Inherent Vice as All-Risk Exclusion and its Clarification from Common Law point of view

Abstract

There is an assumption among shippers that as soon as their cargo is insured, their insurance policy would cover any loss caused under any occasion, while there are certain occasions in which insurance policy will not provide coverage. Inherent vice is an important instance in which the shipper’s claim over the cargo is not eligible. This notion is varied from the perils of the sea. It simply refers to any damage caused to the cargo due to the inherent nature of the goods as opposed to any damages inflicted on the goods by the carrier. In other words, the damage is inflicted by internal causes rather than external ones. Some examples of the aforementioned term can be deterioration due to product instability, rust forming due to metal materials/moisture, and combustion (batteries or other substances). The main reason that makes it impossible to be claimed is that it is most clearly outlined in the contract terms or there is no causation found (no exterior causation). This paper will elaborate on the extended meaning of the inherent vice which is not favored by marine insurance with the help of case law.