What is Warehouse-To-Warehouse Clause
A warehouse-to-warehouse clause in an insurance policy provides for coverage of cargo in transit. A warehouse-to-warehouse clause usually covers cargo from the moment it leaves the origin-warehouse until the moment it arrives at the destination-warehouse. Separate coverage is necessary to insure the cargo while it is being stored in either warehouse.
BREAKING DOWN Warehouse-To-Warehouse Clause
A warehouse-to-warehouse clause assures an exporter that their goods will arrive safely, not only at the port-of-destination, but also at the final destination warehouse. A warehouse-to-warehouse clause mitigates the financial risk an exporter carries of losing a shipment at any point along the journey their goods travels to their final warehouse destination, which saves the shipper from untold amounts of difficulties and headaches.
For example, a warehouse-to-warehouse clause could protect the owner of a large clothing shipment while it was being transported on a truck from a warehouse in Hong Kong to the port in Hong Kong, then by boat from a port in Hong Kong to a port in Los Angeles, and finally while it was transported via train from the Los Angeles port to a warehouse in Las Vegas.
History of Warehouse-to-Warehouse Clause
The warehouse-to-warehouse clause was introduced in the late 19th century to cover land transport. At the time, there was no time limit on sea passage, nor on the journey to the loading port. In order to encourage the cargo owner to take delivery of the goods quickly, a time limit was imposed after discharge. During the Second World War this time limit was found to be impractical and was extended to 60 days. The coverage then became a transit clause, which included the warehouse-to-warehouse coverage.
In the Institute Cargo Clauses (1982), the clause provided that: "This insurance attaches from the time goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either...
- on delivery to the Consignees’ or other final warehouse or place of storage at the destination named herein;
- on delivery to any other warehouse or place of storage, whether prior to or at the destination named herein, which the Assured elect to use either
- for storage other than in the ordinary course of transit, or for allocation or distribution; or
- on the expiry of 60 days after completion of discharge overside of the goods hereby insured from the overseas vessel at the final port of discharge, whichever shall first occur.”