Cargo Perils, Exclusions, and Proximate Cause
Scope
This domain examines cargo perils and the doctrine of proximate cause: which event, in the chain of causation, is treated as the efficient cause of loss. It also tests the exclusions that remove losses from an otherwise covered peril.
Core rules
- A peril insured against must be a fortuitous event. Ordinary wear and tear, normal shrinkage and market fluctuation are not perils.
- Proximate cause is the dominant, effective cause, not the last event in time. The loss must be attributed to that cause even if earlier or later events contributed.
- If the proximate cause is an excluded peril, the loss is not recoverable. If it is an included peril, the loss is recoverable even if an excluded peril was also present, provided the included peril remains the efficient cause.
- Inherent vice is a quality in the goods that causes self-deterioration, such as moisture in grain or natural fermentation. It differs from external water damage.
- Delay is excluded as a cause. Consequential loss, such as loss of market or demurrage, is not physical loss of cargo.
- The insured usually has the burden under named-perils covers; under ICC(A), the insurer must prove an exclusion.
Worked example
Cotton bales are damaged by water used by firefighters to extinguish a fire in the hold. The proximate cause is fire, an insured peril under A, B and C; the water damage is not treated as a separate water peril. If the fire was deliberately started by the insured, the wilful misconduct exclusion applies and the claim fails.
Traps
Do not choose the nearest event. Do not treat delay as the cause merely because the loss happened during a delay. Do not label poor packing as inherent vice without evidence: packing is an external protection issue, while inherent vice is a property of the goods.