Underdeck or On-Deck Clause — Permission for Deck Stowage of Containerized Cargo
Interlink編集部What Is the Underdeck or On-deck Clause?
The Underdeck or On-deck Clause is a special clause that stipulates when containerized cargo may be stowed either underdeck or on deck at the carrier’s discretion as shown on the Bill of Lading (B/L), the insurance coverage will still be applied according to the terms for cargo stowed underdeck as specified in the insurance policy.
In a typical clause wording, it is established that when cargo is packed in containers and the B/L grants the carrier the right to load containers underdeck or on deck without prior notice, such cargo is insured under the terms applicable to underdeck cargo in the insurance policy.
This clause is used to distinguish the actual shipping practice on container vessels, where sealed containers are commonly carried on deck as a matter of routine, from the traditional risks associated with exposed on-deck cargo on conventional vessels.
However, the clause does not unconditionally treat all on-deck cargo the same as underdeck cargo under all circumstances.
Key conditions include that the cargo is packed in standard sealed containers, that the B/L contains a carrier’s discretion clause for stowage, that the cargo owner has not specifically requested special on-deck stowage, and that the insurance policy or open cover includes this clause.
Furthermore, this clause does not expand or modify the basic policy terms such as ICC(A), ICC(B), or ICC(C). While it avoids changing coverage terms solely because the cargo is carried on deck, whether damage is covered will depend on the base policy terms, exclusions, the nature of the cargo, container condition, and the cause of the incident.
Scope Covered in This Article
| Item | Content Covered in This Article | Content to Check Separately |
|---|---|---|
| Underdeck or On-deck Clause | Marine cargo insurance treatment when containers are stowed on deck at the carrier's discretion | Policy wording, Open Cover, individual endorsements |
| Closed-type Containers | Reasons in insurance technology for treating them similarly to underdeck stowage | Container suitability, punctures, doors, seals, floor condition |
| B/L Discretion Clause | General clause allowing the carrier to stow cargo underdeck or on deck | B/L front and back terms, carrier standard conditions |
| Markings such as Shipped on Deck | Difference between discretion clause and explicit on-deck stowage notation | Shipper’s awareness and consent, insurance declaration, L/C terms |
| Jettison / Washing Overboard | Risks specific to on-deck cargo such as jettison and washing overboard | Basic insurance terms, On-Deck Cargo Clause, accident causes |
| General Average | General average sacrifices, contributions, inclusion of jettisoned cargo in general average | B/L, York-Antwerp Rules, governing law, general average adjustment |
| On-Deck Cargo Clause | Differences from terms applicable to general on-deck cargo | Non-containerized cargo, heavy cargo, conventional ship on-deck stowage |
| Open-Yard Storage Clause | Differences between on-deck stowage aboard ship and outdoor storage ashore | Yard storage, cargo after devanning, storage period |
| Open Cover | Automatic coverage and declaration terms under comprehensive planned insurance | Declaration deadlines, applicable cargo, excluded cargo, individual underwriting conditions |
| Individual Coverage | Advance notification when finalizing conditions per specified cargo or voyage | Container type, B/L notation, plan for stowage, insurer approval |
This article mainly focuses on allowances for container cargo stowed on deck on usual container ships. General on-deck stowage of non-containerized cargo, carrier liability, L/C settlement, general average adjustment, and specific insurance claim payment decisions should each be considered as separate topics.
Why This Clause Is Necessary
Marine cargo insurance assumes risks based on the expected transport method, vessel, stowage method, cargo packaging, and route at the time of arranging insurance.
In traditional conventional vessel transport, cargo loaded directly on deck is more exposed than cargo stowed in the hold to seawater, waves, wind and rain, ship motion, falling, loss overboard, and insufficient lashing.
Furthermore, for the purpose of protecting the ship and the common maritime adventure, deck cargo may be jettisoned. Damage from jettison may be treated as Jettison under insurance terms and, if sacrificed for the common safety, could be subject to General Average adjustment as a General Average Sacrifice.
For these reasons, traditional insurance practice often does not automatically treat deck cargo as carrying the same risk as cargo stowed in the hold, applying an On-Deck Cargo Clause or separate conditions instead.
On the other hand, modern container ships routinely carry numerous sealed containers on deck as standard operation. Individual cargo owners may have their containers placed on deck according to the carrier’s stowage plan, even if they did not specify deck stowage themselves.
In such cases, automatically restricting insurance terms solely based on the cargo’s stowage location would be inconsistent with current container transport practice.
