THE TRANSIT CLAUSE
The insurance under the revised Institute Cargo Clauses covers the goods from the time they leave the shelf until completion of unloading. This period may be described, so far as necessary, as the insured “movement”, which is to be distinguished from the insured “transit”, that transit describes the period from when the goods are loaded on vehicles, or conveyances, for their immediate movement, until the vehicles have reached their destination. This is the approach adopted under Clause 8.1 of the revised Institute Cargo Clauses because “transit” will normally begin after the insured journey has earlier commenced, typically at a shelf within a warehouse. The transit may also end before the insured journey terminates, particularly in those cases where vehicles are not immediately unloaded after arrival. In such circumstances, the vehicles may no longer be in transit but the goods are still insured until completion of the unloading.
The Transit Clause has retained its title although it provides insurance that extends beyond “transit” to cover the insured movement. It should also be noted that the Transit Clause deals not only with the insured journey in terms of the attachment and termination of risk (Clause 8.1) but also with two related matters, firstly, the position where goods are insured to an intermediate destination and then forwarded under another policy (Clause 8.2) and, secondly, the automatic continuation of the cover in the event of delay, deviation and like matters beyond the control of the assured (Clause 8.3). These matters will be considered in turn starting with a detailed analysis of Clause 8.1, which is concerned with a central issue in cargo insurance, the attachment and termination of the risk.
Attachment of risk
The revised Institute Cargo Clauses begin by defining the point at which the insurance attaches, as follows:
8.1 Subject to Clause 11, 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.”
“Subject to Clause 11”
The words “Subject to Clause 11” make it clear that the extended warehouse-to-warehouse cover is subject to the need for an insurable interest as required by the Marine Insurance Act 1906 and Clause 11 of the revised Institute Cargo Clauses. The purpose of repeating the insurable interest requirement in the opening words of the Transit Clause is to deal with a misconception that had arisen in the market, and on insurances worldwide, that the granting of warehouse-to-warehouse cover implied that underwriters were waiving a need for an insurable interest.
The words “this insurance attaches” are not new and reflect the words “commencement of the risk” used in the Marine Insurance Act 1906, for example, in section 45 in relation to change of voyage. The revised Institute Cargo Clauses now make a distinction between “this insurance”, meaning the insurance cover set out within the Clauses, and the “contract of insurance” which refers to the open cover or, in the case of a CIF buyer, the contract of insurance carved out of the open cover as evidenced by the certificate of insurance. In particular, there is no reference to any geographical place for commencement or termination of the risk in the printed Clauses. The distinction now made is between the cover within the Clauses, described as “this insurance”, and the insurance contract evidenced by the open cover or certificate (which identifies the geographical locations for the commencement and termination of the transit) which is now described in the Clauses as the “contract of insurance from the time the subject-matter insured is first moved”
