Marine insurance is a critical component of global trade because it covers the risks the ships and cargo face while in transit. A key element of any marine insurance policy is the "Touch and Stay" clause, a term few know but which will determine how much coverage is provided. In this blog we’ll understand the Touch and Stay clause, its role in marine insurance, and how it affects the policyholder.
The Touch and Stay clause is a standard part of many marine insurance policies. It defines the terms under which the insurance coverage applies, including during the voyage of the vessel. The phrase "Touch and Stay" refers to the ship's journey and means the ship must "touch" or "visit" the ports specified in the policy and "stay" at those ports per the agreed terms.
This clause is crucial since it specifies the scope of coverage. The insurer may deny coverage if the vessel takes a different route than agreed upon or does not visit the designated ports. As a result, shipowners, charterers and others involved in maritime operations must understand and abide by the Touch and Stay clause.
The Touch and Stay clause in a marine insurance policy is required for the following reasons:
Defining the voyage:
The clause clearly defines the intended route of the vessel. This may help the insurer and the insured understand the coverage and the risks. The clause may specify which ports the vessel must visit and any conditions to be met during the voyage.
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Attenuating risk:
By defining the voyage, the Touch and Stay clause helps mitigate risk for the insurer. If the vessel takes an unjustified deviation from the agreed route, it faces unexpected dangers and the insurer may not be prepared to accept such additional risks.
Protection for the insured:
For the policyholder, the Touch and Stay clause stipulates what is expected of what happens on the voyage. Following the clause means the insured can keep their coverage and be protected in case of a loss.
Legal implications:
The legal implications of the Touch and Stay clause are significant. During a disagreement, the clause can be used to figure out if the terms of the marine insurance plan were met. This might impact the result of any legal proceedings and also the ability of the insured to recover damages.
The operation of the Touch and Stay clause can be understood by examining its key components:
Specified ports:
The clause usually specifies the ports that the vessel must visit during its voyage. These ports may be listed in an order or a range of permissible ports. The vessel must reach each of these ports as per the policy.
Stay conditions:
The clause may also specify how long the vessel must remain at each port. This might include loading and unloading cargo, refuelling or other activities. The stay must fall within the policy terms.
Clause of deviation:
Sometimes a marine insurance policy will include a deviation clause for minor deviations from the agreed route. Major deviations may, however, void the coverage. The policy implication of the Touch and Stay clause must be read alongside any deviation clauses.
Warranties:
Some warranties in the marine insurance policy have what is called the Touch and Stay clause. A warranty says that the insured will do or not do something on the voyage. Breach of warranty can result in denial of coverage, so the insured agrees to all terms including the Touch and Stay clause.
Common misconceptions include:
Minor deviations are acceptable:
Some policies allow minor deviations and not all deviations are covered by the deviation clause. Changes in route or duration of Stay could violate the Touch and stay clause and coverage denied.
The clause applies only to cargo ships:
This Touch and Stay clause is not just for cargo ships. It can be purchased on any vessel covered by a marine insurance policy - cruise ships, yachts, fishing boats, etc. The terms of the clause will depend upon the vessel type and the voyage type.
The clause Is irrelevant if the loss is at sea:
The Touch and Stay clause can affect coverage even if the loss is at sea. If the vessel took a route different from the route agreed to or stayed in port longer than specified, the insurer may claim the breach of the clause caused the loss and void the coverage.
To avoid pitfalls with the Touch and Stay clause, policyholders should:
Review the policy carefully:
Read the marine insurance policy before you sail. Pay particular attention to the Touch and Stay clause and any associated warranties or deviation clauses.
Plan the route:
Verify if the planned route is within policy terms. If you have questions about ports to visit or stay length, ask the insurer.
Document the voyage:
Track voyage, ports visited, stay length and deviations from route. This documentation may be useful if a dispute arises with the insurer.
Talk to the insurer:
If anything unexpected occurs and calls for a deviation from the route agreed upon, alert the insurer as soon as possible. The insurer may even adjust the policy to reflect the changes.
Get legal advice:
Any questions regarding the effects of the Touch and Stay clause or about anything else in your marine insurance policy should be brought to your attention by a lawyer. A maritime law expert can explain the policy and meet all terms.
A key part of any marine insurance policy is the Touch and Stay clause, which specifies the amount of coverage and how claims are handled. For policyholders, understanding and observing this clause is critical to maintaining coverage and avoiding loss on maritime voyages.
Reviewing the marine insurance policy, planning the voyage accordingly, and communicating with the insurer could help policyholders limit the risks of the Touch and Stay clause. In marine insurance, understanding and preparation are key to protecting your interests and having a safe trip.
As marine insurance policyholders, we need to abide by all agreed terms and conditions. The implications of this clause may help you face the challenges of maritime operations with confidence and peace of mind, regardless of whether you are a cargo owner, charterer, or shipowner.
1) What is the scope of marine insurance?
Marine insurance pays for the cost of repairing the vessel and replacing damaged cargo ashore.
Some types of marine insurance also insure third-party liabilities, such as injuries and death of passengers aboard the ship.
2) What three types of marine insurance are there?
The three types are cargo insurance, hull or vessel insurance and freight insurance. Each of these policies has specific coverages and exclusions you should know when you buy marine insurance.
3) What is the main clause in marine insurance?
Marine Insurance policies typically have about 12 required clauses that policyholders must follow. The touch stay marine insurance clause is one of them. This clause states at what ports the insured vessel may stop along its route.
4) Are minor deviations from the route agreed void for the marine insurance policy?
Yes, even minor deviations from the Touch and Stay clause can break that clause and void the coverage. It's essential to follow the agreed route and conditions precisely or communicate with the insurer if changes are necessary.