The Underdeck or On-deck Clause is an adjustment clause designed to avoid adverse policy term changes merely due to deck stowage of containerized cargo under the carrier’s normal discretion, allowing coverage to proceed under the same terms applied to cargo stowed in the hold on the insurance certificate.
Insurance Technical Reasons for Targeting Closed Containers
Closed containers have a structure that isolates the internal cargo from the external environment using steel walls, roofs, floors, doors, and seals.
When the container is sound, with no abnormalities in the doors, seals, roof, sidewalls, or floor, and the cargo is properly packed and secured, the cargo inside is protected to a certain extent from rainwater, splashes, wind, and direct wave impact.
Therefore, for cargo where the container itself functions as an appropriate transportation outer packaging, the loading position difference—whether inside the ship’s hold or on deck—is considered to present less direct risk difference than with non-containerized cargo.
However, closed containers do not guarantee complete watertightness against all risks.
Damage caused by container perforations, door malfunction, seal failure, corrosion, floor damage, inadequate lashing, container loss, strong seawater impact, internal condensation, temperature rise, etc., requires separate verification of the incident cause and insurance conditions.
| Check Item | Condition Comparable to Stowage in Ship’s Hold | Condition Requiring Individual Confirmation | Practical Verification Documents |
|---|---|---|---|
| Container Structure | Standard closed dry container | Open-top, flat rack, platform | Booking, Equipment Type, Container Photographs |
| Outer Plate / Roof | No perforations, corrosion, or deformation | Holes, cracks, significant corrosion, repair marks | EIR, Damage Report, Photos at In-gate |
| Doors / Seals | Properly closed, seals intact | Door deformation, seal failure, incomplete closure | Seal Number, Door Photographs, Stuffing Report |
| Cargo Packaging | Packing and moisture protection adequate for normal transport | Insufficient packing, loose cargo, inadequate moisture protection | Packing Specification, Packing Photographs |
| Internal Securing | Cargo properly secured | Cargo shift, uneven load, voids, insufficient lashing | Stuffing Photographs, Lashing Records |
| Cargo Characteristics | Ordinary dry cargo with low sensitivity to temperature and humidity | Food, precision machinery, hygroscopic cargo, temperature-controlled cargo | Cargo Specifications, Temperature Conditions, Quality Control Documents |
Applicable Situations
The Underdeck or On-deck Clause is likely to apply primarily under the following conditions:
- The cargo is packed in a standard closed container
- The cargo is transported on a regular full container vessel or container transport service
- The B/L includes a carrier’s discretion clause allowing loading either underdeck or on-deck
- The shipper has not specifically requested on-deck stowage
- No special On Deck conditions are stated on the face of the B/L
- The insurance policy or Open Cover includes the relevant clause
- The cargo and container are suitable for standard container transport
- The cargo or container is not excluded as requiring individual approval
When these conditions are met, the essential purpose of this clause is to avoid altering the insurance conditions simply because the actual stowage was on deck rather than underdeck.
Cargo and Containers Excluded or Often Subject to Individual Confirmation
| Cargo / Container | Reason for Individual Confirmation | Main Risks | Practical Measures |
|---|---|---|---|
| Open Top Container | Top protection differs from standard closed containers | Rainwater, seawater, wave action, tarp damage | Check stowage location, waterproofing measures, and individual insurance conditions |
| Flat Rack Container | No side walls or roof protection from external elements | Wave washing, falling, lashings failure, contact damage | Confirm On-Deck Cargo Clause or obtain individual approval |
| Platform Container | Cargo is almost fully exposed | Seawater, waves, loss overboard, cargo collapse | Confirm individual conditions as on-deck cargo |
| Out of Gauge Cargo | Cargo protrudes beyond container outline | Contact with other cargo or vessel structure, wave damage, inadequate lashing | Obtain stowage plan, lashing scheme, and insurer approval |
| Large Machinery / Heavy Cargo | May not be protected by standard container structure | Overturning, sliding, falling, lashing point failure | Verify survey, packing, center of gravity, and lashing calculations |
| Tank Container | Risks specific to cargo content, container, pressure, and hazardous nature | Leakage, contamination, pressure anomalies, temperature changes | Check cargo characteristics, container inspection, and hazardous cargo conditions |
| Reefer Container | Power supply and temperature control critical in addition to stowage position | Temperature deviation, equipment failure, direct sunlight exposure, quality deterioration | Confirm reefer endorsement, set temperature, and temperature records |
| Food / Perishables | Quality can decline even without visible damage | Temperature, humidity, condensation, spoilage, expiration date | Individually confirm quality standards and basic insurance conditions |
| High-Value Cargo / Precision Machinery | Minor moisture or impact can cause significant losses | Condensation, vibration, minor damage, theft | Confirm individual declaration, packing conditions, and survey requirements |
| Used Machinery / Exhibition Items | Difficult to assess packing condition and pre-existing damage | Pre-existing damage, rust, vibration, reassembly defects | Verify pre-shipment survey and individual insurance conditions |
Deck Stowage Clauses to Check on the B/L
In practice, it is necessary to distinguish between the carrier’s general discretionary stowage clause and explicit on-deck stowage notations printed on the face of the B/L.
