What Is ‘Jettison’ and How Is It Covered in Marine Insurance?

The maritime business involves significant risk to the cargo and vessel, given the unpredictability of the waters. Hence, most marine businesses opt for marine cargo insurance to minimise losses.

Marine insurance operates on various principles and clauses to ensure smooth navigation and fair compensation to all entities involved. Jettison is one such clause in marine insurance that holds significant importance. Since it is a crucial part of the marine insurance contract, let us discuss its meaning and purpose in depth.

What is Jettison?

Jettison is a clause in marine insurance which allows the ship owner or carrier to throw or jettison the cargo and goods onboard to protect the ship, crew and passengers from imminent dangers.

Jettison is a clause that comes into play in exceptional circumstances where it is necessary to get rid of the cargo or goods for safety reasons. Some situations in which jettison takes place under transit insurance are as follows.

• When the weather conditions at sea turn perilous due to extreme weather, navigational difficulties, etc., some of the cargo may have to be jettisoned to save the vessel.
• In some situations, the cargo may be damaged or leaking and it may pose a threat to the other contents on the vessel. In such circumstances, it is best to get rid of the cargo to prevent any further losses.
• Sometimes, the vessel may encounter stability or weight issues. Thus, utilising the jettison clause is the only way to get rid of the excess weightage and save the vessel and members on board.

Jettison and Its Coverage in Marine Insurance

Jettison is a peril covered under marine insurance. When the goods are jettisoned, the cargo owner is eligible to claim compensation for the losses. He can claim the losses from the shipowner and the cargo owners and other parties involved in the ship voyage.

To put it in simple words, the insurers, cargo owners and ship owners share the loss proportionately towards the compensation. 

During emergencies, the ship’s crew does not have sufficient time to make calculated decisions for jettison. Thus, one cargo owner may lose all of his goods, while another owner may not lose any. Here, the general average clause comes into the picture to distribute the losses evenly among all the parties.

Here is an example to understand how jettison is covered under cargo insurance.

Suppose a ship is carrying 100 containers and 50 passengers on board. Due to overload, the ship crew had to jettison 10 containers. This act was necessary to prevent the ship from sinking. The loss of these 10 containers will be shared among the owners of all 100 containers and not just those of the 10 containers.

Jettison Claim and Insurers’ Liability 

When a cargo owner raises a claim under the jettison clause, the insurer is liable to compensate him as per the marine insurance clause. However, the total compensation is shared by all the entities involved in the voyage. Hence, to determine the insurer’s share of compensation, an adjuster is appointed.

The adjuster verifies the incident, determines the losses and comes to a fair amount that the insurer must pay the insured. The adjuster decides the value of the jettisoned goods after consulting with the cargo owner, ship owner, and other parties involved in the incident.

Why is the Jettison Clause Important?

1. Facilitates Risk Management – The jettison clause plays a very important role in the marine insurance landscape, as it helps in managing the risk associated with the maritime business. It enables the ship owners to make quick decisions to protect the vessels and get the necessary legal support thereafter.
2. Clarity – The Jettison clause draws clear guidelines that enable the ship owner and captains to have a clear picture of the legal and financial consequences. Thus, they can act decisively during critical moments.

3. Fair Compensation – By distributing the financial load among the entitled parties involved in the voyage, the jettison clause ensures that the parties suffering a loss receive fair compensation. In this way, the chances of legal disputes and quarrels are reduced significantly.

TATA AIG Marine Insurance Plan: Your Gateway to Secure Maritime Business

The jettison clause is a very crucial component of marine insurance that ensures fairness prevails when goods are jettisoned and the cargo owner suffers a loss. Jettison may be required anytime; hence, it is important to have your guards up.

To safeguard yourself from jettison losses, you can opt for an efficient marine insurance policy from reputed providers such as TATA AIG. With affordable and comprehensive plans, you can rest assured that you will receive adequate claims for all your losses!

Apart from the jettison clause, their plans cover many other sea perils, including piracy attacks, sinking, natural calamities and so on. They offer various types of marine insurance, such as hull insurance, marine cargo insurance, damage liability insurance, etc.

Get your marine insurance today and secure your maritime business from unexpected losses.