AD Banker Property and Casualty Practice Exam

A running down clause in shipping insurance is primarily designed to provide coverage for collisions that are caused by the fault of the shipper or the carrier. This clause protects the insured party from financial losses that may arise due to their liability in such collisions. It ensures that the party responsible for the collision is covered under the insurance policy, which is critical in maritime operations where navigating hazards and other vessels is a common risk.

This coverage is essential because collisions can lead to significant damage not only to the involved vessels but also to third-party properties and environmental damages. By including a running down clause, a shipping insurance policy recognizes the potential liability issues that arise from these incidents and provides necessary protections, allowing shippers and carriers to operate with a degree of confidence regarding their financial exposure in the event of an accident.

The focus of the running down clause is distinctly on the liability for collisions rather than on general operational responsibilities or penalties for delays, making it a vital component of maritime risk management.