| B/L Notation | Meaning | Perspective in Insurance Practice | Points to Confirm |
|---|---|---|---|
| Carrier may carry under or on deck | A general discretionary clause allowing the carrier to stow cargo either underdeck or on deck | Often serves as the basis for Underdeck or On-deck Clause application | Check back terms, carrier’s standard conditions |
| Under deck and/or on deck at carrier’s option | Stowage location is left to the carrier’s discretion | May be treated as regular container transport in some cases | Confirm container type and cargo characteristics |
| Shipped on Deck | Explicitly indicates on-deck stowage on the B/L face | Unlike typical discretionary clauses, individual confirmation is often required | Verify insurance declaration, shipper’s consent, L/C conditions |
| Stowed on Deck | Indicates the cargo has been stowed on deck | Application of On-Deck Cargo Clause or equivalent may be an issue | Check basic insurance terms and special approvals |
| On Deck at Shipper’s Risk | Shipping notation emphasizing the shipper’s risk assumption | Important for both insurance and carrier liability aspects | Confirm with insurer, shipper, bank, and carrier |
| Deck Cargo | Specifies cargo as deck stowed cargo | Treated separately from discretionary stowage of sealed containers | Check On-Deck Cargo Clause applicability and additional premium |
There is a difference in shipper awareness, carrier liability, insurance declaration, and L/C document requirements between cases where only a discretionary clause appears on the back of the B/L and cases where explicit notations like "Shipped on Deck" appear on the B/L face.
Relation to Jettison, Washing Overboard, and General Average
For on-deck cargo, issues such as jettison of cargo into the sea due to rough weather or ensuring the vessel’s safety, washing overboard caused by waves, collapse of container stacks, and lashing failures become critical concerns.
The Underdeck or On-deck Clause treats the applicable container cargo in accordance with the provisions applied to cargo stowed underdeck as stated on the insurance policy.
Therefore, simply because cargo is stowed on deck, the insurance terms related to jettison or general average that apply to underdeck cargo are not excluded.
However, this clause itself does not provide additional coverage for jettison, washing overboard, or general average. The actual coverage follows the basic conditions and exclusions of ICC(A), ICC(B), ICC(C), or other applicable terms.
| Issue | Basic Concept | Effect of Underdeck or On-deck Clause | Points to Confirm Separately |
|---|---|---|---|
| Jettison | Deliberate disposal of cargo for the common safety of the vessel and others | Not excluded from underdeck conditions solely due to on-deck stowage | Basic insurance terms, purpose of jettison, incident records |
| Washing Overboard | Cargo on deck lost due to wave action | Coverage scope follows basic insurance terms | ICC clauses, special clauses, rough weather records, lashing |
| General Average Sacrifice | Sacrificing certain property for the common safety | Handled under conditions that apply to underdeck cargo on the insurance certificate | General average act, B/L, governing rules, adjustment surveyor’s decision |
| General Average Contribution | Salvaged vessel, cargo, etc., sharing general average losses | Follows general average coverage under basic insurance terms | GA Guarantee, GA Bond, contribution amount, exclusions |
| Container Loss Overboard | Containers lost overboard due to lashing failure or stack collapse | Not shifted to separate conditions solely based on on-deck stowage | Cause of incident, insurance conditions, applicability of general average |
| Recourse Against Carrier | Examination of responsibilities for stowage, lashing, vessel seaworthiness, etc. | Insurance coverage and carrier liability are separate matters | B/L, stowage records, incident report, liability limitation |
Separate Consideration of Inclusion in General Average and Insurance Coverage
The question of whether damage to loaded cargo is covered under a marine cargo insurance contract is distinct from the question of whether that damage is recognized as a General Average sacrifice.
Inclusion in General Average is determined by the General Average adjuster in accordance with the York-Antwerp Rules incorporated in the B/L, the carriage contract, the governing law, the stowage method, and accepted trading practices.
Under Rule I of the York-Antwerp Rules, cargo that has not been stowed in accordance with accepted trading practices is generally not recognized as a General Average sacrifice.
