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Drugs found attached to hull, vessel confiscated & insurers refusing to pay out the claim

Unsuspecting vessels are commonly used for smuggling drugs out of Venezuela. The most commonly used methods is to attach the drugs onto vessel’s hull by a diver. Something similar happened in The B Atlantic [2018].

132 kg of cocaine was discovered attached some 10 mtrs below the waterline during a customary pre-departure underwater inspection. Venezuelan authorities confiscated the vessel. Owners looked to 'War Risk underwriters' for a sum of 14135000$ (insured value) plus 5872392$ (sue and labour expenses). Underwriters turned down the claim saying this was an ‘infringement of customs regulation’ which was an expressly excluded peril under Institute War Risk Hull 83.

UK Supreme Court on 22.05.18 AGREED with the UNDERWRITERS. The court further said that the words ‘any person acting maliciously’ (which formed part of an insured peril) do not cover such situations.

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