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Know your BIFA Standard Trading Conditions 2021– Clause 11 part 1
CLAUSE 11 11(A) No insurance will be effected except pursuant to and in accordance with clearly stated instructions given in writing by the Customer and accepted in writing by the Company, and all insurances effected by the Company are subject to the usual exceptions and conditions of the policies of the insurers or underwriters taking the risk. Unless otherwise agreed in writing, the Company shall not be under any obligation to effect a separate insurance on the Goods, but may declare it on any open or general policy held by the Company. COMMENT ON CLAUSE 11(A) ‘Insurance’ under this clause is not defined but in practice this clause concerns insurance of goods either in transit (otherwise called marine insurance even when goods are not carried by sea) or in storage. This clause makes it clear that the BIFA Member will not effect insurance unless instructions to do so are given by the Customer in writing. Under English common law, in respect of a commercial shipper, a forwarding agent is under no obligation to enquire whether or not the goods are insured, because in the absence of insurance instructions it is assumed that the commercial shipper has its own insurance cover for the extent to which goods are at his risk – WLR Traders Ltd v B&N Shipping Agency Ltd [1955], 1 Lloyd’s Rep 554 . That presumption can be rebutted by a regular course of dealing by which it would be apparent that the shipper does not have its own cover. However, with regard to the private shipper – that is a consumer as a natural person – under English common law, a forwarding agent does have a duty to enquire whether the goods need We reach Clause 11 this month and as with liens we have had to split this clause due to space restrictions. Clause11 will be dealt with over two editions of the magazine. This month clause 11(A)
to be insured – Von Trauenberg v Davies, Turner & Co Ltd [1951], 2 Lloyd’s Rep 462 . Clause 11(A) overrides the common law situation in this respect. Clause 11(A) goes further and stipulates that insurance is not effected unless the written insurance instructions are accepted by the Company. The Company is not obliged to accept the insurance instructions. A BIFA Member could also reject the insurance instructions if it knew that goods were already lost or damaged before the insurance instructions were received by it. Until insurance instructions are given in writing by the Customer and accepted by the Company, the open cover is not activated. If the Company does not accept the insurance instructions, then written notification must be sent immediately to the Customer. Insurance and liability. There is often confusion between insurance and liability. Shippers often wrongly assume that a BIFA Member will automatically insure goods for loss or damage. A BIFA Member is obliged to insure only its legal liability, such as that under the BIFA STC or under an overriding international convention. Such liability is usually less than what would be the insured value of the goods and in some circumstances, there is no such liability at all, even when loss or damage arises. A standard Forwarder’s Cargo Declaration policy or facultative ‘one-off’ insurance will usually provide cover for commercial shipments of new packed ‘general approved’ goods (goods not susceptible to breakage or theft) for all risks
of ‘physical’ loss and damage under Institute Cargo Clauses (A) for sea and road shipments or Institute Cargo Clauses (Air) for airfreight. These conditions contain exclusions and restrictions to cover; your customer should be provided with an evidence of insurance cover so that it is aware of the basis under which its goods have been insured. ‘Non-approved’ goods Other ‘non-approved’ goods would be subject to either the addition of further conditions or restrictions, or may even be limited to a lesser level of cover for loss only resulting from a specific named peril. Always refer to your insurance broker for clarification as to the details of the cover that has been made available to you. It is a common practice for a BIFA Member to declare a consignment against an open or general policy in its name and not to go to the trouble of obtaining a separate insurance policy. This gives perfectly good cover and is convenient for the BIFA Member, the insurer and the Customer. Clause 11(A) stipulates that a BIFA Member is not in breach of contract if goods are insured in that way. At common law, under a true CIF contract, a seller is bound to tender to the buyer a proper policy of insurance and the buyer is entitled to demand a policy of insurance that covers only the goods mentioned on the invoice and the bill of lading – Manbre Saccharine Co Inc v Corn Products Co, All ER Reprints [1918-1919] 980. The onus is on the Customer to specify such a requirement in the insurance instructions.
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March 2023
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