If on-deck container stowage on container vessels is recognized as a normal trading practice, and the B/L grants the carrier authority for on-deck stowage, the evaluation may differ from that of traditionally unauthorized on-deck cargo.
However, the Underdeck or On-deck Clause is a provision that defines the treatment under the insurance contract and does not by itself determine recognition in the General Average adjustment.
| Items to Confirm | Judgment under Insurance Contract | Judgment under General Average Adjustment | Main References |
|---|---|---|---|
| Legality and Contractual Compliance of On-deck Stowage | Confirm applicability conditions of the Special Clause | Check if stowage complies with B/L and trading practices | B/L, Carriage Contract, Stowage Records |
| Cause of Cargo Sacrifice | Considered as Jettison under Basic Insurance Conditions | Determine if sacrifice was for the common safety | Master’s Report, Marine Casualty Report, Ship’s Log |
| Amount of Cargo Damage | Calculated based on Insured Value, Damage Amount, and Deductibles | Calculate sacrifice amount according to General Average Rules | Invoice, Insurance Policy, GA Adjustment |
| General Average Contribution | Follow ICC General Average Clause | Calculated based on contribution value of salvaged property | GA Guarantee, GA Bond, Contribution Details |
| Carrier Liability | Consider insurer’s subrogation claims | Distinguish liability issues and GA adjustment by Rule D, etc. | Accident Notice, B/L, Liability Investigation Materials |
Relationship with ICC(A), ICC(B), and ICC(C)
The Underdeck or On-deck Clause is a special clause used in addition to ICC(A), ICC(B), ICC(C), and similar clauses.
This clause does not extend the coverage scope of ICC(B) or ICC(C) to the level of ICC(A).
| Coverage Condition | Basic Treatment after Clause Application | Relation to Stowage and General Average | Notes |
|---|---|---|---|
| ICC(A) | Subject to ICC(A) terms applicable to underdeck stowed cargo | Follows basic conditions and General Average provisions | Exclusions such as improper packing, delay, etc. remain |
| ICC(B) | Handled within ICC(B) scope without changing terms solely due to on-deck stowage | Follows enumerated risks under ICC(B) and General Average provisions | Not all water damage or quality deterioration is covered |
| ICC(C) | Handled under ICC(C) without changing terms solely for on-deck stowage | Verify provisions concerning General Average sacrifice, jettison, and General Average | Coverage for washing overboard and similar risks should be individually confirmed |
| Refrigerated Cargo Conditions | Handled within the scope of reefer clauses and similar | Temperature changes and equipment failures are separately confirmed from stowage risks | Set temperature, duration, and allowable downtime should be confirmed |
| Individual Special Conditions | Follow stowage and packing conditions specified by the insurer | Confirm basic and special conditions together | Special conditions may take precedence over the Underdeck or On-deck Clause |
Differences from the On-Deck Cargo Clause
| Comparison Item | Underdeck or On-deck Clause | On-Deck Cargo Clause | Practical Branching Point |
|---|---|---|---|
| Main Subject | Container cargo placed on deck at carrier’s discretion | General on-deck cargo | Whether it is a standard container or exposed on-deck cargo |
| Type of Cargo | Primarily sealed containers | Non-containerized cargo, large machinery, heavy items, special containers | Whether isolated from external environment |
| Notation on B/L | Carrier’s general discretionary clause | Explicit indication such as "Shipped on Deck" | Discretionary or explicitly stowed on deck |
| Basic Effect | Handled under insurance terms applicable to underdeck stowage | Applies limited or specific terms for on-deck stowage | Whether basic insurance terms are maintained or modified |
| Primary Risk | Typical container ship deck stowage | Loading damage, wave washing, loss overboard, lashing damage, exposure damage | Degree of substantial risk increase due to on-deck placement |
| Declaration | May be automatically covered under Open Cover if within conditions | Often requires individual declaration and additional premium | Check applicable and excluded cargo under Open Cover |
The Underdeck or On-deck Clause is an adjusting clause designed for standard container ship transport. The On-Deck Cargo Clause assumes an increased risk from deck stowage itself and sets insured risks and conditions individually.
