Inherent Vice Exclusion
What Does Inherent Vice Exclusion Mean?
An inherent vice exclusion is an exclusion found primarily, though not exclusively, in marine insurance policies that exclude coverage for damage to property that is caused by some feature or aspect of the property itself.
An inherent vice exclusion may also be referred to as a latent defect exclusion.
Insuranceopedia Explains Inherent Vice Exclusion
Examples of circumstances under which an inherent vice exclusion would apply include: books that deteriorated due to acid in the paper as a result of the manufacturing process; film that deteriorates over time due to instability of the chemicals contained in it; food that deteriorated due to storage at improper temperatures; spontaneous fermentation or combustion of improperly dried grain.
A specific example: A shipment of gloves absorbed moisture prior to transit. When the container entered a substantially colder environment, the moisture condensed and then settled causing stains. The court in T.M. Noten B.V. v. Harding (1990) 2 Lloyd’s Rep. 283 (Eng. C.A.) held that "the loss arose from the natural behavior of the goods as shipped in the ordinary course of the contemplated voyage from Calcutta to Rotterdam", and that the insurer rightfully denied the claim under an inherent vice exclusion.
