:max_bytes(150000):strip_icc()/warehouse-to-warehouse-clause-4186943-3x2-blue-445825ec2eee4a9283e7204e9d02063d.jpg)
Daniel Liberto is a journalist with over 10 years of experience working with publications such as the Financial Times, The Independent, and Investors Chronicle.
Updated May 14, 2023 Reviewed by Reviewed by David KindnessDavid Kindness is a Certified Public Accountant (CPA) and an expert in the fields of financial accounting, corporate and individual tax planning and preparation, and investing and retirement planning. David has helped thousands of clients improve their accounting and financial systems, create budgets, and minimize their taxes.
Fact checked by Fact checked by Yarilet PerezYarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.
A warehouse-to-warehouse clause is a provision in an insurance policy that provides for coverage of cargo in transit from one warehouse to another. 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 goods before and after the transit process.
A warehouse-to-warehouse clause is a provision most commonly found in commercial insurance policies that seeks to cover the risks of shipping. There can be several types of insurance policies available for shipping all kinds of goods from one destination to another. In some cases, automatic insurance may be included or offered for an additional cost. This is common with retail shipping. For commercial shipping, automatic insurance may or may not be included and, if it is included, may not necessarily be sufficient.
Commercial businesses may pay for one-time coverage or have an open policy that covers all shipments over a specified period of time. When shipping is involved, commercial business partners will typically have standards for insurance coverage ownership. In some cases, sellers may take responsibility for insurance coverage. In other scenarios, the buyer may be responsible for any damages.
Moreover, insurance coverages are usually segmented by location, such as warehouse, warehouse-to-warehouse, and destination. The warehouse-to-warehouse clause in an insurance coverage policy generally provides for coverage if damages occur in transit from a storage warehouse to a destination warehouse but not necessarily for storage or destination warehouses, which may need to be covered under different clauses or protection plans.
In a commercial shipping insurance policy, the insured pays a premium for the security of repayment coverage for any damages incurred. The warehouse-to-warehouse clause assures a policyholder against any risks of loss for damaged goods that may be incurred through transit processing. Goods will either arrive safely or be paid for if lost or damaged in transit. The insured pays a small premium for the policy in comparison to the actual costs of goods shipped.
Commercial insurance for the transportation of goods can be an important component of any supply chain department managing the distribution of their own manufactured goods. In large business distribution, sellers will often take the responsibility for shipping costs and insurance. This is where warehouse-to-warehouse clauses may be important, since the seller may only be providing insurance coverage for this transit period.
Consider the case of a tire manufacturing company. The company manufactures and produces tires in China that are distributed to businesses all over the world. The tire company would likely partner with an insurer to provide commercial insurance coverage for the tires while they are in transit to the company’s many different buyers.
With an insurance policy that includes a warehouse-to-warehouse clause, the tire company would pay a premium to insure the cost of any loss or damage that occurs from the time a tire leaves the manufacturer’s warehouse until the time it arrives at the buyer’s warehouse. This may include being transported on a truck from the manufacturer to a port, then by boat from a port to another port, and finally transportation via train to a buyer’s warehouse.
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, initial time limits were found to be impractical and later extended to 60 days. These initial policies and procedures associated with early supply chain management were then further developed and more heavily integrated by insurance companies in broader offerings for commercial cargo insurance.
In the commercial insurance industry, a standardized set of terms has been developed to help provide the framework for commercial insurance policies involving the insurance of goods through land and water transportation. One grouping of standardized terms can be known as Institute Cargo Clauses. Institute Cargo Clauses are typically segmented by classes of A, B, or C. In general, standardized terms and Institute Cargo Clauses help to provide uniformity for details applicable to insurance policies.
Typically, details associated with any warehouse-to-warehouse clauses will include requirements tied to insurance attached from the time goods leave a specified warehouse until a specified termination such as:
A warehouse-to-warehouse clause is a provision in a commercial insurance policy intended to provide protection in the case of losses incurred while goods are being shipped from one warehouse to another. The purpose of the clause is to protect the policyholder from the risks of loss for damaged goods that may occur through transit processing.
A warehouse-to-warehouse clause is meant to protect in the case of losses that are incurred while goods are being shipped from one warehouse to another. However, this kind of clause does not typically provide protection in the case of losses incurred while goods are at a storage warehouse or a destination warehouse, with a separate protection plan needed for such risks.
A policyholder of a warehouse-to-warehouse clause has a guarantee that the goods will arrive and arrive undamaged at the intended destination, or the cost of the lost or damaged goods will be covered.
A warehouse-to-warehouse clause is typically used in commercial shipping so as to protect the policyholder from losses incurred while the product is being transferred from one warehouse to another, such as a storage facility to another destination. The clause does not address the risk of loss before or after the product is shipped, only the risk of loss while it is in transit.