Differences from the Open-Yard Storage Clause
| Comparison Item | Underdeck or On-deck Clause | Open-Yard Storage Clause | Practical Points to Confirm |
|---|---|---|---|
| Applicable Location | On the ship’s deck or inside the cargo hold | Port areas, bonded zones, CFS, warehouse outdoor yards, etc. | Confirm whether the location is on board or on land |
| Applicable Time | During ocean carriage on the vessel | During storage after unloading or in transit | Confirm the time of damage and storage period |
| Applicable Cargo | Primarily containerized cargo | Containers, cargo after devanning, packaged cargo, etc. | Confirm whether the cargo is inside the container |
| Main Risks | On-deck stowage, wave impact, loss overboard, ship movement | Rainwater, flooding, theft, wind damage, long-term storage | Distinguish damage cause and location |
| Documents for Verification | B/L, stowage records, vessel incident reports | Yard photos, in/out gate records, storage contracts | Separate shipping line records from warehouse records |
| Insurance Effect | Handled as if stowed underdeck | Coverage restrictions or additional conditions for outdoor storage | Do not substitute one clause for the other |
Differences Between Open Cover and Individual Insurance
When confirming the applicability of the Underdeck or On-deck Clause, it is necessary to distinguish whether the coverage is under an Open Cover, which is a comprehensive planned insurance, or an individual insurance contract for specific cargo.
| Check Item | Open Cover | Individual Insurance / Specific Item Insurance | Practical Handling |
|---|---|---|---|
| Contract Structure | Pre-establishes continuous coverage conditions for a fixed period | Sets conditions for each specific cargo or voyage | Confirm the contract type first |
| Underdeck or On-deck Clause | May be incorporated in the comprehensive terms in advance | Check via individual policy or quotation terms | Confirm not only the clause name but also the actual attached wording |
| Automatic Coverage | May automatically cover cargo, route, and containers within the scope of the comprehensive terms | The insurer confirms declared details and finalizes coverage conditions | Check the scope and exclusions of automatic coverage |
| Declaration | Declare each shipment by the prescribed method and deadline | Declare cargo, route, container, and stowage method before coverage | Avoid omission or delay in declaration |
| Special Containers | Often excluded from automatic coverage or subject to prior approval | Declare individually when obtaining a quotation | Clearly indicate Open Top, Flat Rack, OOG cargo |
| Explicit On-Deck Loading Notation | If exceeding the usual discretionary clause, make an individual inquiry | Present the B/L draft to obtain prior approval | Do not overlook phrases like "Shipped on Deck" |
| High-value / Special Cargo | Confirm automatic coverage limit, cargo-specific exclusions, and survey conditions | Individual rates, conditions, and deductibles are set | Accurately declare cargo value and characteristics |
| Post-accident Confirmation | Verify whether declaration complied with Open Cover conditions | Cross-check policy wording with actual transport conditions | Retain declaration forms, policies, B/L, and bookings |
Even if "container cargo" is subject to automatic coverage under Open Cover, this does not necessarily include special containers, explicitly On Deck cargo, temperature-controlled cargo, high-value cargo, or specifically excluded cargo unconditionally.
For individual insurance, before the insurance contract is concluded, the container type, stowage method, B/L notation, cargo nature, and possibility of on-deck loading should be presented to the insurer or insurance agent.
The specific scope and effect of disclosure and declaration obligations vary depending on the contract wording, governing law, and individual factual circumstances; therefore, it is important not to make blanket judgments such as "No notification needed because it's Open Cover" or "All is written in the policy because it is individual insurance."
Application Decision Flow
- Confirm the Container Type
Check whether it is a closed dry container or types such as Open Top, Flat Rack, Platform, Tank, Reefer, etc. - Confirm Cargo Characteristics
Verify if the cargo is ordinary dry goods or sensitive to temperature, humidity, or vibration. - Check B/L Discretionary Provisions
Confirm if there are provisions allowing the carrier to load the cargo inside the ship's hold or on deck. - Check for On Deck Explicit Indications
Verify if terms like "Shipped on Deck" or "Stowed on Deck" appear on the surface of the B/L. - Confirm Insurance Arrangement Type
Check whether the coverage is Open Cover or individually placed. - Confirm Attachment of Special Clauses
Confirm whether the Underdeck or On-deck Clause is incorporated into the actual insurance terms. - Confirm Basic Terms
Check ICC(A), ICC(B), ICC(C), or individual policy conditions. - Determine Need for Individual Approval
Pre-inquire for special containers, high-value cargo, temperature-controlled cargo, etc. - Preserve Incident Documentation
Secure documents such as B/L, Booking, EIR, photographs, stowage records, and incident notifications. - Separate Insurance from General Average
Assess insurance coverage, inclusion of general average, and carrier liability separately.
