Photos of the MSC Chitra used with permission from the Law Offices of Countryman & McDaniel at www.cargolaw.com
If a container vessel has an accident and needs to be towed to shore, who pays for the towing? Believe it or not, if the vessel can be saved, the shippers with cargo still on-board and the vessel owner will split the bill for any expenses related to recovering the ship . This notion of shared loss between the vessel owner and cargo owners is known as general average.
With the news of the MSC Chitra collision earlier this month–in which the container vessel collided with another vessel off the coast of Mumbai, India–we’re taking the time to remind clients about the importance of having marine cargo insurance.
Remember–if you have marine insurance, your underwriter pays general average charges on your behalf. Should you not have it, you will be sent a bill for general average charges that must be paid before your freight will be released.
Shippers should also keep in mind the difference between insuring under a marine insurance policy versus a property rider/being self-insured. The Carriage of Goods by Sea Act (COGSA) is a U.S. law that relieves the ocean carrier or NVOCC of liability in any of the following circumstances:
- general average
- acts of god (heavy weather, earthquakes, lightning)
- loss/damage outside carrier’s control
- war, terror, strikes, riots, civil uprising
- criminal acts or negligence by captain or crew
- latent defect in hull or machinery
- unseaworthiness of vessel
Property riders are also no substitute for a marine insurance policy, as they don’t cover unusual maritime risks or general average.
Don’t get stuck paying general average charges. Make sure you are covered by a marine cargo insurance policy before scheduling your next shipment.
Photos used with permission from the Law Offices of Countryman & McDaniel at www.cargolaw.com.
Tina Jordan, Import Compliance Manager, submitted the lead for this article. Tina is a licensed U.S. Customs Broker and a Certified Customs Specialist.