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Understanding the Benefit of Insurance Clause in Legal Contracts
Definition & Meaning
The benefit of insurance clause is a provision in a contract that allows a bailee"someone who temporarily holds goods for another party"to claim the benefits of any insurance policy that the cargo owner has taken out on those goods. This clause is particularly relevant in the context of shipping and transportation, where the safety of goods is paramount. However, it's important to note that under the Carriage of Goods by Sea Act, such clauses are considered void in certain circumstances.
Table of content
Legal Use & context
This term is primarily used in maritime law and contracts related to the transportation of goods. It is relevant in cases involving bailment, where one party (the bailee) has possession of the goods owned by another party (the bailor). Users may encounter this clause in shipping agreements or contracts of carriage. Understanding this clause is essential for anyone involved in logistics, shipping, or related legal practices. Users can manage related forms and contracts through resources like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A shipping company receives a shipment of electronics from a manufacturer. The manufacturer has an insurance policy covering the goods during transit. The shipping contract includes a benefit of insurance clause, allowing the shipping company to claim the insurance benefits if the goods are damaged in transit.
Example 2: A storage facility holds furniture for a client. The client has insurance on the items stored. If the furniture is damaged due to a fire, the storage facility can benefit from the insurance policy under the terms of the agreement. (hypothetical example)
Relevant laws & statutes
One of the key statutes related to this term is the Carriage of Goods by Sea Act (COGSA), which governs the rights and responsibilities of parties involved in the transportation of goods by sea. Under this act, certain clauses, including the benefit of insurance clause, may be rendered void depending on the circumstances.
Comparison with related terms
Term
Definition
Difference
Bailee
A person or entity that temporarily receives goods from another.
The benefit of insurance clause specifically relates to the rights of the bailee regarding insurance claims.
Bailor
The owner of the goods who transfers possession to the bailee.
The bailor is the one who holds the insurance policy, while the clause pertains to the bailee's rights.
Common misunderstandings
What to do if this term applies to you
If you find yourself involved in a situation where the benefit of insurance clause is relevant, consider the following steps:
Review the contract to understand the terms of the benefit of insurance clause.
Check the insurance policy details to see what is covered.
Consult with a legal professional if you have questions about your rights or obligations.
Explore US Legal Forms for templates related to contracts and insurance clauses that may assist you in your situation.
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