Common Practical Issues
| Case | Key Issue | Documents to Check | Insurance Considerations | Initial Response |
|---|---|---|---|---|
| Closed container stowed on deck at carrier’s discretion | Application of the Underdeck or On-deck Clause | B/L, Booking, Container type | Presence of discretionary clause and attached endorsements | Reconcile insurance policy with B/L |
| "Shipped on Deck" stated on B/L front | Difference from discretionary clause | B/L Draft, Shipping Instruction | Whether prior declaration and approval are required | Confirm with insurer before B/L issuance |
| Container lost overboard in rough weather | Washing Overboard, container loss | Vessel accident report, weather records, stowage records | Basic policy terms and cause of incident | Notify insurer and arrange survey |
| Container jettisoned for common safety | Jettison and General Average sacrifice | Master’s report, GA notice, B/L | Separate insurance coverage and GA claim inclusion | Notify insurer and confirm GA guarantee |
| Water damage to Open Top container | Difference from closed container | Container specifications, photos of protection, B/L | May be outside special clause scope; possible individual conditions | Investigate stowage and waterproofing measures |
| Reefer cargo temperature deviation on deck | Causal relationship between stowage location and temperature management | Temperature logs, power supply records, alarm history | Reefer terms and exclusions | Secure data immediately |
| Seawater ingress through container puncture | Container suitability versus marine cargo insurance | EIR, photos at in-gate, damage report | Clause application and container suitability are separate issues | Notify carrier and container provider |
| Special container not declared under Open Cover | Automatic coverage scope and declaration requirements | Open Cover policy, declaration form, Booking | Possible exclusions or need for individual approval | Clarify declaration circumstances and contractual terms |
Comparison of Freight Forwarder Involvement Scope
The Standard Five Classifications in this article are not categories established by law or the wider industry but serve as a framework within this series to analyze the scope of freight forwarder involvement.
| Standard Five Classifications | Expected Involvement | Points to Confirm When On-deck Stowed | Areas Not Automatically Assumed | Practical Response |
|---|---|---|---|---|
| Simple Intermediary | Handling of bookings, B/L drafts, insurance documents, etc. | Whether special container or On Deck designation was accurately communicated | Final decisions on insurance coverage and general average inclusion | Promptly relay information to cargo owners and insurance parties |
| Cargo Transportation Service Provider | Container transport using actual carriers | Container type, transport route, stowage conditions | Constantly specifying or guaranteeing the shipping line’s actual stowage position | Organize booking information and any additional terms |
| NVOCC / House B/L Issuer | Involvement in the transport contract as House B/L issuer | House B/L discretionary clauses and surface description | Unlimited liability for Master Carrier’s stowage decisions | Cross-check House B/L terms with Master B/L terms |
| Door-to-Door Single Contractor | Integrated arrangement of pickup, container stuffing, ocean transport, and delivery | All processes including packing, stuffing, and container suitability | Unconditional guarantee for all maritime risks | Centralize management of responsible parties and evidence for each process |
| Agent/Coordinator for Specific Operations | Individual coordination such as insurance inquiries, surveys, special cargo approvals | Scope of delegation, declaration contents, approval conditions | Insurance or legal decisions beyond delegated authority | Retain written instructions and approvals |
The terms Contracting Carrier and Actual Carrier refer to legal or contractual positions and do not replace the Standard Five Classifications presented here.
Example 1: When a Standard Closed Container is Loaded on Deck
Consider a case where industrial products stored in a standard dry container are loaded onto a container ship, and the shipping line’s Bill of Lading (B/L) contains a discretionary clause allowing the carrier to load the container either underdeck or on deck.
The shipper has not specified deck loading, and there is no special notation such as "Shipped on Deck" on the front of the B/L.
If the insurance policy or Open Cover includes the Underdeck or On-deck Clause, even if the container is actually loaded on deck, it will be covered according to the standard insurance terms applicable to cargo stowed underdeck.
However, in case of damage, it is necessary to separately verify the ICC conditions, container condition, packing, cause of the incident, and any applicable exclusions.
Example 2: Containers on Deck are Jettisoned
Consider a case where, due to severe weather threatening the safety of the vessel, the captain decides to jettison some containers on deck for the common safety.
If the Underdeck or On-deck Clause applies to the cargo in question, the insurance policy will treat the jettison damage under the conditions applicable to cargo stowed underdeck.
At the same time, it is necessary to confirm whether this jettison will be included as a General Average sacrifice.
The inclusion in General Average is not determined solely by the Underdeck or On-deck Clause but depends on the York-Antwerp Rules incorporated in the B/L, the governing law, stowage practices, and the judgment of the General Average adjuster.
