Marine Cargo Insurance
8
ALL RISKS AND EXCLUSIONS
History and nature of all risks cover: burden of proof
8.1 All risks cargo insurance does not cover every untoward eventuality that may befall the cargo during its journey. “All risks” is a term of art subject to implied limitations that restrict the cover to loss of or damage to the cargo caused by a fortuitous external accident or casualty.1 Moreover, it is the practice to exclude certain risks from all risks cover.2 Accordingly, this chapter discusses the limitations on all risks,3 which derive from the fortuitous nature of the cover, and then considers the general exclusions, that is, wilful misconduct, delay, insolvency, and accidents with nuclear weapons and devices. Although these exclusions are common to all risks and most types of cargo insurance, it is convenient to consider them in the context of all risks as this is the most widely used form of cover. There are also exclusions of war, strikes and terrorism, but as the practice is to provide limited cover for these exclusions they are considered separately in . At the end of this chapter there follows a consideration of the seaworthiness and fitness requirements of the carrying vessel, container or conveyance, requirements which are also common to cargo insurance generally. Before examining these matters we consider a number of preliminary issues specific to all risks. Firstly, the history of all risks cover, secondly, the origins of the all risks concept in the context of the inter-relationship between inevitability of loss and fortuity and, thirdly, the burden of proof where cargo is insured on all risks terms.The history of all risks cargo cover
8.2
All risks is a relatively modern concept as marine cargo insurance was for many centuries underwritten on the basis of specific or named perils such as perils of the seas, fire, thieves, jettison and barratry.4 In 1908 deliberations began in order to introduce a standard form of cargo insurance, but when the Institute Cargo Clauses were first adopted in 1912 the insurance was still against named perils.5 Although insurances against “all risks” were being effected before the Great War, it was only in the years immediately following that war that “all risks” cover became increasingly popular with merchants and bankers. Traditional insurers were reluctant to extend cover to all risks but by the 1950s this cover had become a normal everyday feature of cargo insurance, with widespread use of brokers’ clauses giving all risks cover, and it was considered desirable that there should be standardised clauses.6 As a result the Institute Cargo Clauses (All Risks) were introduced on 1 January 1951. These Clauses were amended in 1958, and again in 1963, the primary object of the 1963 amendments being to remove the uncertainty which had arisen as a result of the judgment in John Martin of London Ltd v. Russell.7 The result of that amendment was the introduction of the well-known Institute Cargo Clauses (All Risks) 1/1/63. These Clauses remained in use until 1982 in the London market and were still used by the Japanese and Korean marine cargo insurance markets until about July 2009 when those markets adopted the revised Institute Cargo Clauses of 2009. The 1963 All Risks Clauses were used with two forms of named perils cover, the Institute Cargo Clauses (WA) 1/1/63 and the Institute Cargo Clauses (FPA) 1/1/63.8