The impact of coronavirus on marine insurance isn’t clear cut and a key issue is the extent to which policies respond where there is no physical damage, an insurance professional has stressed.
Matthew Pearson, associate at Clyde & Co., said that marine policies are typically triggered by physical damage, but noted with soft market conditions in recent times policy extensions affording non-physical loss cover have crept into policy wordings.
“In assessing how such policy extensions respond, it will remain important to consider whether, in causation terms, the Coronavirus outbreak is the true cause of the loss rather than having an indirect effect, also whether insurers can establish that other policy exclusions apply,” said Mr Pearson.
“Whilst initial impressions are that the impact of the outbreak on marine insurance may be limited, careful consideration of policy wordings will still be required in the event of a claim.”
Examples of how non-physical loss cover have been included in policy wordings, have been provided by Mr Pearson. (a) Extra expense, forwarding charges or access to property clauses in a cargo policy may trigger coverage; (b) Hull loss of hire policies may respond where a vessel is quarantined or denied port entry; (c) Cruise line policies may respond where a cruise vessel's scheduled itinerary is directly impacted (but query whether quarantine restrictions, as opposed to an actual port closure, is sufficient for this purpose). None of these necessarily depend on any physical loss occurring.
By Rebecca Jeffrey