Example 3: When Arranging Flat Rack Cargo under an Open Cover
An Open Cover held by the cargo owner typically includes an Underdeck or On-deck Clause covering containerized cargo; however, consider the case of transporting large machinery using a flat rack container.
Unlike closed containers, flat racks expose the cargo to the external environment, so they may not be automatically covered under the standard container cargo insurance conditions.
Before booking, dimensions, weight, value, packing, lashing, planned on-deck stowage, Bill of Lading details, and stowage plans should be submitted to the insurer for individual approval, verification of the On-Deck Cargo Clause applicability, additional premiums, survey requirements, and related conditions.
It is important not to treat special container cargo as equivalent to standard closed container cargo merely because the Open Cover includes an Underdeck or On-deck Clause.
Practical Confirmation Checklist
| Timing of Confirmation | Party to Confirm With | Items to Confirm | Actions If Issues Are Found |
|---|---|---|---|
| At Insurance Contract Confirmation | Insurance Company, Insurance Agent | Whether Underdeck or On-deck Clause is included | Check conditions of Open Cover or individual policy |
| Before Booking | Shipper, Shipping Line, Freight Forwarder | Container type, cargo dimensions, weight, value | Obtain prior approval for special containers |
| At Booking | Shipping Line, NVOCC | Loading conditions, On Deck designation, special handling | Share Booking Confirmation with insurer |
| When Confirming B/L Draft | Shipping Line, NVOCC, Shipper | Discretionary clauses and explicit On Deck indication | If explicitly indicated, consult insurer before issuance |
| At Open Cover Declaration | Insurance Company, Insurance Agent | Automatic coverage scope, declaration deadlines, excluded cargo | Submit individual application for excluded cargo |
| When Taking Out Individual Insurance | Insurance Company, Insurance Agent | Cargo, container, stowage, B/L notation | Do not start transport before finalizing conditions |
| At Container Stuffing | Warehouse Operator, Shipper, Surveyor | Container condition, packaging, lashing, seals | Keep photos and Stuffing Report |
| When Accident Occurs | Shipping Line, Insurance Company, Surveyor | Stowage position, container condition, cause of accident | Report accident and preserve evidence |
| At General Average Declaration | Insurance Company, General Average Adjuster, Shipping Line | GA Bond, GA Guarantee, sacrifices and contributions | Separate confirmation of insurance coverage and GA adjustment |
| When Considering Subrogation | Shipping Line, Warehouse Operator, Insurance Company, Lawyer | Lashing, stowage, container defects | Send liability notice within deadline |
Documents to Check in Case of an Incident
| Document | What Can Be Confirmed | Practical Purpose | Points to Note |
|---|---|---|---|
| Insurance Policy / Open Cover | Basic terms, special clauses, automatic coverage scope | Confirm applicability of the Underdeck or On-deck Clause | Review the entire clause text, not just the clause name |
| Front of B/L | Explicit statements such as "Shipped on Deck" | Differentiate from discretionary clauses | Retain both Original and Draft copies |
| Back of B/L Terms | Carrier’s authority for on-deck or underdeck stowage | Verify the premise for clause application | Check for differences in terms by shipping line |
| Booking Confirmation | Container type, special handling, stowage conditions | Compare declared details with actual transportation conditions | Preserve change history |
| EIR | Condition of container at handover | Determine timing of punctures or deformations | Compare condition at in-gate and gate-out |
| Stuffing Photos | Packing, securing, seals, cargo arrangement | Identify causes of poor packaging or cargo shift | Take photos before door closure |
| Onboard Stowage Records | Actual stowage positions and container stacks | Confirm on-deck stowage facts and surrounding conditions | Request early preservation from shipping line |
| Severe Weather and Voyage Records | Waves, wind speed, ship motions, route | Identify causes of loss or water damage | Cross-check ship’s log with weather records |
| Survey Report | Damage condition, cause, salvage value | Basis for insurance claims and recovery | Separate inspection of container and internal cargo |
| General Average Documents | GA declaration, sacrifice, contribution amounts, security demands | Process general average claims | Submit promptly to insurers |
Common Misunderstandings
| Misunderstanding | Actual Concept | Practical Response |
|---|---|---|
| All container cargo is covered | Mainly standard closed containers are targeted | Check the equipment type |
| On-deck stowage has exactly the same risks as underdeck | The clause treats them equally under insurance terms, but physical risks remain | Check stowage methods, lashing, and cause of damage |
| Closed containers are completely waterproof | Damage can occur from holes, faulty doors, heavy seawater splash, condensation, etc. | Keep EIR and container photos |
| Having this clause equates coverage to ICC(A) | Base terms remain ICC(A), ICC(B), or ICC(C) | Confirm the insured base terms |
| If cargo is loaded on deck, general average always applies | Determined by general average safety, stowage practice, B/L, and applicable regulations | Check GA adjustment and accident documentation |
| If cargo loading damage occurs, GA will always be accepted by insurance | Insurance coverage and inclusion in general average are separate decisions | Confirm separately with insurer and GA adjuster |
| If B/L has a liberty clause, special containers are also covered | The liberty clause is only one of the necessary conditions | Verify container type and individual insurance terms |
| “Shipped on Deck” is the same as a liberty clause | Explicit B/L notation usually requires individual declaration | Enquire with the insurer before B/L issuance |
| No prior notice is needed under Open Cover | Special cargo and special containers may require individual approval | Check automatic coverage scope and exclusions |
| This is the same clause as the On-Deck Cargo Clause | The targeted cargo and coverage functions differ | Delineate standard containers from general on-deck cargo |
| The clause also applies to Open-Yard Storage | On-vessel on-deck stowage and land-based open-yard storage involve different risks | Check accident location and storage conditions |
Points of Caution for Freight Forwarders in Practice
Freight forwarders and NVOCCs should individually verify the type of container, cargo characteristics, B/L details, and insurance conditions, even if the shipper explains that "since the cargo is containerized, standard conditions should suffice."
