“Short voyages are low risk. Cargo insurance is unnecessary.”
Reality: Risks exist regardless of distance. Short-sea routes still face explosions, fires, collisions, and sinking.
2. What the MV Wan Chun Explosion Taught Us:
Many shippers did not insure their cargo.
After the explosion, cargo was totally lost with no compensation.
Uninsured shippers were still required to contribute to General Average.
3. Carrier Liability Depends on the Cause of Loss
Exemptions under the Hague Rules (Article 4, Rule 2):
Errors in navigation or vessel management
Fire (not caused by carrier’s fault or privity)
Acts of God (storms, earthquakes, etc.)
Perils of the sea
Inherent vice of the cargo (e.g., self-combustion, decay)
Acts or omissions of the shipper
In these cases, the carrier is legally exempt from liability. Cargo loss is borne by the shipper.
4. When the Carrier Is Liable, Compensation Is Limited by SDR Rules
Under Hague-Visby Rules:
Per package/unt666.67 SDR Or per kg gross weight2 SDR (whichever is higher)
SDR is Special Drawing Rights (IMF unit),Approx. 1 SDR ≈ NT$42 (as of 2025)
5. Conclusion & Recommendation:
Without insurance: No compensation for total loss, but still liable for General Average contribution.
With insurance: Immediate claimable compensation regardless of fault.
Cargo insurance is essential to protect your cargo value and ensure financial resilience.
Contact us via below hot line, if you have any cargo insurance problem.
