What does the inchmaree and liner negligence clause mean

28 March 2018

In this regular feature we take a look at common clauses found in Energy Insurance that are often not well understood and try to look at what their intentions are, and what they cover or exclude. In this article we look at the Additional Perils (Inchmaree) Clause and Liner Negligence Clause.

The ‘Inchmaree’ or ‘Negligence’ Clause was introduced as a direct result of a case that came before the House of Lord’s called Thames and Mersey Marine Insurance Co Ltd v Hamilton, Fraser and Co, ‘Inchmaree’ (1887) which drew attention to the problems that could arise with some claims made under the auspices of ‘perils of the seas’. Often referred to also as the ‘additional perils clause’ the clause is now contained within the standard hull insurance (Institute Time) clauses.

Inchmaree was a steamship insured under a time policy, wherein the risks insured against included ‘perils of the seas’.

Whilst lying at anchor awaiting orders, it became necessary to pump up the main boilers by means of the donkey engine. However, a valve in the pipeline between the donkey engine and one of the boilers was closed, due, it was admitted, to the negligence of the engineers. The result was that the donkey engine became over-pressurised and was damaged. The shipowner claimed on their insurance policy for the cost of replacing the donkey engine.

The House of Lords, in reversing the decision of the Court of Appeal, ruled that such a loss was not covered by ‘perils of the seas’ or ‘all other perils’.

The Inchmaree Clause was introduced to give cover for damage caused by negligence of the master or crew. Over the years it was extended to include other ‘Additional Perils’ such as bursting of boilers or breakage of shafts or latent defect, and was often referred to as an Additional Perils clause. These days these perils are now incorporated in to the standard Institute Hull clauses so the Inchmaree clause has become obsolete, although it is still referenced as such in the American Institute Hull clauses.

However this clause should not be confused with the Institute Additional Perils clause (often referred to as Liner Negligence clause) which unlike the standard hull clauses (or the previous Inchmaree clause) specially extends cover to the repair or replacement of the defective part itself. However the clause does not include the cost of repairing or replacing any part found to be defective as a result of error in design or construction that has not caused damage to the insured vessel. This clause also extends the ‘negligence’ of the master or crew under the standard hull clauses to the negligence of ‘any person whatsoever’ but does not cover losses caused by want of due diligence by the Assured, owners or manager, of the vessel.

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If you require any further information, please contact John Cooper, Managing Director on +44 (0)20 7466 6510 or email john_cooper@jltgroup.com