In particular, containers such as Open Top, Flat Rack, Platform, Out of Gauge, Tank Container, and Reefer Container may not be covered under the usual automatic insurance provisions applicable to standard sealed dry containers.
If a special container or on-deck stowage was anticipated at the time of booking but was not communicated to the shipper or insurance parties, disputes may arise after an incident regarding the reported details, underwriting conditions, and allocation of responsibility.
When an NVOCC issues a House B/L, the discretionary clauses in the House B/L, the statements on the Master B/L, and the actual stowage conditions should each be confirmed separately.
Freight forwarders are not in a position to independently decide the ultimate applicability of the Underdeck or On-deck Clause, whether to include damages in general average, or whether insurance proceeds are payable.
However, it is important to organize the B/L draft, booking confirmation, container type, cargo specifications, stowage conditions, Open Cover, insurer’s approval, and incident documentation, and to communicate these in a timely manner to relevant parties.
In the event of a casualty, it is necessary to concurrently verify not only the insurance claim but also the container suitability, packing, stowage, lashing, carrier liability, general average, and recovery claims against third parties.
Summary
The Underdeck or On-deck Clause is a special clause applied when containerized cargo is stowed on deck at the carrier’s discretion as stated on the B/L. Under this clause, the cargo is handled following the provisions of the insurance policy applicable to cargo stowed underdeck.
This clause serves to avoid unfavorable changes in terms solely based on stowage location, considering that container stowage on deck has become a common operational practice on modern container vessels.
The main scope covers standard closed containers that provide a certain level of separation of the internal cargo from external elements. Containers such as Open Top, Flat Rack, Platform, and Out of Gauge cargo require individual assessment due to higher exposure risks.
This clause does not expand the basic coverage conditions of ICC(A), ICC(B), ICC(C), or similar standard clauses. Whether damage is covered depends on those basic conditions, exclusions, the condition of the container, packaging, cargo characteristics, and cause of the incident.
When cargo stowed on deck is jettisoned, it should be separately confirmed whether this constitutes a jettison loss under the insurance contract or is included as a General Average sacrifice in the general average adjustment.
The Underdeck or On-deck Clause governs how the insurance treats the cargo but does not automatically decide the inclusion in general average. General average determinations follow the B/L terms, York-Antwerp Rules, applicable law, stowage practices, and general average adjustment procedures.
Under an Open Cover policy, this clause may be incorporated into the blanket terms, automatically covering standard containerized cargo within the scope. However, special containers, high-value cargo, temperature-controlled cargo, or deck-stowage declared cargo may require individual approval.
For individual policies, it is generally required to declare container type, cargo, B/L descriptions, stowage methods, and the possibility of deck stowage before policy inception to confirm applicable conditions.
General discretionary terms on B/Ls and visible notations such as Shipped on Deck, Stowed on Deck, On Deck at Shipper’s Risk, etc., differ in their impact on insurance, carrier liability, and L/C settlement, and thus should be separately verified.
The actual application of the clause, coverage scope, general average treatment, additional premium charges, declaration requirements, and insurance claim eligibility will vary depending on the specific insurance policy, Open Cover terms, B/L details, container type, cargo characteristics, cause of loss, and individual factual circumstances.
