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Wednesday, March 19, 2014

What is Sympathetic / Taint damage in Marine Insurance ? ? ?

Marine Insurance is confounding and most interesting …. Cargo insurance covers various goods in transit from one place to another, usually sent through a medium – the transporter. There are innumerable possibilities of loss or damage – as the goods passes different hands at different places…  apart from the oft repeated perils of – fire, accident to carrying vehicle / vessel, stranding, running aground etc., there are risks of TPND; Fresh & rainwater damge; hook damage; oil damage; damage by mud, acid and other extraneous substances; sweating and more…….

When a physical loss or damage occurs, the policy holders feel that their claim is genuine and there is need for sympathetic treatment ~ and that Insurers should not take refuge under fine prints…. Primarily Insurance is a contract and naturally any settlement would be bound by the terms and conditions of the agreement. Though the genuinity of the occurrence is established, there could still be non-consideration, if the cause of loss was not an insured peril or was caused by an exception. 

The depth of Ocean insurance offers another terminology – ‘Sympathetic Damage’ :  it is loss suffered by cargo following damage to other goods in the same ship. An example would be taint arising from odour given off by another cargo which has been damaged by seawater.  In Insurance, the loss could have been caused because of an unrelated cargo suffering a loss ! – yet the physical loss or damage to the cargo is to be occur.

With elections around, we hear more of the word ‘taint’ in Politics, of some being tainted by one scam or other … not that all of them lose or shunned thought.  The noun “Taint” would mean : - a trace of a bad or undesirable substance or quality. It is a stain or contamination on the other – the other being adulterated or affected.   Have read that ‘Cork taint’  is a broad term referring to a wine fault characterized by a set of undesirable smells or tastes found in a bottle of wine, especially spoilage that can only be detected after bottling, aging and opening. Though there could be host of factors responsible for the taint - the cork stopper is normally considered to be responsible, and a wine found to be tainted on opening is said to be "corked" or "corky". Cork taint can affect wines irrespective of price and quality level.

Many a times, cargo owners put up claim without properly establishing or detailing the ‘occurrence and cause of loss’ …. No insurance policy would pay for ‘fear of loss’ … more so, when the fear is of ‘marketability’ … that cargo might have suffered some damage and most likely could not be sold in the market.  Sometimes, there have been apprehension on ‘contamination of cargo’ – especially ‘containerised cargo’ – arising either out of stowage with other cargo or from the not so properly cleaned / fumigated container floors.  This is pronounced in case of food products and in one instance – that of paper product that went into making of cup for a food product. 
container floor tainted and contaminated...

Though there are streamlined process of cleaning including steam cleaning wherever necessary, there could be negligence – but a claim against an Insurer can be brought about only when such loss could be established as arising out of fortuity.  In some cases, keeping the cargo in well ventilated condition allowing free air movement could itself free it of the taint. 

On gleaning further came to know of a caselaw ‘Montoya v. London Assurance’ – where hides  were shipped in the same hold as Tobacco.  The  hides became badly damaged by sea water, causing them to ferment and decompose, and the noxious odour arising therefrom tainted the tobacco. The Insurers were held liable for the damage to the tobacco on the ground that the damage to the hides was due to a sea peril and the damage to the tobacco was the direct result  thereof.
stowage one upon the other..

That takes to the principle of ‘proximate cause’ and the chain of causation ….. the dominant cause, which need not be the physically proximate cause – needs to be an insured peril.  Of course there has to be physical loss or damage to the subject matter and a mere suspicion of loss or damage would not make it tenable.

The common examples of cargo susceptible to ‘taint’ are – tobacco, tea chests and butter – absorbing smells of surrounding cargo…. In a strange incidence, food essence became the subject matter of claim…. A package containing chicken fragrance leaked out damaging the nearer package of butter fragrant  ~ though the butter incense was not physically damaged, it picked up the odour of ‘chicken’ ………. Perhaps turning ‘butter-chicken’ and a claim for damage stating that the subject matter could not be used for the intended purpose was put up.

Any views on the above …. and any case-law / update on ‘sympathetic damage’ please…. do post your comments or e-mail Yours Truly

With regards – S. Sampathkumar

19th Mar 2014.

2 comments:

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