At a Glance Guide - International Hull Clauses

International Hull Clauses Comparing the International Hull Clauses (01/11/03)and the Institute Time Clauses - Hulls (01/10/83)

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© Hill Dickinson

2nd Edition, Nov 2003

www.htd-law.com

ContentsSection: Page No.

Introduction 3

Part 1 Principal Insuring Conditions 8

1. General 8

2. Perils 8

3. Leased equipment 9

4. Parts taken off 9

5. Pollution hazard 9

6. 3/4ths collision liability 9

7. Sistership 10

8. General average and salvage 10

9. Duty of the assured (sue and labour) 11

10. Navigation provisions 12

11. Breach of navigation provisions 12

12. Continuation 12

13. Classification and ISM 12

14. Management 13

15. Deductible(s) 14

16. New for old 14

17. Bottom treatment 14

18. Wages and maintenance 14

19. Agency commissions 14

20. Unrepaired damage 15

21. Constructive total loss 15

22. Freight waiver 15

23. Assignment 15

24. Disbursements warranty 15

25. Cancelling returns 15

26. Separate insurances 15

27. Several liability 15

28. Affiliated companies 15

29. War and strikes exclusion 15

cont’d…

International Hull Clauses

Section: Page No.

…cont’d

30. Terrorist, political motive and malicious acts exclusion 16

31. Radioactive contamination, chemical, biological, bio-chemical and electromagnetic

weapons exclusion 16

Part 2 Additional Clauses - 01/11/03 16

32. Navigating limits 16

33. Permission for areas specified in navigating limits 16

34. Recommissioning condition 16

35. Premium payment 16

36. Contracts (Rights of Third Parties) Act 1999 17

37. Fixed and floating objects 17

38. 4/4ths collision liability 17

39. Returns for lay-up 17

40. General average absorption 17

41. Additional perils 18

Part 3 Claims Provisions - 01/11/03 19

42. Leading Underwriters 19

43. Notice of claims 19

44. Tender provisions 19

45. Duties of the Assured 20

46. Duties of the Underwriters in relation to claims 20

47. Provision of security 21

48. Payment of claims 21

49. Recoveries 22

50. Dispute resolution 23

Contents

Whilst care has been taken in the preparation of this guide, the matters referred to herein are subject to change andno liability or responsibility is accepted by anyone for any errors or omissions which may exist in it. The contents ofthis booklet are descriptive only and should not be used as a substitute for legal advice.


Introduction

This booklet is intended to serve as a guide to the International Hull Clauses (01/11/03) and to highlight

the principal changes from the Institute Time Clauses – Hulls (01/10/83).

It is not an exhaustive analysis of the extent of cover nor does it list all the changes which have been

introduced. Whilst there are comments on certain key changes, these are not intended as legal advice

on the meaning of any Clause.

In order to keep this booklet as simple as possible, no detailed reference is made to the Institute Time

Clauses - Hulls (01/11/95) or to the International Hull Clauses (01/11/02), the forerunner of these clauses.

Separate booklets in this series already deal with those Clauses.

The principal changes from ITC-Hulls (01/10/83) are:

1. General

The Clauses are now in three parts

Part 1 contains the principal insuring conditions; Part 2 contains commonly used additional clauses, to include optional covers which may

be agreed on placing (FFO, 4/4ths RDC, lay-up returns, general average absorption and

additional perils); Part 3 contains the claims provisions and sets out the duties of the Assured and Underwriters.

2. Part 1 - Principal insuring conditions

Perils (cl. 2) Cover for loss and damage caused by burst boilers/broken shafts and any latent defect

under clause 2.2 has been expressed such that the costs of repairing/replacing the burst

boiler/broken shaft and correcting the latent defect are not covered. However, where loss or damage has been caused, 50% of the common repair costs are

covered under clauses 2.3/2.4.

3

4

Leased equipment (cl. 3) Cover is given as standard for leased equipment.

Parts taken off (cl. 4) Cover is given as standard for parts taken off.

Pollution hazard (cl. 5) Pollution hazard cover is extended to governmental action to prevent or mitigate

damage to the environment or threat thereof.

3/4ths RDC (cl. 6) Legal costs cover is subject to an express limit of 25% of the insured value.

General Average and salvage (cl. 8) There is no reduction in claims for salvage, salvage charges and GA where the vessel

is underinsured. Cover is provided for Article 13(1)(b) salvage awards under the International Convention

on Salvage 1989 and General Average expenditure allowable under Rule XI(d) of the

York-Antwerp Rules 1994.

Sue & labour (cl. 9) There is no reduction in claims for sue and labour expenditure where the vessel

is underinsured.

Navigation provisions (cl. 10) These are no longer expressed as warranties. There is no cover for loss during the period

of breach.

Continuation (cl. 12) The vessel must now be in distress/missing (at sea) or in distress (in port), to be held

covered at expiry.

Classification & ISM (cl. 13) There are major changes to reflect current practice regarding Class and ISM. Automatic termination for failure to maintain Class, to comply with Class requirements

relating to the vessel’s seaworthiness and to have in place valid ISM documentation.

4

Leased equipment (cl. 3) Cover is given as standard for leased equipment.

Parts taken off (cl. 4) Cover is given as standard for parts taken off.

Pollution hazard (cl. 5) Pollution hazard cover is extended to governmental action to prevent or mitigate

damage to the environment or threat thereof.

3/4ths RDC (cl. 6) Legal costs cover is subject to an express limit of 25% of the insured value.

General Average and salvage (cl. 8) There is no reduction in claims for salvage, salvage charges and GA where the vessel

is underinsured. Cover is provided for Article 13(1)(b) salvage awards under the International Convention

on Salvage 1989 and General Average expenditure allowable under Rule XI(d) of the

York-Antwerp Rules 1994.

