DEFINITION of ‘Inchmaree Clause’
A clause found in maritime insurance policies which provides coverage for the ship’s hull from loss or damage caused by machinery. The Inchmaree clause, also called the negligence clause, covers damage that is caused by negligence of ship personnel, such as engineers and captains, when navigating. It is a type of additional perils clause.
INVESTOPEDIA EXPLAINS ‘Inchmaree Clause’
Shipping cargo across vast oceans can carry great risk. In addition to storms potentially sinking or flooding a ship, the actions of the ship’s crew and other personnel responsible for maintaining a properly working vessel may result in damage to the ship’s cargo. For example, a boiler that is not properly maintained may burst, causing a ship to lose power and run aground, or a shaft may break loose and strike items held in the cargo bay.
Until the Inchmaree clause was established, most cargo insurance policies only covered perils that occurred while on the open sea, such as bad weather. This changed in the late 19th century. The Inchmaree clause is named after a British court case, Hamilton v James and Mersey Insurance. The case involved the Inchmaree, a British steamer that sunk in Liverpool harbor in 1884. The ship’s cargo was damaged when an internal pump flooded the holding area, but the cargo owners’ claims were denied by the insurer because the damage was not caused by the “perils of the sea”. The maritime insurance industry was pressured to provide additional coverage for accidents that were not caused by the sea, and instead caused by other factors such as negligence.
The clause typically provides additional coverage for damage or loss caused by broken drive shafts, burst boilers, hull defects and other problems associated with a ship and the ship’s equipment. Additionally, policies will cover negligence from a ship’s officers, engineers and crew, including errors in navigation.