On Tuesday 23 March the container ship ‘Ever Given’ ran aground in the Suez Canal. The vessel, capable of carrying the equivalent of 20,000 twenty-foot containers and measuring nearly a quarter of a mile long, completely blocked one of the world’s busiest and most vital shipping lanes.

According to the BBC, at the time that the Ever Given was moved from the Suez canal to Great Bitter Lake, an estimated GBP7bn worth of goods a day were being delayed, meaning significant disruption to global supply chains.

Our insurer partner NMU explains below what this means to Cargo policyholders.

It is of course impossible to provide an all-encompassing statement that embraces all variants of circumstance and policy wordings; however as most UK cargo policies will be based on the Institute Cargo Clauses. NMU provide some general comments:

Is cover in force during any delay?

For any goods on board Ever Given or on vessels that had already commenced their journeys, the delay would be deemed to be within the ordinary course of transit and cover remains in force.

Is there any cover for costs arising from the delay?

As with most property covers, under the terms of the Institute Cargo Clauses, the subject matter insured must have suffered physical loss or damage for a claim to be recoverable.

If a cargo owner suffers an inability to fulfil orders or loses trade due to a breakdown in the supply chain caused by the delay, there is no such physical loss or damage and it is therefore unlikely that there would be a recoverable claim.

There is also a specific exclusion within the Institute Cargo Clauses for any loss, damage or expense proximately caused by delay.

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