v Poland and Whittle v Mountain). 

10. Fire Policy On Ship

Fire policy covers the risk of fire during the pendency of the policy but if there is no evidence of movement of the vessel for other purposes (Pearson v Commercial Union Assurance Co). 

11. Attachment Of Risk Under Voyage Policies: The Statutory Provisions

Section 42 MIA provides as follows:-

(1) Where the subject-matter is insured by a voyage policy “at and from” or “from” a particular place, it is not necessary that the ship should be at that place when the contract is concluded, but there is an implied condition that the adventure shall be commenced within a reasonable time, and that if the adventure be not so commenced the insurer may avoid the contract.

(2) The implied condition may be negatived by showing that the delay was caused by circumstances known to the insurer before the contract was concluded, or by showing that he waived the condition.

Section 43 MIA provides as follows:-

Where the place of departure is specified by the policy, and the ship instead of sailing from that place sails from any other place, the risk does not attach.

Section 44 MIAprovides as follows:-

Where the destination is specified in the policy, and the ship, instead of sailing for that destination, sails for any other destination, the risk does not attach.

Section 45 MIAprovides as follows:-

1. Where, after the commencement of the risk, the destination of the ship is voluntarily changed from the destination contemplated by the policy, there is said to be a change of voyage.
2. Unless the policy otherwise provides, where there is a change of voyage, the insurer is discharged from liability as from the time of change, that is to say, as from the time when the determination to change it is manifested; and it is immaterial that the ship may not in fact have left the course of voyage contemplated by the policy when the loss occurs.

12. Application Of S. 44 MIA To The Cover Under The Institute Cargo Clauses

Section 44 MIA applies to cargo policies affording warehouse to warehouse cover (Simon Isreal & Co v Sedgewick)

The argument that the insured transit is solely defined by its inland termini under a policy containing a warehouse to warehouse clause, so that the risk will have attached on leaving the stipulated warehouse in the country of export for transit to the stipulated inland destination in the country of import was rejected in the cases of Simon Isreal & Co v Sedgewick, George Kallis v Success Insurance and The Prestrioka.

13. Discharge Into Lighters During 

Lighters are boats which assist in the process of unloading cargo at the port or harbour. This is a customary way of unloading cargo from a vessel and as such will fall within “until they are safely landed” contained in Rule 5 of the First Schedule to the MIA. This is also stated in Pelly v Royal Exhange Assurance Co and Brown v Carstairs.

14. Time Within Which The Goods Must Be Landed

No time limit to land the goods but it must be done within reasonable time after the arrival of the vessel at the port of discharge unless the is a good reason for delay (Parkinson v Collier). 

If no good reason for the delay in landing the goods, then the risk ceases to attach (Rule 5 of the First Schedule to the MIA). 

15. Goods Insured To Their Final Port Of Destination

The risk will run until the goods arrive at the last place of destination within the policy (Oliverson v Brightman and Brown v Vigne).

16. Goods Insured “Till Arrived At The Last Place Of Discharge

This should be made clear within the policy as held in Richardson v London Assurance Co where the Court stated that the assured should have made it clear that the coverage was until the goods were discharged at the port of discharge and not to give emphasis on the duration of the outward voyage instead.

17. Effect Of Transhipment

The general rule is that if the goods on a vessel are transferred onto another vessel, the risk does not attach any longer.

The caveat to this that if it is specifically mentioned within the policy (Tierney v Etherington). 

For transhipment from necessity, Section 59 MIA provides as follows:-

Where, by a peril insured against, the voyage is interrupted at an intermediate port or place, under such circumstances as, apart from any special stipulation in the contract of affreightment, to justify the master in landing and reshipping the goods or other moveables, or in transhipping them, and sending them on to their destination, the liability of the insurer continues, notwithstanding the landing or transhipment.

18. Warehouse To Warehouse Clauses

This is now known as the transit clause within the Institute Cargo Clauses.

