What is a both-to-fault collision clause?
A both-to-fault collision clause is part of an ocean marine insurance policy, which states that if one ship(s) collides with another due to the negligence of both, both the shipowners and the shippers are in proportionate loss. should take part. The monetary value of their cargo and interests before the collision. Both the owner of the cargo and the company responsible for the shipment are required to pay for the damage.
- A two-to-fault collision clause is an insurance policy clause that states that both shipowners must share responsibility for a collision between ships if the accident was caused by negligence.
- Marine insurance coverage covers actions such as a sinking or collision of a ship, but does not cover damage or war.
- The Hague–Visby Rules state that if carriers have done due diligence to provide a seaworthy vessel they are not liable for claims resulting from a collision, partly or wholly due to negligent navigation.
- The both-to-fault collision clause is designed to preserve security under the Hague–Visby Rules by giving a carrier a contractual indemnity against cargo interests.
How the two-to-fault collision clause works
As globalization increases, so does the shipping industry. In the event of a collision, the Company’s liabilities, and thus the risk, will be limited to Marine Insurance. A marine marine insurance provides coverage against damages to ships. It provides protection in the event of damage or destruction of the ship’s hull and/or ship’s cargo.
Some of the protections provided under this insurance include:
- The collision of a ship with another ship or object.
- The sinking, capsizing, or entrapment of a ship.
- Fire, piracy, jettisoning (throwing property over water to save other property).
- Baratry (fraudulent or illegal act by the owner or crew of a ship).
Damage caused by wear and tear, moisture, rot, mildew and war is not included in the coverage.
The Hague–Visby Rules provide that, if the carrier has done due diligence to provide a seaworthy vessel, they may collide partly or wholly due to negligent navigation (Article IV Rule 2(a)) shall not be liable for claims arising out of, Typically, both vessels are partially to blame for the collision and the cargo interests can then damage their claims against the non-carrying vessel.
Under US law, claimants could recover their claims in full from the other vessel’s owners, who could then recover a half from the carriers. This rule prevents shipping error defense. It also creates a situation in which the resumption of cargo interests cannot be achieved if the cargo ships are solely at fault. The both-to-fault collision clause is designed to preserve security under the Hague–Visby Rules by giving a carrier a contractual indemnity against cargo interests.
Example of a both-to-fault collision clause
If Ship A collides with Ship B, due to Ship B’s fault, the owner of any goods in Ship A that is damaged or lost through Ship B’s fault may claim 100% of the damages from Ship B’s owners . ,
However, both because of the no-to-fault collision clause, and in circumstances where the division of defect is assumed to be 50/50, the owner of Ship B has the right to claim 50 percent of his liability from the owners of Ship A.
This leaves Ship A with a bill of half the cost of damages, so Ship A returns that cost to the owner of the goods, via a both-to-fault collision clause in the bill of lading.