Sue & labour (cl. 9) There is no reduction in claims for sue and labour expenditure where the vessel

is underinsured.

Navigation provisions (cl. 10) These are no longer expressed as warranties. There is no cover for loss during the period

of breach.

Continuation (cl. 12) The vessel must now be in distress/missing (at sea) or in distress (in port), to be held

covered at expiry.

Classification & ISM (cl. 13) There are major changes to reflect current practice regarding Class and ISM. Automatic termination for failure to maintain Class, to comply with Class requirements

relating to the vessel’s seaworthiness and to have in place valid ISM documentation.

5


Management (cl. 14) Automatic termination (if no prior agreement) where the vessel sails for break-up. There is a continuing duty upon the Assured, Owners and Managers to comply with flag

state requirements and Class accident/defect reporting requirements. There is no cover

for loss attributable to breach of this duty.

Deductible(s) (cl. 15) Additional Machinery deductible may apply if agreed on placing. Claims under the GA Absorption clause are not subject to the deductible.

Bottom treatment (cl. 17) Cover extended for anti-fouling coatings to the damaged/disturbed areas.

Constructive total loss (cl. 21) Constructive total losses are now payable when the costs of repair or recovery exceed

80% of insured value.

Cancelling returns (cl. 25) CRO, but lay-up returns may be agreed on placing under cl. 39.

Separate insurances, several liability, affiliated companies (cls. 26-28) All included as standard.

War, strikes, terrorists, political motive and malicious acts (cls. 29-30) These have been re-ordered. Malicious acts exclusion now applies to “any weapon” rather than “any weapon of war”.

RACE/Chem-Bio (cl. 31) The new Institute Extended Radioactive Contamination, Chemical, Biological, Bio-

chemical and Electromagnetic Weapons exclusion has been adopted. The cyber attack wording (cl. 1.2 of CL 365) has not been adopted.

6

3. Part 2 - Additional clauses

Navigating limits (cl. 32) The Institute Warranty limits have been re-drawn as per the International Navigating

Conditions (01/11/03) and are no longer expressed as warranties.

Recommissioning (cl. 34) Applies following lay-up for more than 180 days.

Premium The Assured undertakes that the premium will be paid within 45 days or as may be

agreed based on LSW 3000.

FFO and 44ths RDC (cls. 37/38) Optional FFO and 4/4ths RDC cover can now be agreed on placing.

Returns for lay-up (cl. 39) Optional lay-up returns can now be agreed on placing.

GA Absorption (cl. 40) Optional GA absorption clause, based on the BIMCO clause, can now be agreed on placing. Payable without the application of the deductible.

Additional perils (cl. 41) Optional additional perils clause can now be agreed on placing. Provision for costs not covered under clauses 2.2.1 and 2.2.2 (burst boilers/broken shafts

and latent defect).

4. Part 3 - Claims provisions

Leading Underwriters (cl. 42) Leaders designated on the slip given authority to bind followers in respect of claims matters.

6

3. Part 2 - Additional clauses

Navigating limits (cl. 32) The Institute Warranty limits have been re-drawn as per the International Navigating

Conditions (01/11/03) and are no longer expressed as warranties.

Recommissioning (cl. 34) Applies following lay-up for more than 180 days.

Premium The Assured undertakes that the premium will be paid within 45 days or as may be

agreed based on LSW 3000.

FFO and 44ths RDC (cls. 37/38) Optional FFO and 4/4ths RDC cover can now be agreed on placing.

Returns for lay-up (cl. 39) Optional lay-up returns can now be agreed on placing.

GA Absorption (cl. 40) Optional GA absorption clause, based on the BIMCO clause, can now be agreed on placing. Payable without the application of the deductible.

Additional perils (cl. 41) Optional additional perils clause can now be agreed on placing. Provision for costs not covered under clauses 2.2.1 and 2.2.2 (burst boilers/broken shafts

and latent defect).

4. Part 3 - Claims provisions

Leading Underwriters (cl. 42) Leaders designated on the slip given authority to bind followers in respect of claims matters.

7


Notice of claims (cl. 43) A failure to give notice within 180 days of Assured, Owners or Managers becoming aware of

loss, damage, liability or expense which may result in a claim means claim not recoverable.

Duties of the Assured (cl. 45) The duties of the Assured to co-operate in claims investigation are now set out. Underwriters shall not be liable if an Assured misleads them or conceals material facts at

any stage of the claims process, prior to the commencement of legal proceedings.

(However, the Assured cannot be required under this clause to disclose documents or

matters which are subject to legal privilege.)

Duties of the Underwriters (cl. 46) The duties of Underwriters in relation to surveyors, appointment of average adjusters,

payment of their fees and release of reports are now set out. Underwriters will make a decision on claims within 28 days of a fully documented

claims presentation.

Provision of security (cl. 47) Underwriters will give due consideration to the provision of security or countersecurity.

Recoveries (cl. 49) There is an express duty on the Assured to co-operate with Underwriters to protect

recoveries from third parties before claim paid or agreed. Recoveries are now to be shared pro rata rather than "top down".

Dispute resolution (cl. 50) Alternative dispute resolution procedures options are acknowledged.

8

1. General

ITC - Hulls – (01/10/83)(minor changes not shown)

International Hull Clauses – (01/11/03)(Clauses not set out in full)

Part 1 Principal Insuring Conditions

1 Introductory wording relating to application of Parts 1, 2 and 3 and the optional cover in Clauses 37-41.

2 This insurance is subject to English law and practice.

3 This insurance is subject to the exclusive jurisdiction of the English High Court of Justice, except as may be expressly provided herein to the contrary.

4 Severability clause.

New Parts 2 & 3 may be altered in the future, withoutalteration to Part 1.

