Dangerous cargo – a hazard to owners and insurers

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A recent decision at a New York Court held a chemical company and tank container operator liable for the cost of repairs to a large container ship and the loss of most of its cargo. This is a timely reminder of the significant increase in liabilities caused by the introduction of huge container ships.

This exposure affects everybody involved in the international transport of cargo that can harm other cargo or the ship on which it is carried, including shippers, receivers, freight forwarders, container operators and their liability insurers.

This is a definite risk to large companies and multinationals with assets that can be proceeded against by claimants, according to Malcolm Hartwell, a director at Norton Rose Fulbright, and a reminder to large companies routinely shipping potentially dangerous cargo to ensure they have appropriate liability insurance and risk avoidance practices in place. For brokers, this means ensuring that their clients have an appropriate liability insurance programme in place that can respond to claims that could easily exceed $1bn. Underwriters need to price their risk appropriately, ensure suitable exclusions and limitations, and make sure potentially catastrophic losses are covered by their reinsurers.

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