A warehouse-to-warehouse clause is a provision in an insurance policy that offers coverage for cargo in transit from one warehouse to another. This clause ensures that your cargo is protected from the moment it departs the origin warehouse until it reaches the destination warehouse. It’s essential to secure separate coverage both before departure and after arrival to ensure comprehensive protection.
Key Takeaways
- A warehouse-to-warehouse clause is usually found in commercial insurance policies, providing coverage for goods in transit between warehouses.
- This clause protects against losses from theft or damage to goods during shipment.
- Large manufacturers typically bear the cost of commercial insurance that includes these clauses.
Comprehensive Coverage with a Warehouse-to-Warehouse Clause
A warehouse-to-warehouse clause is vital in insurance policies, especially commercial ones, as it covers the risks associated with the transportation of goods. Depending on the type of shipping, several insurance options are available to ensure thorough coverage.
For some shipments, insurance may be bundled automatically or offered at an additional fee, common in retail. Commercial shipping can be more complex, often requiring customized solutions tailored for specific needs.
Businesses might opt for one-time coverage or an open policy that covers all shipments over a specified period. Insurance responsibilities between business partners vary, with either the seller or buyer assuming coverage responsibilities.
Typically, insurance coverages are divided by locations—warehouse, transit, and destination. A warehouse-to-warehouse clause specifically covers the transit part, ensuring no protection gaps except where separate storage coverages are necessary.
With a warehouse-to-warehouse clause within a commercial shipping insurance policy, the insured pays a premium that guarantees compensation if damage occurs during transit. This clause reassures that goods will either arrive safely or their value will be reimbursed, minimizing the financial risks significantly.
Inspiring Example of Protection on the Move
Consider a large tire manufacturing company. This company ships its products globally from its manufacturing facility in China. With thousands of products moving to various destinations, a robust insurance policy is critical.
The company partners with an insurer to cover the transportation risks using a warehouse-to-warehouse clause. By paying a premium, the company ensures the shipment is protected from the manufacturer’s door in China to every international buyer’s warehouse. This includes multiple transit modes like trucks, ships, and trains.
Evolution of the Warehouse-to-Warehouse Clause
Originating in the late 19th century, the warehouse-to-warehouse clause was designed to cover land transport journeys without a set time limit for sea passages. As logistics and supply chains evolved, especially during WWII, time limits were adjusted to better suit practical wartime needs, leading to the current comprehensive policies.
The modern clause framework, reinforced by initiatives like the Institute Cargo Clauses, ensures standardization in commercial shipping insurance. Policies often segment these clauses alphabetically (A, B, C) for different levels of coverage precision.
Typically, warehouse-to-warehouse clauses specify terms that may entail:
- Delivery to the final destination warehouse or storage location
- Delivery to alternate or secondary storage as required
- Coverage continuation even for unclaimed goods up to specified time limits (e.g., 60 days post-shipment)
Purpose and Coverage Clarification
The core aim of a warehouse-to-warehouse clause is protecting goods during transit. However, it doesn’t cover storage risks at origin or destination warehouses—separate protection plans are required.
Assurances with Warehouse-to-Warehouse Clauses
Policyholders secure a guarantee of their cargo arriving safely. If goods are lost or damaged during transit, the policy ensures financial compensation, relieving policyholders from bearing transit risk costs.
The Bottom Line
Using warehouse-to-warehouse clauses is essential in mitigating shipping losses during transfer between warehouses. These clauses, found chiefly in commercial shipping insurance, cover only the transit part of the journey. Thus, always ensure you also secure the right coverage for storage periods to have full protection for your valuable goods in transit.
Related Terms: cargo insurance, commercial insurance, shipping policy, transit coverage, supply chain insurance.
