The incident involving the MV Mississippi at the Port of Long Beach is a complex maritime casualty that will trigger multiple types of insurance claims. The recovery process depends on the type of insurance coverage held by the involved parties and the legal concept of liability.
Key Insurance Policies and Principles Involved
Marine Cargo Insurance: This is the most relevant policy for cargo owners (shippers/consignees). It is typically arranged on an “all risks” basis, meaning it covers physical loss or damage to the insured goods from any external cause, unless specifically excluded. This policy responds first.
Ocean Carrier’s Liability (Bill of Lading Contract): The carrier’s liability is governed by international conventions (e.g., The Hague-Visby Rules). The carrier is liable for loss or damage unless they can prove the loss was due to an “error in navigation or management of the ship” or a “peril of the sea.” In a stowage collapse, shippers will argue it was due to improper stowage (carrier’s fault), while the carrier may argue it was due to a sudden, unforeseen event.
Protection & Indemnity (P&I) Insurance: The ship owner (carrier) is a member of a P&I Club. This is a mutual insurance club that covers the carrier’s liability to third parties (e.g., cargo owners) that exceeds the limited liability under the Bill of Lading. The P&I Club will handle the defense and claims against the carrier.
Hull & Machinery (H&M) Insurance: This covers physical damage to the ship itself (e.g., damage to the deck or rails from falling containers). The “STAX 2” barge would also have its own H&M policy for the damage it sustained.
General Average: If the master of the vessel intentionally jettisoned containers or took extraordinary measures (e.g., moving the unstable vessel to a safer berth) to preserve the entire maritime venture, this could be declared. This would require all parties with a financial interest in the voyage (ship owner and all cargo owners) to proportionally share the losses.
The Claims Process: Step-by-Step
Step 1: Notification and Documentation
The consignee (receiver of the goods) or their “insured” (the company that bought the goods) immediately notifies their:
Freight Forwarder / Customs Broker
Cargo Insurance Underwriter (or their broker)
The Ocean Carrier (ZIM) and the Vessel Operating Common Carrier (VOCC)
They must gather and secure all critical documents:
Bill of Lading (B/L): Proof of title and contract of carriage.
Commercial Invoice & Packing List: To prove the value of the goods.
Certificate of Insurance: Proof of coverage.
Damage Report / Survey Report: From the carrier or an independent surveyor.
Step 2: Establishing Liability and Filing the Claim
The cargo insurer will first seek recovery from the carrier’s insurer (the P&I Club).
Example Claim to Carrier: The insured (or their insurer subrogated to their rights) will file a formal “Notice of Claim” in writing with the carrier, citing the B/L number, container numbers, and a description of the lost/damaged goods.
Step 3: The Carrier’s Defense and the “Package Limit”
The carrier will likely invoke the “package limitation” under the Hague-Visby Rules. Liability is often capped at 666.67 Special Drawing Rights (SDRs) per package or 2 SDRs per kilogram of gross weight lost/damaged, whichever is higher. (Note: 1 SDR ≈ $1.35 USD, so 666.67 SDRs ≈ $900).
Crucial Point: If the shipper declared the nature and value of the goods on the B/L before shipment and paid an ad valorem (extra) freight charge, they can break this package limit and recover the full invoice value.
Step 4: Settlement
If the carrier accepts liability, the claim will be settled, either for the full value (if a higher value was declared) or the package limit.
If the carrier denies liability (e.g., claiming it was a “peril of the sea” or an error in navigation for which they are exempt), the cargo insurer will pay their insured the full claim value (assuming an all-risk policy) and then pursue subrogation against the carrier’s P&I Club to recover the paid amount.
Practical English Phrases for Claims Communication
“We hereby file a formal claim for total constructive loss of our cargo under Bill of Lading [B/L Number], which was lost overboard due to a container stack collapse on September 9, 2025.”
“Please acknowledge liability and confirm the settlement amount pursuant to the terms of the bill of lading and the Hague-Visby Rules.”
“We declare that the value of the goods exceeded the standard package limitation. We demand full indemnity for the actual value of $[Amount].”
“We have been subrogated to the rights of our insured, [Company Name], and now have the right to pursue recovery from the carrier for the amount we have paid out.”
“We require a copy of the vessel’s protest (Master’s Report) and the survey report to assess the cause of the incident.”
Concrete Example of a Claim
Scenario: Company ABC in Los Angeles imports 500 high-end electric bicycles (e-bikes) from China, with a total value of $500,000 ($1,000 per unit). The goods were in one container that was lost overboard from the MV Mississippi. The shipper did not declare the high value on the B/L.
Invoice Weight: The gross weight of the containerized e-bikes is 10,000 kg.
Package Limit Calculation:
Per Package: 500 units x 666.67 SDRs ≈ 500 x $900 = $450,000
Per Kilo: 10,000 kg x 2 SDRs ≈ 10,000 x $2.70 = $27,000
Settlement: The carrier would be liable for the higher of the two amounts: $450,000.
Gap: There is a $50,000 gap between the recovery from the carrier ($450k) and the actual value ($500k).
Role of Cargo Insurance: Company ABC’s marine cargo insurance policy would cover the full $500,000. The insurer would then pay Company ABC and, through subrogation, attempt to recover the $450,000 from the carrier’s P&I Club. The insurer absorbs the $50,000 shortfall if recovery is limited.
Conclusion
In such incidents, having comprehensive Marine Cargo Insurance is paramount. It ensures the consignee is made whole quickly, while the complex and often lengthy battle over liability and package limits is handled by the insurance professionals behind the scenes.
