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What is Jettison in Marine Insurance?

  • Author :
  • TATA AIG Team
  • Published on :
  • 11/04/2024
  • 2 min read

Various risks are involved during sea transit, such as bad weather, equipment failure, and more. Thanks to new navigation technologies and safety measures, this has drastically decreased.

However, there are still chances that a sea voyage can cause ship damage or delay in cargo delivery. Due to this, many businesses consider purchasing a marine insurance policy to compensate for loss or damage.

Marine insurance has various elements, such as the jettison clause. In this blog, we will learn about jettison’s meaning and purpose in a marine insurance policy.

What is Jettison in Marine Insurance?

Jettison refers to throwing off cargo or equipment from the ship or vessel to lighten its load and prevent it from sinking. This is a common practice taken by the ship or crew member to save lives during unforeseen situations.

Jettison’s meaning in marine insurance is considered a sacrifice made to protect the insured property for the covered peril. The property or goods that are scrapped are marked as sacrifice goods. The jettisoned or sacrificed goods are entitled to compensation by the insurance provider for the damage or loss caused by the peril covered under the policy.

This is generally covered under the "sue and labour" clause in the marine insurance policy. Under this clause, the insured is advised to take preventive or reasonable action to minimise the damage or loss.

The decision for jettison is usually taken by the ship captain or master, who is responsible for the vessel and its crew's safety. The ship captain needs to account for various factors, such as the severity of peril, the value of goods, ship stability and more, before jettisoning.

Reasons for Jettison

The jettison in the ship can occur due to a variety of reasons, such as:

  • Rough or bad weather.

  • Fire

  • Equipment Failure

  • Piracy

  • Collision

Problems Caused By Jettison

When a ship or crew member sacrifices goods, it also causes various other problems, such as:

  • Environmental Impact: The goods that are tossed in the ocean during an emergency situation can cause environmental impact. Generally, crew members don't pay attention to what they are throwing out.

    Certain goods, such as batteries or hazardous materials, when thrown into the ocean, can cause significant environmental damage.

  • Financial Loss: Another problem jettisoned causes is a significant financial loss to a business. The goods thrown out of the vessel are unlikely to recover, leading to financial loss.

  • Shipping Delays: The loss of cargo or goods during the transit can cause shipping delays. When the customer doesn't get the cargo on time, they are likely to cancel the contract. Furthermore, if a business manages to deliver a new order to a customer, it can cause missed delivery dates.

  • Operation Impact: The jettison also affects the operation of a business. When the goods are thrown out or lost during transit, it affects the whole operation of a business. They need to send the package again, which means a new vessel, packaging, new paperwork and more expenses.

Principle of General Average & Jettison Clause in Marine Insurance Policy

The marine insurance policy employs the principle of general average, which is a legal principle of Maritime law.

When a ship owner decides to jettison cargo to save lives or prevent great peril, according to this principle, all the parties that are involved in the sea or ocean voyage will share the loss proportionally.

In simple words, the insurers, cargo owners and ship owners will share the value of sacrificed goods. Each party's contribution is decided based on the value of their respective interests.

The principle of general average is only applicable when the goods are jettisoned to save the entire vessel or ship from peril.

Let's understand the principle of general average by example:

Suppose a vessel has 50 containers and 50 passengers on board. During transit, one of the containers caught fire. The fire then spread to 9 other containers.

To save the ship and its members the captain decides to jettison all 10 containers.

Since the action is taken to prevent the great peril and save the lives of crew members, the loss of 10 containers will be shared among all 50 customers instead of 10 whose containers are thrown out.

Types of Goods Jettisoned in Marine Insurance

Below are some common types of goods that are generally jettisoned during sea transit.

  • Dangerous goods: The very first thing thrown out of the vessel during the incident is dangerous goods. These goods can cause further damage to the ship or vessel, so it is safe to jettison them.

    The goods that come in the dangerous category are chemicals, flammable materials, and explosives. Due to their hazardous nature, these goods are generally insured for a higher value.

