What is the Pair and Set Clause in Marine Insurance?

A pair and set clause in marine insurance is a provision that addresses how claims are handled when one item in a pair or set is damaged or lost during transit. In such cases, the insurer does not treat the damaged item as an individual loss but instead assesses the impact on the entire pair or set.

The purpose of the pair and set clause in insurance is to make sure that the insurer does not pay for the replacement of an individual item in a pair or set but rather accounts for the diminished value of the entire collection, which can result in a lower claim payout.

This clause is particularly important in situations where the insured item is considered part of a set or pair whose combined value is greater than the sum of its parts.

The pair and set clause in marine insurance applies when only part of a pair or set of items is damaged or lost. In such cases, the insurer may either replace or repair the damaged item to restore the value of the entire pair or set.

Alternatively, the insurer may compensate for the difference between the value of the set or pair before the damage and its reduced value after the loss.

This clause makes sure that the insured is not overcompensated for the loss of a single item but instead is reimbursed in a way that reflects the diminished value of the whole set or pair.

The items that come under pair and set clause in marine insurance policy are:

• Jewellery

• Set of antique furniture

• Pair of antique vases

• Collection of art pieces

• Navigation Equipment

The pair and set clause impact the claim settlement of marine insurance policies. One of the major impacts is reduced compensation. If only part of a set is damaged, the insured may not receive the full replacement value of the damaged item. This can lead to dissatisfaction if the insured expects a payout based on the individual value of the lost or damaged item.

It can also lead to disputes over the exact value of the damaged part or set. Insured parties may feel they are not being adequately compensated, particularly when the value of the entire set decreases significantly due to the loss of one item.

Considering all these situations, it is crucial to involve experienced professionals in the settlement process. An experienced professional will know the intricacies of the maritime industry and can identify areas where coverage is uncertain.

-Also Read: Marine Insurance Claim Process

In addition to the pair and set clause, there are various other clauses in marine insurance. Some of these clauses are listed below:

-Valuation Clause

One of the significant clauses under a marine insurance policy is the valuation clause, which determines the insured property values in the event of marine losses. This value can depend on the market value, purchase price and other agreed-upon criteria.

-Jettison Clause

Another crucial clause found in marine insurance policy is the jettison clause, which covers the loss of cargo or goods deliberately thrown to save the remaining cargo or vessel. The loss of jettisoned or thrown cargo is considered a general average loss.

Also Read: What is Jettison in Marine Insurance?

-Sue and Labour Clause

This is another important clause in marine insurance policy that encourages the insured party to take all preventive steps to minimise further damage and loss to insured property. The insurance provider will reimburse the insured party for additional expenses incurred to save the insured property.

-Memorandum Clause

Under the memorandum clause of a marine insurance policy, the insurance provider will exclude certain inherent risks associated with the nature of the insured property, such as ordinary wear and tear, ordinary leakage, inherent vice, etc.

-Inchmaree Clause

This is also referred to as a negligence clause in a marine insurance policy, especially for the hull and machinery of ships. Under this clause, coverage is extended beyond the traditional perils of the sea. It offers coverage for loss or damage caused by the negligence of crew members, captains or other personnel responsible for ship operation.

-Also Read: Clauses Covered in Marine Insurance

Understanding the pair and set clause in insurance is crucial for businesses and individuals with high-value pairs or sets, such as jewellery, antiques, fine art, etc. Therefore, it is best to understand all about the pair and set clause in a marine insurance policy and how it will impact the compensation amount.

TATA AIG offers various marine insurance plans that are customised for business needs. For instance, our marine open policy offers protection to cargo across various shipments made over a year.

What does not fall under the pair and set clause?

Items that are not part of a pair or set, or those that have independent value, do not fall under the Pair and Set Clause. For example, individual items like single pieces of artwork, standalone furniture, etc.

Is it mandatory to have marine insurance in India?

Marine insurance is not legally mandatory in India for all shipments, but it is required for importers and exporters under certain conditions, especially for high-value goods.

How do I know if I am compliant with the pair and set clause in marine insurance?

To know compliance with the pair and set clause, review your policy documents to confirm they include the clause. If unsure, consult your insurance provider to verify how the clause applies to your goods and ensure proper coverage.