At the time of taking a marine insurance policy, it is necessary to mention the name of both the departure and destination ports, which comes under the touch and stay clause.
What is the Touch and Stay Clause in marine policies?
As per the touch and stay clause in marine insurance, the ship should stay only at those ports which are clearly stated in the policy document. In case, the ports are not mentioned in the policy document; it’s necessary for the ship, to take the customary route and stay only at that port that comes in its way.
It means the vessel in the course of the voyage must touch and stay at all those ports which are clearly stated in the policy document. Further, the fact that deviation didn’t increase the risk or the ship regained its position before any loss happened. It would not consider a non-deviation by the insurer who would still consider it as a deviation.
Read more: Who can buy Marine Insurance?
In those situations where the ship goes to any other port, it would be termed as the deviation. If the deviation would be allowed if there are valid reasons behind it.
In case, there mentioned several ports, the ship should touch or stay at all the ports or any one of them. In case, the ship doesn’t stay at the port mentioned in the policy document; the marine insurance company has all rights to reject the claim in case of loss or damage.
In those cases, if changed the ports to either save the ship or the lives on board, the insurer would allow a change in ports and settle the claim, if any. In any case, may allow a change in port only if there is a valid reason and as the policyholder, it would be your responsibility to prove that change in ports needs to secure both lives and goods on board.
Case on touch and stay clause :
A few years ago, L.S Shipping signed an agreement with M.K.M Engineering to export the goods of the company to the Middle East regions. In order to get coverage against various kinds of losses and damages, L.S Shipping purchased a marine insurance policy. As per the insurance policy, the insurer would offer financial coverage to L.S Shipping in case of loss or damage. At the time of buying a marine insurance policy, L.S Shipping clearly stated the name of the ports where its ships would stay. In case the ship did not stay at a port mentioned in the policy document, may consider a deviation. In that case, the marine insurance policy wouldn’t cover losses or damages which may arise due to deviation.
As M.K.M Engineering had to export engineering items to the Middle East, L.S Shipping decided to use its JV Ship. The ports where the ship would stay, are clearly stated in the marine export insurance policy document. However, the ship experienced some technical issues and couldn’t operate at full speed. As a result, there was a change in ports. However, at a charging port, some boxes containing engineering items resulted in damage while unloading.
As L.S Shipping had a marine insurance policy, it approached the insurer for the claim settlement. However, the insurer refused to settle the claim. The insurer appointed a surveyor who found out that L.S Shipping changed the ports without any valid reason. The loss happened at a new port which was different than mentioned in the insurance document. And therefore, the insurer decided to reject the claim.
Read more: What is Warranty in Marine Insurance?
L.S Shipping argued that it had to change the port due to technical issues in its ship. However, the insurer clearly stated that it was the responsibility of L.S Shipping to ensure the proper functioning of its ships and perform all safety tests.
As L.S Shipping didn’t do proper safety tests on its ship, which it had to change its port. The insurer was not responsible for paying for losses or damages which happened at a new port.