  • Heavy goods: The goods that come under this category are machinery, construction materials, vehicles, etc. Since these goods are heavy, moving them from one point to another can cause more damage to the ship. These goods are also insured for a higher value.

    Non-essential goods: These are items or goods that are not essential for the survival of crew members during the accident. They only create a burden on ships. Since these goods are insured for a lower value, they can be easily disposed of to save the high-value cargo.

  • Perishable Goods: These goods include fruits, meat, raw vegetables, etc. Since these goods can rot or decompose fast, it can cause health hazards on the ship. These goods are insured for a lower value making it a feasible option to dispose of.

Procedure to Claiming Jettison in Marine Insurance

The jettison or sacrificial goods can be covered under the marine insurance policy as per the policy condition. However, to get the claim, policyholders need to follow the procedure.

  • Step 1: Notify the insurance company about the incident.

  • Step 2: The notification of the goods lost should contain information about the incident, such as the date and time of the accident, the value of cargo and more.

  • Step 3: After notifying the insurance company, the policyholder needs to file a claim. The claim needs to be filed within the stipulated time duration.

  • Step 4: Submit the reque- **Sted document for the claim amount.

  • Step 5: After verifying everything, the insurance provider will release the amount.

If the policyholder fails to inform the insurance company on time it can lead to claim rejection.

Document Required for Claiming Jettison in Marine Insurance

The documents required for claiming jettison in marine insurance are:

  • Bill of lading

  • Original marine insurance policy document.

  • Value or bill of goods.

  • Identity and address proof document.

  • Cargo manifest document.

  • Any additional document asked by the insurance company.

Time Limit for Jettison in Marine Insurance

The time limit for jettison clauses in marine insurance is 30 days after the incident or accident. The policyholder needs to file for the jettison claim in a decided timeframe. Failure to file a claim in a decided timeframe can lead to claim rejection.

Role of Adjusters in Jettison Claims

During a jettison incident, the cargo owner files a claim with their insurance company to compensate for the damaged or lost goods. The adjuster comes into play at the time of filing a claim. They handle jettison claims.

The adjuster investigates the whole accident, such as the reason for the jettison and the extent of damage. To determine all of this, the adjuster works closely with the cargo owners, parties involved, and ship owners to determine the exact value of jettison goods.

Adjusters also know the terms and conditions of the policy very well, so they work in accordance with the policy. They also know about the laws governing jettison claims. The purpose of the adjuster is to verify everything and reach a fair settlement amount.

Best Practice to Prevent Jettison

Unforeseen situations can occur without prior warning; however, by taking some preventive measures, the vessel owner can prevent the jettison.

  • First and foremost, ensure that the vessel is loaded correctly and up to its weight mark. Do not overload the vessel in any situation. If the vessel is not loaded properly, it can cause instability, which leads to jettison.

  • Another thing is to ensure that the ship and crew members are skilled and trained with ship procedures and equipment. Trained staff will handle the situation more actively and reduce the risk of jettison.

  • Besides this, it's also crucial to have an understanding of the jettison clause in marine insurance. It will help in knowing the situation where jettisons are covered and the exclusions where the jettisons are not covered. A clear understanding of policy terms and conditions will help shipowners to make an informed decision.

Conclusion

Jettison during sea transit is a very old practice. To save the ship from great peril, the ship captain sacrifices goods. This can cause severe financial loss to the involved parties.

However, with a marine insurance policy, businesses can cover the sacrificed goods under the jettison clause. Tata AIG is a well-known insurance provider that offers a cost-effective marine insurance policy. Explore the website to learn more about their marine insurance plan.

Frequently Asked Questions

1. What is the purpose of the jettison?

The purpose of the jettison during the ocean voyage is to save the life of a ship or crew member in case of peril. During the voyage, if unforeseen situations occur in the ship then the ship captain can throw out goods to save the ship and its crew member.

2. What is the jettison of a ship?

It is an intentional act to throw out the ship's goods and cargo to save the rest of the vessel.

3. Does the insurance company cover jettison?

The jettison is covered under the sue and labour loss of the marine open policy, which mentions the preventive action taken to minimise the damage or loss.

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Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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