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Viewpoint: Recovering losses due to the Suez Canal blockage

Taking proactive steps with your insurance company is key

(Photo: Suez Canal Authority)

The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.

By Shruti D. Engstrom, John N. Ellison and Luke E. Debevec

The blockage of the Suez Canal by the Ever Given has given rise to trade and supply chain disruptions for businesses that depend on shipments through the canal. 

Policyholders should look to their insurance to determine if they have coverage for these types of losses. Businesses should also carefully review their contracts with suppliers and related vendors to determine if they have available insurance through those contracts, indemnification protection through those contracts, or indemnification obligations because of those contracts.  


Taking proactive steps is the key to securing recovery for these losses.

Read your policies and vendor contracts

The first step is to locate and carefully read the applicable policies or vendor contracts.  The insurance policies most likely to respond to supply chain disruptions or loss of cargo include trade disruption coverage, contingent business interruption coverage or cargo insurance.  

Look to your company’s political risk insurance policies for trade disruption coverage, which provides protection from loss of earnings or extra expenses incurred as a result of supply chain disruption.   

Review your company’s property insurance policies for contingent business interruption coverage, which will provide similar protection due to property damage to the Ever Given.  


Coverage for cargo can also be found in cargo insurance policies or policies offering inland marine coverage and provides protection for damaged or lost cargo.

Because policies with these types of coverages often have different names, reviewing all of your company’s insurance policies is the best way to determine potential coverage.  

This is important because the wordings and coverages can sometimes be complex. The complexity, however, should not be a deterrent.  A close reading of your company’s policies will likely reveal the provisions under which coverage exists and give you a good foundation for discussion with the company’s broker or the insurance company.

Similarly, contracts with suppliers or other such vendors are another source of potential recovery.  Vendor contracts likely contain indemnification provisions and insurance procurement provisions.  

Check these contracts carefully for potential coverage options or potential obligations to customers.

Be aware of policy deadlines

Give notice as soon as possible to avoid any pushback from your insurer on timing.  There is no harm in giving notice, but the failure to do so can essentially put an end to your claim.  

Your company’s notice should include all known losses and a catchall provision for losses that you may discover after giving notice. If necessary, provide updates as needed but do not delay in giving notice.  If your vendor agreements provide indemnification or insurance protection, notify the vendor as well.

In addition to prompt notice, keep track of policy deadlines.  


Policies may require proofs of loss within a certain amount of time, or clauses that require that a suit be filed within a certain amount of time. Keep all of your options on the table and preserve all of your rights by meeting deadlines or securing extensions of time from your insurance company.

Quantify the claim

It is important to gather and preserve information that quantifies the effects of the Suez Canal disruption on your business, such as lost profits and extra expenses. This information will likely involve business accounting, so it is important to have the right team in place to quantify the claim.  

Insurance companies hire accountants and other independent experts to assess claims, so consider seeking outside help on this issue — particularly if your claim is big enough or your company does not have adequate internal resources. The more evidence you collect to quantify your claim, the better.  

Claim quantification also involves communicating with your insurance company and responding to requests for information. Respond promptly to these requests, but make sure to document these communications and track the information requests and responses provided by your company. 

Stay on your insurance company’s radar 

In addition to responding promptly to your insurance company, make sure it responds promptly to you. For instance, write letters to demand information on the status of your claim as well as details and explanations of coverage positions, and follow up on those requests.  

Do not blindly accept coverage delays or denials, but ensure that your insurance company knows that you are invested in your claim and expect responsiveness. 

If needed, engage your broker or an attorney to challenge insurance company delays or denials.  

John N. Ellison, Luke E. Debevec and Shruti D. Engstrom are insurance coverage attorneys at Reed Smith LLP and regularly represent policyholders and their captives in insurance and reinsurance coverage disputes. 

One Comment

  1. Takis Kalogerakos Marine Underwriter

    My position, contrary to what is heard from the parties involved, is in a different direction, so I would say that there is a question of full liability.
    Those who have a contractual obligation to complete a voyage in a controlled canal route must take every precautionary measure for a safe navigation within the limits of their own authority and pay full attention to avoid such incidents, so my view is clear, the Canal’s management is contractually obliged to fulfilling their commitment, carrying full responsibility to third parties.

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