If hull and machinery insurance covers only the vessel, who covers cargo damage during voyage and how is liability determined?

• A. Cargo is not insured
• B. Liability is determined solely by hull policy
• C. Cargo insurance covers cargo; liability by B/L terms and applicable law (e.g., Hague-Visby or CMR)
• D. Liability is determined by port regulations only

Answer: (C)

When hull and machinery insurance covers only the vessel, protection for the cargo itself comes from a separate cargo policy. The carrier’s responsibility for cargo damage during the voyage isn’t decided by the hull policy. Instead, it’s set by the contract of carriage (the bill of lading) and the law that governs that contract. In international sea carriage, that means the bill of lading terms work together with applicable rules such as the Hague-Visby Rules (or other relevant conventions) to determine liability, defenses, and any limits. If the voyage is under different modes or regimes, other laws (like CMR for road) may apply. So, cargo insurance covers the cargo, and liability is determined by the bill of lading terms and the applicable law.