When leasing containers, it’s essential to understand the key terms that outline your insurance coverage. In this article, we’ll explain important terms from the xChange Container Insurance Policy, including General Average, Total Loss, Constructive Total Loss, Mysterious Disappearance, and New Impact Damages. These definitions will help you better understand your coverage and what to expect in different scenarios.
Table of Content
General Average
What is General Average?
General Average is a principle in maritime law where all parties involved in a sea voyage (shipowners, cargo owners, etc.) share the losses if part of the ship or cargo is sacrificed to save the rest in an emergency.
Example:
If a ship has to jettison (throw overboard) containers during a storm to stabilize the vessel, the losses are shared among everyone with cargo on that ship, even if your container wasn't thrown overboard.
Total Loss
What is Total Loss?
Total Loss refers to a situation where the container is completely destroyed or lost, and cannot be recovered or repaired. Both Constructive Total Loss and Mysterious Disappearance are subcategories of Total Loss.
Example:
If a ship sinks and your container is unrecoverable, this would be considered a Total Loss.
Constructive Total Loss
What is Constructive Total Loss?
Constructive Total Loss happens when the container is not entirely destroyed, but the cost of repairing or recovering it is more than the DRV (Depreciated Replacement Value).
Example:
If you file a damage claim but the repair estimate provided by the depot states that the repair cost would exceed the DRV value of the container, it is classified as a Constructive Total Loss.
Mysterious Disappearance
What is Mysterious Disappearance?
Mysterious Disappearance refers to a situation where the container goes missing under the custody of the User and/or their consignees without the clear indication of theft.
Example:
If your container is listed on a ship’s manifest but is not there when the ship arrives at its destination, and no one can account for where it went, it’s a Mysterious Disappearance.
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