CASE STUDIES

One of our Clients manufactures leather goods for the automotive industry and often exports them overseas. When Mad Cow Disease reached US shores this past fall, with the report of a few incidents in Washington State, the Client’s shipments of hides to South Africa were in jeopardy of being rejected due to a recently enacted embargo of US bovine products to that country. The South African ban was to be temporarily in effect until the authorities were sure that the American beef and related products posed no danger for use in South Africa. The ban was put in place while the hides were in transit across the oceans, and if still in place at the time of arrival, the goods would be sent back, quarantined, or destroyed at the Client’s expense.

Even though the Ocean Transit coverage does not protect against trade disruption or embargo issues as written, a little knowledge goes a long way. We advised the Client that there are insurance policies called “Rejection Insurance” offered by none other than the Lloyd’s of London marketplace. Such policies can be written to protect their policyholders where its products are rejected for entry into the United States, or where US products are rejected from another country such as South Africa. So long as the products arrive otherwise certified as “fit” for their purpose, the insured is fully reimbursed when a governmental authority rejects goods for such reasons. This type of coverage is often purchased by seafood importers, and prices can run in the range of 3-5% of the value of the goods.

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