An importer of fresh produce takes delivery at Fos of two refrigerated containers whose temperature has drifted. It notifies the claim to its cargo insurer. The insurer’s surveyor points to inadequate pre-cooling at loading, and therefore to inherent vice of the goods, and a denial of cover is looming.
The cover
Cargo insurance covers the goods carried. Under French law, the insurer is liable for physical damage caused to the insured property by any peril of the sea or by force majeure (Article L. 172-11 of the French Insurance Code). French policies (“all risks” forms or “FPA unless” forms, FAP sauf) and the English clauses (Institute Cargo Clauses A, B or C) then define the actual scope of the cover and its exclusions.
The insured’s obligations after the loss
The insured must help to salvage the goods and take all measures to preserve its rights against liable third parties (Article L. 172-23 of the Insurance Code). In practice: written notice of loss to the carrier on delivery, or within three days for non-apparent damage (Article R. 5422-24 of the French Transport Code); inviting the carrier to attend the survey; preserving evidence (temperature records, photographs, seals). Negligence on this point allows the insurer to reduce its indemnity, since it jeopardises the insurer’s recourse.
Grounds for denial of cover
Inherent vice of the goods. The insurer does not cover loss resulting from inherent vice of the insured property (Article L. 172-18). For perishable goods, the debate concerns causation: a defect in the goods or a failure in the carriage.
The insured’s fault. Fault does not deprive the insured of cover, save for failure to take reasonable care to protect the goods, or for intentional or inexcusable fault (Article L. 172-13). Manifestly unsuitable packaging is often relied on.
Policy exclusions. Delay, war, strikes, insolvency of the carrier: each policy has its own exclusions, which must be read closely.
After the indemnity is paid
The insurer that has paid is subrogated to the insured’s rights against the carrier (Article L. 172-29). It then brings the claim, within the one-year time limit applicable against the carrier (Article L. 5422-18 of the Transport Code). The insured retains a claim for the uncompensated portion, in particular the deductible.
What the firm checks first
- The policy: conditions, cover, exclusions.
- The notices of loss and the joint survey.
- The cause of the damage according to the technical evidence.
- The time limits: two years against the insurer and one year against the carrier.
- The uncompensated portion to be claimed from the carrier.
For the firm’s services, see Marine insurance.
Further reading
- FOB, CFR, CIF: who can sue the carrier after cargo damage?
- Hull insurance: challenging a denial of cover
- One-year time limit against the sea carrier: interrupting, extending, seeking recourse
For a loss involving a Chinese port, claims now follow a calendar of their own. See Trade with China: your governing-law clause no longer holds before a Chinese court.
This analysis is part of the firm’s work in maritime law.
Frequently asked questions
What is the time limit for a claim against the cargo insurer?
Two years (Insurance Code, Article L. 172-31).
Can the insurer refuse to pay on grounds of inherent vice of the goods?
Yes, if the loss results from inherent vice (Insurance Code, Article L. 172-18). The cause is established by survey.
What happens once the insurer has paid?
It is subrogated to the insured’s rights against the carrier (Insurance Code, Article L. 172-29).