Warehouse-to-Warehouse Clause

A warehouse-to-warehouse clause is an insurance provision that covers cargo during the period it is in transit between two warehouses. It protects against loss or damage that occurs while goods are being moved from an origin warehouse to a destination warehouse, but typically does not cover risks while goods remain in storage before pickup or after delivery.

Key takeaways

• Covers cargo from the moment it leaves a specified origin warehouse until it arrives at a specified destination warehouse.
• Common in commercial cargo insurance and often purchased as part of one-time policies or open (period) policies.
• Does not usually insure goods while they are stored at origin or destination warehouses; separate coverage is needed for storage risks.
• Typical clauses may include time or place-based termination points (e.g., delivery, alternative storage, or a specified number of days after discharge).

How it works

• Scope: The clause defines a clear start and end point for coverage—normally when goods leave the origin warehouse and until they are delivered to the destination warehouse or another agreed termination point.
• Policy types: Businesses can buy single-shipment coverage or maintain an open policy covering multiple shipments over a period of time. Responsibility for buying insurance may rest with seller or buyer depending on contract terms (e.g., Incoterms).
• Premiums and claims: The insured pays a premium for the policy. If goods are lost or damaged during the covered transit, the insurer compensates the policyholder according to the policy terms.
• Limits and exclusions: Standardized terms (such as Institute Cargo Clauses) and policy-specific exclusions determine covered perils, limits, and any time restrictions.

Example

A tire manufacturer in China ships tires to multiple overseas buyers. With a warehouse-to-warehouse clause, the manufacturer’s insurance covers loss or damage from the moment the tires leave the factory warehouse, through truck, sea, and rail transport, until they arrive at the buyer’s warehouse. Damage while sitting in either warehouse outside those transit windows would need separate storage insurance.

Brief history

Warehouse-to-warehouse clauses emerged in the late 19th century to manage land-transport risks and to motivate timely receipt of cargo after sea discharge. Time limits evolved—wartime experience led to extensions (commonly to 60 days) for post-discharge coverage. Over time, standardized frameworks such as the Institute Cargo Clauses (A, B, C) developed to harmonize terms and coverages across the industry.

Common clause terms

Typical termination points or conditions included in policies:
* Delivery to the buyer’s final warehouse or place of storage.
* Delivery to an alternative or designated warehouse.
* A specified number of days (commonly 60) after completion of shipment to cover undeliverable or stored goods.

FAQs

Q: What is the purpose of a warehouse-to-warehouse clause?
A: To insure against loss or damage that occurs specifically during transit between warehouses.

Q: Does it cover goods before pickup or after delivery?
A: No. Coverage normally excludes risks while goods are in storage at the origin or destination warehouses; separate storage coverage is required.

Q: What guarantee does it provide?
A: It ensures the insured will receive compensation for loss or damage occurring during the defined transit period, subject to policy terms, limits, and exclusions.

Bottom line

A warehouse-to-warehouse clause is a focused transit insurance provision used in commercial shipping to protect goods while they move between warehouses. It is essential to understand the clause’s defined start and end points and to secure additional coverage for storage periods outside those boundaries.