8.Transit Clauses

8.1 Subject to Clause 11 below, this insurance attaches from the time the subject-matter insured is first moved in the warehouse or at the place of storage (at the place named in the contract of insurance) for the purpose of the immediate loading into or onto the carrying vehicle or other conveyance for the commencement of transit, continues during the ordinary course of transit and terminates either 

8.1.1 on completion of unloading from the carrying vehicle or other conveyance in or at the final warehouse or place of storage at the destination named in the contract of insurance, 

8.1.2 on completion of unloading from the carrying vehicle or other conveyance in or at any other warehouse or place of storage, whether prior to or at the destination named in the contract of insurance, which the Assured or their employees elect to use either for storage other than in the ordinary course of transit or for allocation or distribution, or 

8.1.3 when the Assured or their employees elect to use any carrying vehicle or other conveyance or any container for storage other than in the ordinary course of transit or 

8.1.4 on the expiry of 60 days after completion of discharge overside of the subject-matter insured from the oversea vessel at the final port of discharge, whichever shall first occur. 

8.2 If, after discharge overside from the oversea vessel at the final port of discharge, but prior to termination of this insurance, the subject-matter insured is to be forwarded to a destination other than that to which it is insured, this insurance, whilst remaining subject to termination as provided in Clauses 8.1.1 to 8.1.4, shall not extend beyond the time the subject-matter insured is first moved for the purpose of the commencement of transit to such other destination. 

8.3 This insurance shall remain in force (subject to termination as provided for in Clauses 8.1.1 to 8.1.4 above and to the provisions of Clause 9 below) during delay beyond the control of the Assured, any deviation, forced discharge, reshipment or transhipment and during any variation of the adventure arising from the exercise of a liberty granted to carriers under the contract of carriage.

Simon Israel v Sedgewick was the first case to deal with the warehouse to warehouse clause. The general rule is that the land transit becomes incidental to the marine leg of the transit. Following this there are a large body of case laws on this area (Renton v Black Sea & Baltic General Insurance Co, Wunsche v Tai Ping Insurance Lo Ltd, Bayview Motors Ltd v Mitsui Marine & Fire Insurance Co amongst others)

The risk, as stated within the Institute Cargo Clauses, will attach when the goods arrive at the warehouse or place storage as named in the policy (clause 8.1).

Under clause 8.1 the risk will cease to attach the minute there is a discontinuity of the said transit.

Under Clause 8.2, denotes delivery of the goods to some other destination.

Clause 8.3 enhances clause 8.1 by emphasising on delay or deviation caused to transit of the goods.

19. Insurance On Ship From A Port

Rule 2 of the Rules of Construction to the MIA states that where the subject matter is insured from a particular place, the risk does not attach until the ship starts on the voyage insured.

20. Insurance On A ship At And From A Port

Three scenarios can arise – (1) the ship may then be lying at the terminus a quo; (2) she may not have arrived there; (3) she may already have sailed.

The first two scenarios have to be looked at together to with inter alia seaworthiness. 

The third scenario needs to be seen retrospectively as seen in Palmer v Marshall.

21. Construction Of The Words “At And From”

The word “at” is to be given the meaning must have been at a place in good safety for the risk to attach (Parmeter v Cousins).

22. Policy Where The Ship Has Not Yet Arrived

As mentioned in scenario (3) in Para 20 above, when a ship has not arrived at the point the policy is effected, the risk attaches as soon as the ship arrives at the port of loading (Haughton v Empire Marine Insurance Ltd and Bell v Bell).

23. “At And From” Do Not Imply That The Ship Is At The Place

From the time of the effecting the policy and the arrival of the vessel, the risk must not vary too much and any such delay (must be a reasonable time frame) which can cause the material varying of the risk will stop the said risk from attaching (De Wolf v Archangel Maritime Bank & Insurance Co).

This is also in conjunction with Section 42 MIA as mention in paragraph 11 above.

24. Delay, Whether Excusable 

A detention for a reasonable time for the purposes of the adventure insured must be allowed, and whether the time is reasonable must be determined, not by any positive or arbitrary rule, but by the state of things existing in the port where the vessel happens to be (Phillips v Irving, Palmer v Marshall and Chitty v Selwyn). 

25. What Is The Beginning To Prepare For The Homeward Voyage?

Making an enquiry of cargo through the officer of the cruise vessel is held to be preparing for the homeward voyage which attaches the risk upon the vessel when lost (Lambert v Liddard).