No change

New Previously applied where risks written on the MAR 91form. May be deleted.

New

2. Perils

(cont’d…)

No change (cl. 6.1)

No change (cl. 6.1.1)





Changed (cl. 6.1.6 – breakdown to nuclear installations)Deleted. See Clause 31.

Changed (cl. 6.1.7) Aircraft or objects falling therefrom nowaddressed in Clause 2.1.9.


Changed (cl. 6.2.1) No longer subject to the due diligenceproviso in Clause 2.2 and extended to include stores andparts.

Changed (cl. 6.1.7) Now includes damage caused byhelicopters, satellites and objects falling therefrom. Thiswas subject to the due diligence proviso in Clause 6.2 of the1995 clauses.

No change (cl. 6.2)

Changed (cl. 6.2.2) Cover applies when damage is caused bybursting boilers or breaking shafts, but not in respect of thecosts of replacing the boiler or shaft. Common costs arereferred to in Clause 2.3 below. (Additional Perils cover canbe agreed - see Clause 41 below.)

Changed (cl. 6.2.2) Cover applies to damage caused by thelatent defect, but not in respect of the costs of correctingthe latent defect. Common costs are referred to in Clause2.4 below. This Clause seeks to reinstate a distinctionbetween the defect and consequential damage asunderstood prior to the Court of Appeal decision in the“Nukila”, without referring to “part”. “Part” defies easydefinition.



1 Covers loss of or damage to the subject-matter insured caused by

1.1 perils of the seas, rivers, lakes or other navigable waters

1.2 fire, explosion

1.3 violent theft by persons from outside the vessel

1.4 jettison

1.5 piracy

1.6 contact with land conveyance, dock or harbour equipment or installation

1.7 earthquake, volcanic eruption or lightning

1.8 accidents in loading, discharging or shifting cargo, fuel, stores or parts

1.9 contact with satellites, aircraft, helicopters or similar objects, or objects falling therefrom.

2 Covers loss of or damage to the subject-matter insured caused by

2.1 bursting of boilers or breakage of shafts but does not cover any of the costs of repairing or replacing the boiler which bursts or the shaft which breaks

2.2 any latent defect in the machinery or hull, but does not cover any of the costs of correcting the latent defect

2.3 negligence of Master, Officers, Crew or Pilots

2.4 negligence of repairers or charterers provided such repairers or charterers are not an Assured under this insurance

6. 3/4ths collision liability

(cont’d…)

4. Parts taken off

3. Leased Equipment

9


(…cont’d)

5. Pollution Hazard



2.5 barratry of Master, Officers or Crew

provided that such loss or damage has not resulted from want of due diligence by the Assured, Owners or Managers.

3 Where there is a claim recoverable under Clause 2.2.1, cover is also given for one half of the costs common to the repair of the burst boiler or the broken shaft and the loss or damage caused thereby.

4 Where there is a claim recoverable under Clause 2.2.2, cover is also given for one half of the costs common to the correction of the latent defect and to the repair of the loss or damage caused thereby.

5 Master, Officers, Crew or Pilots shall not be considered Owners within the meaning of this Clause 2 should they hold shares in the vessel.

1 Covers loss of or damage to equipment not owned by the Assured but installed on the vessel for whichthe Assured has assumed contractual liability. Damage must be caused by an insured peril.

2 The measure of indemnity is the lesser of the cost of repair, replacement or the contractual liability. Cover for leased equipment is included in the insured value of the vessel.

1 Covers loss of or damage to parts taken off the vessel. Damage must be caused by an insured peril.

2 The measure of indemnity for leased parts taken off is the same as for leased equipment under Clause 3.

3 Parts taken off are covered excess of any other responsive insurance.

4 Cover is limited to 60 days whilst the parts are not on board the vessel. Excess periods can be held covered where notice is given to Underwriters prior to expiry and any amended terms of cover and additional premium agreed.

5 The Underwriters’ liability for parts taken off does not exceed 5% of the insured value of the vessel.

Covers loss of or damage to the vessel caused by anygovernmental authority under its powers to prevent ormitigate a pollution hazard or damage to theenvironment or threat thereof, where these result fromdamage to the vessel for which the Underwriters areliable. Proviso as to exercise of due diligence toprevent/mitigate the hazard or threat.

1 Cover for 3/4ths of any sum(s) paid by the Assured due to its legal liability in damages following a collision for

1.1 loss of or damage to any other vessel or property thereon


No change The additional words “or Superintendents or any of their onshore management” introduced in the 1995 clauses have not been included.

New Costs common to the repair of the burst boiler/brokenshaft and the damage caused are not covered under Clause2.2.1. This Clause gives cover for half of such costs.(Additional Perils cover can be agreed - see Clause 41 below)

New Costs common to the correction of the latent defectand the repair of the damage caused are not covered underClause 2.2.2. This Clause gives cover for half of such costs.(Again, Additional Perils cover can be agreed - see Clause 41below)

No change (cl. 6.3)

New Cover applies to leased equipment, lost or damaged bythe Clause 2 perils (or Additional Perils, if agreed). TheClause does not provide all risks cover for leased equipmentas appears under some market wordings.

The Clause is based on CL362.

New Cover applies to parts taken off the vessel lost ordamaged by the Clause 2 perils (or Additional Perils, ifagreed). Cover is limited to 60 days and subject to a limit of5% of the insured value of the vessel.

This Clause is based on CL364, but includes leased partstaken off and is extended to 60 days.

Changed (cl. 7) Extended to include governmental action toprevent or mitigate damage to the environment/threatthereof as well as a pollution hazard/threat.

