Page 30 - Insurance Times February 2024

The Court found that if, hypothetically, the loss was caused where the detention is the result of the act of third parties
proximately by the malicious act of the drug smugglers, it and in no way attributable to the owners.
was also caused by the detainment of the vessel arising from The difficulty with war risk insurance is the inability of an
infringement of Venezuelan customs regulations – the insurance company to accurately assess the possible
detainment was not only a mere manifestation of the outcome of damages and therefore calculate appropriate
attempted smuggling. The Court was not willing to limit the premiums to charge. Furthermore, the damage from war
exclusion to the effect that it would not apply to malicious
or related activities can be so vast and unpredictable that
acts, and even if it had, that would have made little
even high premiums might not be enough to cover the
difference because the concurrent peril of “detainment” was damage that insurance companies are liable for. This makes
operative and was clearly excluded by the terms of the war insurance an unknown quantity for insurance companies
insurance.
with a high risk that a war insurance policy could send them
Accordingly, the owner’s claim failed. into insolvency.

It is essential for owners and operators to know whether *I am thankful to Dr.S.Mukherjee, an Expert and
their war risks insurance will respond to claims arising out International Investigator for Maritime Fraud for his advice
of the detention of their vessels. That will ultimately depend
on the terms of the insurance and the circumstances of the Dr. Soumi Mukherjee completed her Graduation in Mass
detention. Where the detention arises from the lawful act Media and Masters in Mass Media from University of
of a foreign government, whether for infringement of Mumbai, later completed her Ph.d. She is interested in
customs legislation or in the context of a criminal Investigative Journalism related with History, Geography,
investigation, that is most likely excluded from traditional Zoology etc. She is currently serving in Media Officer
war risks policies. That may follow even in circumstances with International Police Organization.

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28 February 2024 The Insurance Times