Both to Blame Clause in Marine Insurance Policies
Both to blame clause is a policy of marine insurance that states that both the owners of the ship shall share the proportion of loss in case of collision of their ship due to the negligence of both the shipper and owners. The both-to-blame clause is defined under clause 3 of the Indian Cargo Clauses (ICC).
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- Both to Blame Clause in Marine Insurance Policies
Parties to the Losses
The following parties shall be responsible for sharing losses caused to the vessel due to collision.
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Cargo Owner
If the ship is collided due to the negligence of both parties on the cargo, the cargo owners of both vessels are subject to sharing the losses to the extent of the degree of negligence.
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The Company Responsible for the Shipment
The company shall bear the equal loss caused to the ship due to the act of both parties.
Both to Blame Clause
Due to the advancement of globalization, the shipping industry is developing at a significant pace. Therefore, the ships are prone to the risk of collision.
Under such circumstances, the companies are advised to purchase marine insurance. The both-to-blame clause in marine insurance provides coverage to the ship owners against the loss suffered by them.
It protects the following events under the marine insurance policy.
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Collision
The marine policy protects the interest of ship owners in case of a collision with another ship or object. However, in the case of negligence of both parties, the losses are shared according to the degree of negligence of both parties.
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Sinking
A ship may sink due to collisions with another vessel. As a result, the goods may be destroyed, and the ship owner may suffer from a huge loss. As a result, the marine policy indemnifies the insured due to the sinking.
Party to Collision
The following can be the party to the damages caused to the marine due to collision with a vessel.
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Master
The master of the vessel is responsible for the cargo, the safety of the vessel and the passenger. In addition, he is expected to plan and execute the route of the vessel.
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Mariner
Mariner is responsible for the smooth running of the vessel in the sea. He ensures that the passengers, cargo and vessel reach their destination safely.
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Captain
The captain of the marine has explicit command over the navigation of the ship. He takes control of the cargo and ensures the complement of the ship with the local and international laws.
The aforementioned person is generally held responsible for the collision of the ship.
Example of Both to Blame Clause
Established in 2005, ABC Construction Company situated in Chennai won a contract to construct a hospital in the USA. However, the company was required to send some construction goods or materials along with machinery and equipment to the USA. The company in its board meeting decided to send its vessel in order to transport the necessary items to the USA.
After determining the risk associated with water transportation, the company purchased a marine insurance policy in order to avert the losses.
On the way to accomplishing its journey, the ship of ABC Construction Company collided with the vessel of XYZ Ltd.
Both companies filed the claim under the marine insurance policy to their respective insurer. The cargo of both ships had the 'both to blame clause’.
The total loss suffered by both vessels was evaluated as INR 20,00,000. Hence, the loss needed to be shared. The surveyor of the ship determined the degree of negligence from both ships and found ABC Construction Company more negligible, which resulted in a loss ratio of 60:40. Hence, the loss was divided as INR 12,00,000 and INR 8,00,000 respectively.
Conclusion
Both to blame clause in a marine insurance policy is applied when both parties are found negligible for the collision of the ship. As a result, both parties share losses on the basis of the degree of risk evaluated by the surveyor.