26. Construction Of The Word Port

A place usually used to load and unload goods will be known as a port (Cockey v Atkinson) even if it is a roadstead (Sea Insurance Co v Gavin).

27. Policy At And From An island Or District 

The risk attaches at the first port in the island that the vessel arrives at in good safety for the purpose of discharging her outward cargo (Camden v Cowley).

28. Risk To Commence On Expiration Of Previous Policy

The attachment of the risk can be deferred by a condition precedent like the expiration of a previous policy (Kynance SS Co v Young).

29. Mooring In Good Safety

This means (1) in such state of physical safety that she can keep afloat while discharging her cargo; (2) in such state of political safety that she shall not have been subjected during the time to any embargo, seizure or capture on the part of the government of the port or of strangers; (3) under such circumstances as to have had an opportunity of unloading and discharging (Lidgett v Secretan, Shawe v Felton and Mercantile Marine Insurance Co v Titherington).

If the 24 hour clause is struck out of the policy, then the risk will continue until her safe arrival at her port of destination but would cease immediately on her being at her moorings (Stone v Marine Insurance Co).

30. Arrival At Port Of Discharge

If a ship has not moored safely for more than 24 hours at the dock she has to head to, then the risk is still attached (Samuel v Royal Exchange Assurance Co to be contrasted from Whitwell v Harrison).

31. Effect Of Unloading Part Of The Cargo

Discharging part of the cargo at an intermediate port does not end the risk (Leigh v Mather). 

32. Insurance To Port Of Discharge

The risk would be extended until 24 hours after her arrival at the port where she discharges her cargo (Moffatt v Ward)

33. Substituted Port Where It Is Illegal To Enter “Last Port Of Discharge”

If a ship insured to port or ports “until arrived at her last port of discharge” elects to put into some other port because it was illegal by the laws of war to continue her voyage to the port originally intended to, and disposes of a considerable part of her cargo in the substituted port, the risk on the ship ends after she has moored there for 24 hours (Brown v Vigne compared to Oliverson v Brightman).

34. Insurance To “Final Port”

The words port or ports and final port did not refer to the ports of discharge (Crocker v Sturge, Crocker v General Insurance Co of Trieste and Marten v Vestey)

35. Duration Prolonged By Usage

As seen in the case of Salvador v Hopkins, it was held that policies were generally adapted to the usage and were uniformly held to cover all intermediate voyages in the Indian seas unless restricted by special clauses. 

Also seen in Farquharson v Hunter and Preston v Greenwood.

36. Express Prolongation Of Risk

The express prolongation of risk is when the policy carries a clause with a longer period than the usual 24 hours period (Mercantile Marine Insurance Co v Titherington and Comfoot v Royal Exchange Assurance Ltd).

37. Commencement Of Risk On Freight

Where a cargo has been contracted for and is ready to be shipped on board at the time of the loss, and the ship, being otherwise in a condition to receive the cargo, is only prevented from doing so by the intervention of the perils insured against, the policy on freight attaches and the underwriters are liable for the loss of the whole freight which would have been earned on the voyage, even though no part of the cargo has been shipped at all (Montgomery v Eggington).

38. Commencement Of Risk On Chartered Freight

Here, freight is secured to the ship owner by one entire contract for the whole voyage. This right accrues from the very inception of the voyage described in the charterparty and if properly insured, the risk under the said policy will commence from the same period (Foley v United Fire and Marine Insurance Co of Sydney, Rankin v Porter and Barber v Fleming).

39. Where Commencement Of Risk Depends On A Certain Event

Commencement of the risk is only upon the happening of the said event (Beckett v West of England Insurance Co)

40. The Voyage Being Performed Must Be That In The Policy

If the voyage is not covered by the policy, then no claim will succeed (Sellar v M’Vicar and Ellis v Lufon).

41. Insurance For Part Of The Journey

This can be covered by insurance as long as it is taken ahead of time (Taylor v Wilson). This also involves the coverage for freight for such part journey (Barclay v Stirling)

42. End Of Risk On Freight

Risk of freight ends at the point it is paid regardless at which point of the voyage (Atty v Lindo).

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