Fear of Loss

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A marine policy issued under All Risk terms does not cover “Fear of loss” as the loss apprehended by the owner of the goods is imaginary and not real.

Example 1

30 Chests containing teas were despatched from Garden to Auction centre when 10 chests were damaged during transit but remaining was sound.  It was apprehended by the Assured that although 20 chests were arrived as sound but would not be able to fetch the reasonable market price as it arrived at the Auction centre with the damaged chests.  Hence, the Insurer should consider the claim for loss of market price of the sound chests also.

Since there has been no physical loss or damage to the sound chests, the claim of the Assured will not be admissible under the policy as it will be considered as “Fear of Loss”

Example 2

A consignment of crude palm oil was despatched by a vessel in her three separate holds. On arrival of the ship, but prior to discharge, the contamination of cargo in two tanks of the ship was noticed but the cargo present in the third tank was sound.  Cargo from the third tank was discharged separately and the contaminated cargo of two tanks was declared as not fit for human consumption. Although the chemical tests of the cargo kept in the third tank was declared as sound but the Assured refused to accept the same with the reasons  that, simply by association, the cargo kept in the third tank should not be deemed to be sound for which buyers would be prepared to pay full amount for the sound goods.

However, since the Assured is unable to show that the cargo kept in the third tank was physically damaged, the liability under All Risk policy will not be attached. If the buyers do not want to pay the full price of the sound goods, the same will be considered as “Fear of Loss”.

While recovery of a claim under “All Risk” policy, it is not required for the Assured to show exactly how the loss or damage occasioned. It is to be shown that the loss or damage was caused due to fortuity.