No change (cl. 8.1)



(cont’d…)

4. Parts taken off

3. Leased Equipment

9


(…cont’d)

5. Pollution Hazard



2.5 barratry of Master, Officers or Crew

provided that such loss or damage has not resulted from want of due diligence by the Assured, Owners or Managers.

3 Where there is a claim recoverable under Clause 2.2.1, cover is also given for one half of the costs common to the repair of the burst boiler or the broken shaft and the loss or damage caused thereby.

4 Where there is a claim recoverable under Clause 2.2.2, cover is also given for one half of the costs common to the correction of the latent defect and to the repair of the loss or damage caused thereby.

5 Master, Officers, Crew or Pilots shall not be considered Owners within the meaning of this Clause 2 should they hold shares in the vessel.

1 Covers loss of or damage to equipment not owned by the Assured but installed on the vessel for whichthe Assured has assumed contractual liability. Damage must be caused by an insured peril.

2 The measure of indemnity is the lesser of the cost of repair, replacement or the contractual liability. Cover for leased equipment is included in the insured value of the vessel.

1 Covers loss of or damage to parts taken off the vessel. Damage must be caused by an insured peril.

2 The measure of indemnity for leased parts taken off is the same as for leased equipment under Clause 3.

3 Parts taken off are covered excess of any other responsive insurance.

4 Cover is limited to 60 days whilst the parts are not on board the vessel. Excess periods can be held covered where notice is given to Underwriters prior to expiry and any amended terms of cover and additional premium agreed.

5 The Underwriters’ liability for parts taken off does not exceed 5% of the insured value of the vessel.

Covers loss of or damage to the vessel caused by anygovernmental authority under its powers to prevent ormitigate a pollution hazard or damage to theenvironment or threat thereof, where these result fromdamage to the vessel for which the Underwriters areliable. Proviso as to exercise of due diligence toprevent/mitigate the hazard or threat.

1 Cover for 3/4ths of any sum(s) paid by the Assured due to its legal liability in damages following a collision for

1.1 loss of or damage to any other vessel or property thereon


No change The additional words “or Superintendents or any of their onshore management” introduced in the 1995 clauses have not been included.

New Costs common to the repair of the burst boiler/brokenshaft and the damage caused are not covered under Clause2.2.1. This Clause gives cover for half of such costs.(Additional Perils cover can be agreed - see Clause 41 below)

New Costs common to the correction of the latent defectand the repair of the damage caused are not covered underClause 2.2.2. This Clause gives cover for half of such costs.(Again, Additional Perils cover can be agreed - see Clause 41below)

No change (cl. 6.3)

New Cover applies to leased equipment, lost or damaged bythe Clause 2 perils (or Additional Perils, if agreed). TheClause does not provide all risks cover for leased equipmentas appears under some market wordings.

The Clause is based on CL362.

New Cover applies to parts taken off the vessel lost ordamaged by the Clause 2 perils (or Additional Perils, ifagreed). Cover is limited to 60 days and subject to a limit of5% of the insured value of the vessel.

This Clause is based on CL364, but includes leased partstaken off and is extended to 60 days.

Changed (cl. 7) Extended to include governmental action toprevent or mitigate damage to the environment/threatthereof as well as a pollution hazard/threat.

No change (cl. 8.1)


10

(…cont’d)

7. Sistership

8. General average and salvage

(cont’d…)

1.2 delay to or loss of use of any such other vessel or property thereon

1.3 general average of, salvage of, or salvage under contract of, any such other vessel or property thereon.

2 Cover under Clause 6 is in addition to the indemnityprovided by the other terms and conditions of this insurance, subject to the following provisions

2.1 where the vessels are both to blame, subject to limitation of liability, the indemnity under Clause 6 is to be calculated on the principle of cross-liabilities.

2.2 Underwriters’ liability under Clauses 6.1 and 6.2 is limited to three fourths of the insured value of the vessel in respect of any one collision.

3 Underwriters to pay three fourths of the legal costs in contesting/limiting liability where Underwriters have given their prior written consent and subject to a limit of 25% of the insured value of the insuredvessel (unless specific written agreement obtained from Underwriters).

EXCLUSIONS

4 Clause 6 does not cover payments by the Assured in respect of

4.1 removal or disposal of obstructions, wrecks, cargoes or any other thing whatsoever

4.2 any real or personal property or thing whatsoever except other vessels or property on other vessels

4.3 the cargo or other property on, or the engagements of, the insured vessel

4.4 loss of life, personal injury or illness

4.5 pollution or contamination, damage to the environment or threats thereof, except from other vessels with which the insured vessel is in collision. However, the clause does not apply to an enhanced salvage award under Article 13(1)(b) of the International Convention on Salvage, 1989.

Cover for collision with/salvage services rendered bysisterships. The sum payable, if any, is fixed by anarbitrator agreed between Underwriters and the Assured.

1 Covers the vessel's proportion of salvage, salvage charges and/or general average. Underwriters’ liability is not reduced in the event of under insurance. Specific cover for general average sacrifice.

2 Adjustment to be according to the law and practice obtaining at the place where the adventure ends,

but where the contract of affreightment so provides the adjustment shall be according to the

York-Antwerp Rules.



No change (cl. 8.2)



Changed (cl. 8.3) The costs cover is now subject to a limit of25% of the insured value of the vessel, unless otherwiseagreed.

No change (cl. 8.4)





Changed (cl. 8.4.5) Extends exclusion to threats ofpollution/contamination and to damage to theenvironment or threat thereof. However, the exclusion willnot apply to an enhanced salvage award under Article13(1)(b).

No change (cl. 9)

Change (cl. 11.1) There is now no reduction in claims forsalvage, salvage charges and GA where the vessel is underinsured.

