50/50 clause
A clause written into both the cargo policy and the CAR or EAR policy: when no one can tell whether damage found on site happened in transit or during erection, each insurer pays half.
Slough, west of London. Economizer blocks made in Romania arrive at the site of a waste recycling plant, are installed, and only four to six months later does anyone find fatigue cracks in their tubes. The erection all risks insurers pay, then turn against the cargo insurer. In May 2012, in European Group v Chartis, Mr Justice Popplewell found that the damage happened in transit, for lack of effective packing between the tubes, and put the whole loss on the cargo policy. Both policies carried a 50/50 clause. It never came into play, because the judge found a probable cause. The Court of Appeal dismissed Chartis's appeal on 22 March 2013 (Ace European Group v Chartis, [2013] EWCA Civ 224) and left the whole loss on the cargo policy. The clause solves a boundary problem. The project transit policy covers up to delivery on site; the CAR or EAR policy picks up at unloading. Damage found when the crates are opened can come from either side, and without a clause the insured waits for two insurers and two adjusters to agree. The 50/50 settles it in advance: if no one can establish whether the damage occurred before or after arrival, each insurer pays half of the adjusted loss. It rests on factual conditions that adjusters check before anything else. The wording must appear in both policies: a 50/50 on one side does not bind the other insurer. The damage must be covered by each policy had it occurred on that policy's side, and a cargo exclusion for inherent vice or insufficient packing defeats the split. Most versions also require the packages to be inspected within a short period after arrival, which is awkward for an erection contractor who stores parts for months before unpacking them. The 2012 case gives the English reading: the judge first looks for a probable cause, and the split only comes as a fallback, when the uncertainty is genuine. Versions differ on how the deductible applies to each half, and on a large project transit and erection are often placed in two different markets.
Textbook case, in numbers. A transformer arrives at a power plant site; opened eight days later, within the clause's time limit, it shows a displaced winding. Repair: 1.2 million euros. The adjusters cannot date the impact. Both policies carry the 50/50 clause and each applies its deductible to its half: the cargo policy pays 600,000 - 25,000 = 575,000 euros, the EAR policy 600,000 - 100,000 = 500,000 euros. The insured receives 1,075,000 euros and keeps 125,000. If the survey proves an impact at sea, the cargo policy alone pays 1,200,000 - 25,000 = 1,175,000 euros.
50/50 damage clause, cargo/EAR 50/50 clause, fifty-fifty clause, 50/50 cargo-construction clause
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