Understanding War and SR&CC Coverage in an Open Marine Policy

In its simplest form, an “All Risk” cargo insurance policy protects goods in transit against physical loss or damage from an external source. Whether it is freight damaged in an overturned truck, a container falling off an ocean vessel, or an airline losing a pallet of goods during transit, cargo insurance is there to make you whole again. But within a cargo insurance policy are exclusions and paramount warranties that exclude certain risks. 

• Free of Capture & Seizure Warranty (FCS) - excludes loss or damage to cargo as a consequence of hostilities or war like operations, whether there is a declaration of war or not.
• Strikes Riots & Civil Commotion Warranty (SR&CC) – excludes loss or damage to cargo resulting from strikes, riots, civil commotions, lockouts, vandalism, and sabotage, including terrorist acts and any other acts carried out for political or ideological purposes.

• Cargo War Risk Open Policy – A separate policy within the main cargo insurance policy. Extends coverage to certain risks excluded in FC&S Warranties, including capture, seizure, destruction or damage by men-of-war, piracy, arrests, restraints, detainments and other war-like operations. The coverage applies to goods in transit only and excludes ground transportation and goods stored in warehouses. Coverage attaches when the goods are loaded on overseas vessels or aircrafts and ends upon discharge at destination (or 15 days after arrival at port of discharge if still on the vessel or aircraft). For shipments moving through multiple ports, the coverage ends 15 days after arrival at the transshipment port.
• Strikes, Riots, & Civil Commotion Endorsement – An endorsement added to the policy. Extends coverage to risks excluded in the SR&CC Warranties, including physical loss or damage caused by Strikers, locked-out workmen, or persons taking part in labor disturbances or riots or civil commotions. It also includes damage or loss directly caused by vandalism, sabotage, or malicious acts. Lastly, it covers losses caused by the act or acts of one or more persons, whether or not agents of a sovereign power, carried out for political, terroristic, or ideological purposes. Damage may be accidental or intentional.

Although these endorsements reinstate coverage previously excluded, it is important to note that both endorsements usually come with a 48-hour cancellation provision, allowing the insurance company to cancel the coverage with 48 hours’ notice. This provides insurers a certain level of flexibility during these events and encourages the industry to avoid moving goods through those high-risk areas when possible.

Keeping up with the evolving landscape of trade and supply chain risk management can be difficult. As a logistics-focused cargo insurance broker, ECIB has the expertise and experience needed to ensure your supply chain is covered. Our experts are happy to help you fully understand your current coverage, contact us today for a free policy review.