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CIF seller and insurable interest

To reject an insurance claim, cargo insurers often rely on policyholder's lack of insurable interest. In The Edina Maria [2020], the c.i.f. sellers got their claim for $0.45m denied for this reason and were now approaching the National Commission of India for redressal.

Cargo insurance was arranged by sellers based in Singapore for a cargo of timber which was to be shipped to India. 6 voyage policies on ICC(A) were taken out in the names of 4 consignees. Consideration was to be paid upon arrival at destination. The vessel ran aground during the voyage and was declared a total loss.

The insured consignees then assigned the policies to seller’s establishment in India (and not to the parent company), who then approached the insurers but claim was refused. As per them, the consignees had no insurable interest at the time of the loss & moreover after the loss they assigned it to a company different from sellers.

As per the commission, loss ought to have been insured by seller in it's own name, not in the manner in which it came to be insured in the names of consignees. The consignees had no insurable interest at the time of loss & their assignment had no meaning.

To be noted, many other jurisdictions are moving towards a more liberal view of insurable interest.

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