Understanding the Warehouse-to-Warehouse Clause in Insurance Policies

What is Warehouse-to-Warehouse Clause?

The warehouse-to-warehouse clause is a standard provision in marine cargo insurance that ensures continuous coverage for goods from the moment they leave the origin warehouse until they arrive at the destination warehouse. It covers all risks during transit, including multiple transport modes such as sea, air, rail, and road, bridging potential coverage gaps in international logistics.

This clause is crucial for safeguarding shipments through the entire supply chain, protecting against losses from theft, damage, or delays during transit under the principle of uberrimae fidei contract, which requires full disclosure in insurance agreements.

Key Characteristics

Key features of the warehouse-to-warehouse clause include:

• Coverage Period: Begins when goods leave the named origin warehouse and ends upon arrival at the destination warehouse, often including a grace period of 15 to 30 days post-discharge.
• Multi-modal Protection: Provides seamless insurance across all modes of transport—sea, air, rail, and road—eliminating gaps between carriers.
• Risk Scope: Covers perils like theft, fire, accidents, and natural disasters during transit and temporary storage phases.
• Policy Variations: May include extensions such as Marine Extension (C) allowing coverage during resale or forced discharge scenarios.
• Exclusions: Typically excludes losses from inherent vice, delay, or spoilage of goods.

How It Works

The warehouse-to-warehouse clause activates when goods exit the origin warehouse named in the policy, maintaining uninterrupted coverage throughout transit until delivery to the final warehouse. This continuous protection covers risks during loading, unloading, temporary storage, and even transshipment.

In practice, if the shipment is delayed or rerouted, coverage often extends until the goods are sold or re-delivered under certain conditions. Understanding these terms is essential, as insurers vary widely in how they apply the clause and its grace periods, making it important to review policy specifics carefully.

Examples and Use Cases

This clause is especially vital in complex supply chains involving multiple transport modes and destinations:

• Airlines: Companies like Delta rely on such clauses to cover goods transported by air and connected land routes, ensuring protection from warehouse departure to final delivery.
• International Trade: A shipment of electronics leaving a factory in China, shipped by sea, then transported by rail within the U.S., remains insured continuously under this clause.
• Storage During Transit: Goods temporarily stored at intermediate warehouses benefit from the clause, avoiding coverage gaps during delays or forced discharges.

Important Considerations

When utilizing the warehouse-to-warehouse clause, verify the exact start and end points of coverage and understand any applicable grace periods. Note that coverage usually excludes pre-transit storage at the origin or long-term warehousing beyond the final destination.

Businesses should also be aware that while the clause reduces risk exposure, it may not cover all perils such as delay-related losses or spoilage. Evaluating complementary policies like valuable papers insurance or consulting guides on best large-cap stocks can provide broader financial protection strategies.