No change (cl. 11.2)



11


(…cont’d)

9. Duty of the Assured (sue and labour)

3 When the vessel sails in ballast and not under charter, the provisions of the York-Antwerp Rules, 1994 (excluding Rules XX and XXI) apply. Defines the general average voyage in such circumstances.

4 No claim under Clause 8 where the loss was not incurred to avoid a peril insured.

5 Underwriters shall not be liable under this Clause 8 for

5.1 special compensation payable to a salvor under Article 14 of the International Convention on Salvage, 1989 or under any other similar provision

5.2 expenses or liabilities incurred in respect of damage (actual or threatened) to the environment or due to the escape (actual or threatened) of pollutants from the vessel.

6 Clause 8.5 does not exclude any sum which the Assured shall pay

6.1 as an enhanced salvage award under Article 13(1)(b) of the International Convention on Salvage, 1989

6.2 as general average expenditure allowable under Rule XI(d) of the York-Antwerp Rules 1994, but only where the contract of affreightment provides for adjustment according to the York-Antwerp Rules 1994.

1 In case of any loss or misfortune it is the duty of the Assured and their servants and agents to take such measures as may be reasonable for the purpose of averting or minimising a loss which would be recoverable under this insurance.

2 Underwriters will contribute to charges properly and reasonably incurred by the Assured under Clause 9.1. General average, salvage charges (except as provided for in Clause 9.5), special compensation and expenses referred to in Clause 8.5 and collision defence or attack costs are not recoverable under Clause 9.

3 Measures taken by the Assured or Underwriters to save, protect or recover the subject-matter insured will not prejudice the rights of either party.

4 Provides that where Underwriters have agreed a total loss of the vessel and expenses have been reasonably incurred in saving or attempting to save the vessel and there are no salved proceeds, or the expenses exceed the salved proceeds, then Underwriters pay pro rata.

5 The sum recoverable under this Clause 9 shall be in addition to the loss otherwise recoverable under

this insurance but shall in no circumstances exceed the insured value of the vessel.

Changed (cl. 11.3) York-Antwerp Rules 1994 are substitutedfor the York-Antwerp Rules 1974. As before, the provisionsrelating to commission on general average disbursementsand interest on losses made good in general average areexcluded. Unlike the 1995 clauses, expenses under RuleXI(d) (see Clause 8.6.2 below) are not excluded under thisclause.


New

No cover for or in respect of special compensation payableto a salvor under Article 14.

No cover for or in respect of expenses or liabilities incurredin respect of damage (actual or threatened) to theenvironment or due to escape (actual or threatened) ofpollution from the vessel.

New

An enhanced salvage award under Article 13(1)(b) is notexcluded by Clause 8.5.

Where the contract of affreightment provides foradjustment under the York-Antwerp Rules 1994, certainexpenses to prevent or minimise damage to theenvironment allowable under Rule XI(d) are not excludedby Clause 8.5. Under the 1995 clauses, additional coverhad to be purchased under the General Average PollutionExpenditure Clause (CL 360).

Changed (cl. 13) There is now no reduction in claims for sue and labour expenditure where the vessel isunderinsured (cl. 13.4 has been deleted).


Changed (cl. 13.2) To make it clear that Article 14 specialcompensation and expenses excluded by Clause 8.5 are alsoirrecoverable as sue and labour.


Changed (cl. 13.5) Deletion of the underinsuranceprovisions and in the same way as Clause 9.2 (see above).




11


(…cont’d)

9. Duty of the Assured (sue and labour)

3 When the vessel sails in ballast and not under charter, the provisions of the York-Antwerp Rules, 1994 (excluding Rules XX and XXI) apply. Defines the general average voyage in such circumstances.

4 No claim under Clause 8 where the loss was not incurred to avoid a peril insured.

5 Underwriters shall not be liable under this Clause 8 for

5.1 special compensation payable to a salvor under Article 14 of the International Convention on Salvage, 1989 or under any other similar provision

5.2 expenses or liabilities incurred in respect of damage (actual or threatened) to the environment or due to the escape (actual or threatened) of pollutants from the vessel.

6 Clause 8.5 does not exclude any sum which the Assured shall pay

6.1 as an enhanced salvage award under Article 13(1)(b) of the International Convention on Salvage, 1989

6.2 as general average expenditure allowable under Rule XI(d) of the York-Antwerp Rules 1994, but only where the contract of affreightment provides for adjustment according to the York-Antwerp Rules 1994.

1 In case of any loss or misfortune it is the duty of the Assured and their servants and agents to take such measures as may be reasonable for the purpose of averting or minimising a loss which would be recoverable under this insurance.

2 Underwriters will contribute to charges properly and reasonably incurred by the Assured under Clause 9.1. General average, salvage charges (except as provided for in Clause 9.5), special compensation and expenses referred to in Clause 8.5 and collision defence or attack costs are not recoverable under Clause 9.

3 Measures taken by the Assured or Underwriters to save, protect or recover the subject-matter insured will not prejudice the rights of either party.

4 Provides that where Underwriters have agreed a total loss of the vessel and expenses have been reasonably incurred in saving or attempting to save the vessel and there are no salved proceeds, or the expenses exceed the salved proceeds, then Underwriters pay pro rata.

5 The sum recoverable under this Clause 9 shall be in addition to the loss otherwise recoverable under

this insurance but shall in no circumstances exceed the insured value of the vessel.

Changed (cl. 11.3) York-Antwerp Rules 1994 are substitutedfor the York-Antwerp Rules 1974. As before, the provisionsrelating to commission on general average disbursementsand interest on losses made good in general average areexcluded. Unlike the 1995 clauses, expenses under RuleXI(d) (see Clause 8.6.2 below) are not excluded under thisclause.


New

No cover for or in respect of special compensation payableto a salvor under Article 14.

