Meaning
Standard policy provision denies coverage for loss or damage caused by insufficiency or unsuitability of packing or preparation of the subject matter insured. Institute cargo clauses clause 4.3 exclusion applies when the goods are not protected against the ordinary risks of the planned voyage. This provision is found in the widely used A and B versions of the standard marine insurance terms.
Packaging Standard
Shippers must use materials and methods that can withstand the vibrations and humidity changes of international transport. When institute cargo clauses clause 4.3 exclusion is invoked, the insurer argues that the damage was inevitable because the crates were inadequate. This includes the internal stowage of the goods inside a container.
Underwriter Defense
Insurers use the results of a marine survey to determine if the packing met the industry requirements at the time of shipment. Because institute cargo clauses clause 4.3 exclusion is a common reason for the rejection of claims, exporters must document their packing processes with photographs.
Liability Boundary
Professional packing by a third party contractor can shift the risk if the contractor provides a guarantee of suitability. Use of institute cargo clauses clause 4.3 exclusion does not apply if the packing was performed by an independent agent after the start of the transit. Understanding this boundary is essential for companies shipping fragile battery cells.
Proper selection of dunnage and moisture barriers reduces the risk of a claim being denied under this clause.
