A both-to-blame collision clause is embedded in an ocean marine insurance policy, stipulating that if two ships collide due to their own negligence, both ship owners and shippers must proportionally share the resulting losses based on the monetary value of their respective cargo and interests prior to the incident. The clause mandates that both cargo owners and the shipping company carrying the goods bear the financial burden of any damages.
Key Takeaways
- The clause necessitates shared responsibility between vessel owners for collisions arising from mutual negligence.
- Marine insurance typically covers incidents like ship collisions and sinking but excludes damage from wear and tear or war-related actions.
- According to the Hague-Visby Rules, carriers are not accountable for collision claims if they have exercised due diligence in ensuring their ship’s seaworthiness, and if the collision is caused partly or wholly by negligent navigation.
- This clause offers carriers contractual indemnity against cargo claims ensuring their protection under the Hague-Visby Rules.
Discover How a Both-to-Blame Collision Clause Functions
As global trade expands, the shipping industry’s insurance products, like ocean marine insurance, become critical. These policies provide crucial coverage against potential losses incurred from ship damage or destruction.
Specifically, ocean marine insurance covers:
- Collisions with other ships or physical objects.
- Sinking, capsizing, or stranding of ships.
- Fire, piracy, and jettison (purposeful disposal of cargo to protect the vessel).
- Barratry (fraudulent or illegal activities by the ship’s master or crew).
However, standard coverage excludes damage arising from wear and tear, dampness, decay, mold, or war.
Special Considerations
The Hague-Visby Rules state that if a carrier has employed due diligence to ensure their ship is seaworthy, they are exempt from liability for collision-related claims arising from negligent navigation (Article IV, Rule 2(a)). Often, both vessels may partly share the blame in a collision. In such cases, cargo interests might file claims against the non-carrying vessel in a tort action.
In the U.S., claimants can recover full claims from the non-blaming vessel’s owners, who can then seek half of the compensation from the carrying vessel’s owners. This rule can override the defense of navigational error, and it means that cargo interests won’t recover losses if the carrying vessel is wholly at fault. The both-to-blame collision clause backs this by offering indemnity against cargo interest-related claims.
Real-World Example of Both-to-Blame Collision Clause
Consider a scenario where Ship A and Ship B collide due to Ship B’s fault. The owners of damaged or lost goods on Ship A can claim full damages from Ship B’s owners. However, invoking the Both-to-Blame Collision Clause and where the fault is shared 50/50, Ship B can reclaim 50% of their liability from Ship A.
As a result, Ship A ends up responsible for half the damage costs. This cost is then transferred back to the cargo owners via the Both-to-Blame Collision Clause in the Bill of Lading.
Related Terms: liability, negligence, cargo insurance, Hague-Visby Rules, contractual indemnity.
References
- International Trade/Commercial Law & e-Commerce Monitor. “The Hague Visby Rules: Article IV”.