No cover for or in respect of expenses or liabilities incurredin respect of damage (actual or threatened) to theenvironment or due to escape (actual or threatened) ofpollution from the vessel.

New

An enhanced salvage award under Article 13(1)(b) is notexcluded by Clause 8.5.

Where the contract of affreightment provides foradjustment under the York-Antwerp Rules 1994, certainexpenses to prevent or minimise damage to theenvironment allowable under Rule XI(d) are not excludedby Clause 8.5. Under the 1995 clauses, additional coverhad to be purchased under the General Average PollutionExpenditure Clause (CL 360).

Changed (cl. 13) There is now no reduction in claims for sue and labour expenditure where the vessel isunderinsured (cl. 13.4 has been deleted).


Changed (cl. 13.2) To make it clear that Article 14 specialcompensation and expenses excluded by Clause 8.5 are alsoirrecoverable as sue and labour.


Changed (cl. 13.5) Deletion of the underinsuranceprovisions and in the same way as Clause 9.2 (see above).




12

Unless Underwriters agree otherwise in accordance withClause 11

1 the vessel shall not breach any provisions as to cargo, trade or locality such as the Institute limits (see Clause 32 below).

2 the vessel may navigate with or without pilots, go on trial trips and assist and tow vessels or craft in distress, but may not be towed except as is customary to the first safe port or place when in need of assistance, or undertake towage or salvage services under a previously arranged contract.

3 the Assured shall not enter into any contract with pilots or for customary towage which limits or exempts the liability of the pilots and/or tugs and so on unless compelled to do so in accordance with established local law or practice.

4 the vessel shall not be employed in trading operations which entail cargo loading or discharging at sea from or into another vessel (not being a harbour or inshore craft).

In the event of breach of Clause 10, the Underwriters arenot liable for any loss, damage, liability or expensearising out of or resulting from an accident or occurrenceduring the period of breach, unless immediate notice isgiven to Underwriters after receipt of advices of suchbreach and any amended terms of cover and anyadditional premium required are agreed.

If at expiry, the vessel is at sea and in distress or missing,or in port and in distress, she is held covered until arrivalat the next port in good safety, or if in port and indistress until the vessel is made safe, at a pro ratamonthly premium, provided that notice is given toUnderwriters as soon as possible.

1 At the inception of and throughout the period of this insurance

1.1 the vessel shall be classed with a Classification Society agreed by Underwriters

1.2 there shall be no change, suspension, discontinuance, withdrawal or expiry of the vessel’s class with the Classification Society

1.3 any recommendations, requirements or restrictions imposed by the vessel's Classification Society which relate to the vessel's seaworthiness or to her maintenance in a seaworthy condition shall be complied with by the dates required by that Society

Changed (cl. 1) Breach of these clauses is no longer abreach of warranty in the strict sense (if ever it was) under theMarine Insurance Act 1906. Rather, Underwriters are notliable for loss and damage arising whilst the vessel or theAssured are in breach (see Clause 11 below).

New To address any separate provisions in the slip and the new International Navigating Conditions set out in Clause 32.

Changed (cl. 1.1) In that Clause 10.2 is no longer expressedas a warranty and breach is now addressed in Clause 11.

New This Clause follows Clause 1.2 of the 1995 Clauses.

Changed (cl. 1.2) In that Clause 10.4 is no longer expressedas a warranty and breach of this provision is nowaddressed in Clause 11.

New (cl. 3) Since the Clause 10 matters are no longerexpressed as warranties under which Underwriters might bedischarged from liability from the date of breach, thisClause provides instead that Underwriters are not liable asa result of anything happening during the period ofbreach, unless notice is given to Underwriters immediatelyafter the breach is advised. Thus, for example, chartererstaking the vessel within the navigating limits may notprejudice the owners’ cover, provided that immediatelyafter the owner becomes aware, he notifies Underwritersand agrees any amended terms of cover and additional premium.

Changed (cl. 2) The vessel must now be in distress/missing(at sea) or in distress (in port) for Clause 12 to apply. Simplybeing at sea or at a port of call is no longer sufficient.Whilst the vessel must now be in distress if in port, there isno longer a requirement that the port be one of refuge orcall. Cover is no longer provided until the vessel arrives ather port of destination. Cover continues only until the “nextport in good safety” or, if the vessel is in port at expiry, until thevessel is made safe. The requirement under the 1995clauses that notice be given prior to expiry has beenchanged to “as soon as possible”.

Changed (cl. 4) This clause broadly follows ITC-Hulls1/10/83, but also applies to ISM and recommendations byClass as to seaworthiness. The remedy remains asautomatic termination, subject to clause 13.2.

Change (cl. 4.1) Clause 13 now envisages that theUnderwriters must agree the vessel’s Class at the outset.

No change (cl. 4.1)

New This is taken from the JH131 wording. The Assuredmust ensure that any Class recommendations etc. relatingto seaworthiness are complied with by the due dates. Thiswas clause 4.1.2 in the 1995 Clauses.

11. Breach of navigation provisions

12. Continuation

13. Classification and ISM

(cont’d…)



10. Navigation provisions

13


1.4 the Owners or the party assuming responsibilityfor operation of the vessel from the Owners shall hold a valid Document of Compliance in respect of the vessel as required by Chapter IX of the International Convention for the Safety of Life at Sea (SOLAS) 1974 as amended and any modification thereof

1.5 the vessel shall have in force a valid Safety Management Certificate as required by Chapter IX of the International Convention for the Safety of Life at Sea (SOLAS) 1974 as amended and any modification thereof.

