Inchmaree Clause

An Inchmaree clause is found in maritime insurance policies and 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.

The Inchmaree clause was, in large part, developed with the advent of steam navigation and machinery aboard vessels. 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.

The Inchmaree 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. The Inchmaree clause also extends to damage resulting from accidents in loading, discharging, and handling cargo; negligence of charterers or repairers; accidents while going on and off dry docks, scraping docks, etc.; and explosions on shipboard or elsewhere. 

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 19^th century. The Inchmaree clause is named after a British court case, Hamilton vs. 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.

There is often a tension between the Inchmaree clause and the warranties under the policy. Warranties, in particular promissory warranties, are usually found in almost (if not all) marine insurance policies. The warranty is regarded as an essential term of the contract, non-compliance with which discharges the insurer from liability, arguably, even if there is no causal link between the breach of the warranty and the insured loss.