Co-mingled Cargo

What is co-mingled cargo?

The cargo is considered to be “Co-mingled” when a ship loads cargo of the same specification from different suppliers into the same hold or tanks with no segregation and intends to deliver to various consignees/receivers under several Bills of Lading.

 

However, if the cargo is procured from the same suppliers but loading is done from different shore tanks, barges etc. the cargo loaded there in shall not be termed as “Co-mingled”.

Adjustment of claim for co-mingled cargo.
Sometimes the client approaches their underwriters to cover the shipment of bulk cargo (Dry or liquid). The ship which carries the cargo for the client may also carry the cargo of same specification in the same holds/tanks under separate Bills of Lading issued to the different consignees. If the cargo arrives short, how the claim for shortage will be adjusted?

 

Example: 1
Per bottom limit: Rs 50,00,000/-
Excess: 1% excess on the value of whole consignment.

If the consignment value for a single shipment is Rs 50,00,000/- and shortage is quantified as Rs 1,00,000/-, the liability under the policy shall be Rs 50,000/- only after considering the policy excess.

However, where the cargo of same specification under separate Bills of Lading of different consignees is dispatched in the same vessel, the loss, if any, under the particular policy should be adjusted by prorated application to individual sum insured of all the consignees.

The following example will show that adjustment of claim will not be equitable if prorated application to individual sum insured of the all the consignees is not done.

Certificate	Sum  Insured	Shortage	Deductible	Net Claim
Certificate no I	Rs 10,00,000/-	NIL	Rs 10,000/-	NIL
Certificate no 2	Rs 5,00,000/-	NIL	Rs 5, 000/-	NIL
Certificate no 3	Rs 20,00,000/-	NIL	Rs 20,000/-	NIL
Certificate no 4	Rs 15,00,000/-	Rs 1,00,000/-	Rs 15,000/-	Rs 85,000/-
Total	Rs 50,00,000/-		Rs 50,000/-	Rs 85,000/-

 

 

It is observed from the above example that the consignees under certificate no 4 will get more than the amount shown in the first example due to inequitable adjustment of the claim.

In Bulk cargo trade, it is a common practice of some unscrupulous consignees to receive full quantity of cargo, if not more to avoid policy excess. Such situation arises if any of the consignees arrive late to receive their portion of cargo and allow others to take more than their allotted quantity. If adjustment of claim is done with a prorated application to individual sum insured of the consignees, the adjustment of the claim will be as under:

 

Example-2

Certificate	Sum Insured	Shortage	Deductible	Net Claim
Certificate no I	Rs 10,00,000/-	Rs 20,000/-	Rs 10,000/-	Rs 10,000/-
Certificate no 2	Rs 5,00,000/-	Rs 10,000/-	Rs 5,000/-	Rs 5,000/-
Certificate no 3	Rs 20.00,000/-	Rs 40,000/-	Rs 20,000/-	Rs 20,000/-
Certificate no 4	Rs 15,00,000/-	Rs 30,000/-	Rs 15,000/-	Rs 15,000/-
Total	Rs 50,00,000/-	Rs 1,00,000/-	Rs 50,00,000/-	Rs 50,00,000/-

 

 

The above adjustment shows that the shortage of Rs 1,00,000/- is apportioned between all the consignees considering their individual sum insured is declared under the policy.

 

Hence, the policy should be issued with “co-mingled clause” where the cargo of same specification under separate Bills of Lading of different consignees is dispatched in the same vessel. The following version of “Co-mingled” Clause should be incorporated in the policy.

 

“It is agreed that when property in bulk is stowed so as to be Co-mingled with like property belonging to others, loss or damage arising from a peril insured against shall be apportioned over the party or parties involved in the shipments in accordance with the respective interest(s) of the said party or parties involved in the ratio of the quantity of property belonging to each party bears to the total quantity of produce stowed at the time and place of loss.”