2 Unless Underwriters agree otherwise, the insurance terminates automatically at the time of breach of Clause 13.1

2.1 unless the vessel is at sea, in which case the termination operates on arrival at her next port

2.2 unless the change, suspension, discontinuance or withdrawal of her class under Clause 13.1.2 has resulted from loss or damage covered under the insurance or which would be covered by the Institute War and Strikes Clauses Hulls-Time, in which case the termination only operates if the vessel sails from her next port without the prior approval of the Classification Society.

A pro rata daily net return of premium shall be made provided that a total loss of the vessel, whether by perils insured under this insurance or otherwise, has not occurred during the periodof this insurance or any extension thereof.

1 Unless Underwriters otherwise agree, the insuranceterminates automatically at the time of

1.1 any change, voluntary or otherwise, in the ownership or flag of the vessel

1.2 transfer of the vessel to new management

1.3 charter of the vessel on a bareboat basis

1.4 requisition of the vessel for title or use.

Proviso that if the vessel has cargo on board and has already sailed from her loading port or is at sea in ballast, automatic termination can be deferred until arrival at final port of discharge if with cargo or at port of destination if in ballast. Provision as to requisition for title or use.

2 Unless Underwriters agree otherwise, the insurance terminates automatically when the vessel sails (with or without cargo) with an intention of being broken up, or being sold for breaking up.

New This tracks Chapter IX in relation to the DOC.

New This tracks Chapter IX in relation to the SMC.

New The insurance will terminate automatically, subject tocontrary agreement by Underwriters and the originalexceptions.

No change (cl. 4.1)

No change (cl. 4.1)

Changed In the event of termination, premium is stillreturnable, provided that there has not been a total loss ofthe vessel.

New This clause broadly follows Clause 4.2 of ITC-Hulls1/10/83, but also now applies to break-up voyages. Clause14.4 is new and again adopts provisions from JH131.

No change (cl. 4.2)

No change (cl. 4.2)

No change (cl. 4.2)

No change (cl. 4.2)

No change (cl. 4.2)

Changed (cl. 1.3) The insurance now terminatesautomatically whereas under ITC-Hulls 01/10/83 theinsured value was reduced to the market value of the vesselas scrap (albeit without limiting claims for GA and sue &labour). However, as previously, an extension of cover maybe negotiated.

(…cont’d)

14. Management

(cont’d…)



13


1.4 the Owners or the party assuming responsibilityfor operation of the vessel from the Owners shall hold a valid Document of Compliance in respect of the vessel as required by Chapter IX of the International Convention for the Safety of Life at Sea (SOLAS) 1974 as amended and any modification thereof

1.5 the vessel shall have in force a valid Safety Management Certificate as required by Chapter IX of the International Convention for the Safety of Life at Sea (SOLAS) 1974 as amended and any modification thereof.

2 Unless Underwriters agree otherwise, the insurance terminates automatically at the time of breach of Clause 13.1

2.1 unless the vessel is at sea, in which case the termination operates on arrival at her next port

2.2 unless the change, suspension, discontinuance or withdrawal of her class under Clause 13.1.2 has resulted from loss or damage covered under the insurance or which would be covered by the Institute War and Strikes Clauses Hulls-Time, in which case the termination only operates if the vessel sails from her next port without the prior approval of the Classification Society.

A pro rata daily net return of premium shall be made provided that a total loss of the vessel, whether by perils insured under this insurance or otherwise, has not occurred during the periodof this insurance or any extension thereof.

1 Unless Underwriters otherwise agree, the insuranceterminates automatically at the time of

1.1 any change, voluntary or otherwise, in the ownership or flag of the vessel

1.2 transfer of the vessel to new management

1.3 charter of the vessel on a bareboat basis

1.4 requisition of the vessel for title or use.

Proviso that if the vessel has cargo on board and has already sailed from her loading port or is at sea in ballast, automatic termination can be deferred until arrival at final port of discharge if with cargo or at port of destination if in ballast. Provision as to requisition for title or use.

2 Unless Underwriters agree otherwise, the insurance terminates automatically when the vessel sails (with or without cargo) with an intention of being broken up, or being sold for breaking up.

New This tracks Chapter IX in relation to the DOC.

New This tracks Chapter IX in relation to the SMC.

New The insurance will terminate automatically, subject tocontrary agreement by Underwriters and the originalexceptions.

No change (cl. 4.1)

No change (cl. 4.1)

Changed In the event of termination, premium is stillreturnable, provided that there has not been a total loss ofthe vessel.

New This clause broadly follows Clause 4.2 of ITC-Hulls1/10/83, but also now applies to break-up voyages. Clause14.4 is new and again adopts provisions from JH131.

No change (cl. 4.2)

No change (cl. 4.2)

No change (cl. 4.2)

No change (cl. 4.2)

No change (cl. 4.2)

Changed (cl. 1.3) The insurance now terminatesautomatically whereas under ITC-Hulls 01/10/83 theinsured value was reduced to the market value of the vesselas scrap (albeit without limiting claims for GA and sue &labour). However, as previously, an extension of cover maybe negotiated.

(…cont’d)

14. Management

(cont’d…)



14



3 In the event of termination under Clause 14.1 or Clause 14.2 above, a pro rata daily net return of premium shall be made provided that a total loss of the vessel, whether by perils insured under this insurance or otherwise, has not occurred during the period of this insurance or any extension thereof.

4 It is the duty of the Assured, Owners and Managers to

4.1 comply with all statutory requirements of the vessel's flag state relating to construction, adaptation, condition, fitment, equipment, operation and manning of the vessel

4.2 comply with all requirements of the vessel's Classification Society regarding the reporting to the Classification Society of accidents to and defects in the vessel.

In the event of any breach of Clause 14.4, Underwriters are not liable for any loss, damage,

liability or expense attributable to such breach.

1 Application of deductible. Deductible will not apply to the expense of sighting the bottom after stranding, in certain circumstances.

