The “Improper Packing” Dispute in Logistics

The Reality of Indian Supply Chains

For businesses involved in trade and logistics, the movement of goods across India’s vast and varied terrain is a daily gamble. While Marine Transit Insurance is designed to cover these risks, a significant number of claims are rejected annually under the vague exclusion of “Insufficient or Improper Packing.” Insurers often argue that if goods arrive damaged, the packaging must have been faulty, shifting the blame—and the financial loss—back onto the business owner.

The Client Scenario

A rapidly growing distributor of consumer electronics based in Delhi faced this precise nightmare. They had dispatched a high-value consignment of LED panels and home theatre systems to a retailer in the Northeast. The shipment was worth approximately ₹85 Lakhs.

While navigating a steep gradient in a heavy monsoon, the transport vehicle skidded and overturned. The goods were severely damaged by the impact and subsequent water ingress. The client filed an immediate claim, confident in their “All Risk” Marine Policy.

However, the insurance company repudiated (rejected) the claim entirely. Their argument was technical: they claimed the cardboard cartons used were “standard retail packaging” and not robust enough for long-haul inter-state transport. They cited the “Improper Packing” exclusion, stating that the client should have used wooden crating for such a journey.

The Disha Insurance Solution

The client was facing a total loss of ₹85 Lakhs, a hit that would have wiped out their quarterly profits. They turned to Disha Insurance for a rescue strategy.

We approached the problem with a two-pronged technical defense:

• Proximate Cause Analysis: We challenged the insurer’s fundamental premise. While packaging is important, we argued that the Proximate Cause of the loss was the overturning of the vehicle (an insured peril), not the quality of the cardboard. We demonstrated that given the severity of the crash, even wooden crates would have resulted in significant damage. The packaging was not the cause of the loss; the accident was.
• Industry Standard Verification: We collated data from the Original Equipment Manufacturer (OEM). We proved that the packaging used was the global standard for shipping these specific electronics and had successfully withstood thousands of kilometers of transit previously. We argued that holding the client to an arbitrary “wooden crate” standard was unfair and not stipulated explicitly in the policy schedule.

The Outcome

After weeks of intense negotiation and technical representations by our team, the insurer conceded. They acknowledged that the accident was the dominant cause of damage.

• Initial Status: Claim Rejected (₹0 Payout).
• Final Settlement: ₹78 Lakhs (after standard deductibles).

The Strategic Value

This victory did more than just recover money. It reinstated the client’s faith in the insurance mechanism. At Disha Insurance, we understand that in the fine print of a policy often lies the difference between a write-off and a recovery. We ensure that technicalities are never used to deny a genuine business loss.