2 Machinery Damage Additional deductible may apply. If it does, then it must be applied before the deductible in Clause 15.1.

3 Neither deductible applies to a claim for total loss or sue and labour associated therewith.

4 Heavy weather between two successive ports is treated as being due to one accident.

5 Lightening/cargo loading or discharging damage is treated as being due to one accident.

Claims recoverable under this insurance shall be payablewithout deduction on the basis of new for old.

Underwriters not liable in respect of bottom treatment,except in specified circumstances.

Underwriters not liable for wages/maintenance of Masteror Crew except in specified circumstances.

The costs of the Assured obtaining and supplyinginformation/documents or associated agency chargescannot be recovered.

Changed In the event of termination, premium is stillreturnable, provided that there has not been a total loss ofthe vessel. A return is also now available where theinsurance terminates under Clause 14.2.

New

New This additional requirement relates to certain flagstate requirements and includes ISM and STCW obligations.

New This Clause is based on JH131. However is not awarranty, but rather a duty. It is a variation of clause 4.3in the 1995 clauses, although the duty to report nowapplies where the Assured is required to do so under Classrules, rather than where the “incident condition ordamage” are matters in respect of which Class “might”make recommendations.

New Breach of the duties means that Underwriters are notliable, where the breach is causative of loss.

Changed (cl 12.1) The changes reflect the additional coverin Clause 3 (Leased Equipment), Clause 4 (Parts Taken Off),the optional extensions in Clauses 37 and 38 (FFO and4/4ths RDC) and Clause 41 (Additional Perils). Theseoptional extensions are subject to the Clause 15.1deductible. The size of the deductible is no longer stated inthe body of the Clause.

New This Machinery Damage deductible (taken from CL289) only applies where agreed. If AMD is “0”, the Clause has no effect. This Clause includes theAdditional Deductible Adaptation Clauses (CL 306) (whenClause 41 applies).



New This Clause is based upon the market LighteningClause and will apply where Underwriters have agreedcover for trading operations entailing cargo loading ordischarging at sea under Clause 10.4/Clause 11.

No change (cl. 14)

Changed (cl. 15) Cover now extended to anti-foulingcoatings for the damaged/disturbed areas

No change (cl. 16)

No change (cl. 17) However, the Assured is now under acontractual obligation to provide certain information toUnderwriters under Part 3. Underwriters will pay certainreasonable costs in respect of recoveries under Clause 49.

(…cont’d)

15. Deductible(s)

16. New for old

17. Bottom treatment

18. Wages and maintenance

19. Agency commission

14



3 In the event of termination under Clause 14.1 or Clause 14.2 above, a pro rata daily net return of premium shall be made provided that a total loss of the vessel, whether by perils insured under this insurance or otherwise, has not occurred during the period of this insurance or any extension thereof.

4 It is the duty of the Assured, Owners and Managers to

4.1 comply with all statutory requirements of the vessel's flag state relating to construction, adaptation, condition, fitment, equipment, operation and manning of the vessel

4.2 comply with all requirements of the vessel's Classification Society regarding the reporting to the Classification Society of accidents to and defects in the vessel.

In the event of any breach of Clause 14.4, Underwriters are not liable for any loss, damage,

liability or expense attributable to such breach.

1 Application of deductible. Deductible will not apply to the expense of sighting the bottom after stranding, in certain circumstances.

2 Machinery Damage Additional deductible may apply. If it does, then it must be applied before the deductible in Clause 15.1.

3 Neither deductible applies to a claim for total loss or sue and labour associated therewith.

4 Heavy weather between two successive ports is treated as being due to one accident.

5 Lightening/cargo loading or discharging damage is treated as being due to one accident.

Claims recoverable under this insurance shall be payablewithout deduction on the basis of new for old.

Underwriters not liable in respect of bottom treatment,except in specified circumstances.

Underwriters not liable for wages/maintenance of Masteror Crew except in specified circumstances.

The costs of the Assured obtaining and supplyinginformation/documents or associated agency chargescannot be recovered.

Changed In the event of termination, premium is stillreturnable, provided that there has not been a total loss ofthe vessel. A return is also now available where theinsurance terminates under Clause 14.2.

New

New This additional requirement relates to certain flagstate requirements and includes ISM and STCW obligations.

New This Clause is based on JH131. However is not awarranty, but rather a duty. It is a variation of clause 4.3in the 1995 clauses, although the duty to report nowapplies where the Assured is required to do so under Classrules, rather than where the “incident condition ordamage” are matters in respect of which Class “might”make recommendations.

New Breach of the duties means that Underwriters are notliable, where the breach is causative of loss.

Changed (cl 12.1) The changes reflect the additional coverin Clause 3 (Leased Equipment), Clause 4 (Parts Taken Off),the optional extensions in Clauses 37 and 38 (FFO and4/4ths RDC) and Clause 41 (Additional Perils). Theseoptional extensions are subject to the Clause 15.1deductible. The size of the deductible is no longer stated inthe body of the Clause.

New This Machinery Damage deductible (taken from CL289) only applies where agreed. If AMD is “0”, the Clause has no effect. This Clause includes theAdditional Deductible Adaptation Clauses (CL 306) (whenClause 41 applies).



New This Clause is based upon the market LighteningClause and will apply where Underwriters have agreedcover for trading operations entailing cargo loading ordischarging at sea under Clause 10.4/Clause 11.

No change (cl. 14)

Changed (cl. 15) Cover now extended to anti-foulingcoatings for the damaged/disturbed areas

No change (cl. 16)

No change (cl. 17) However, the Assured is now under acontractual obligation to provide certain information toUnderwriters under Part 3. Underwriters will pay certainreasonable costs in respect of recoveries under Clause 49.

(…cont’d)

15. Deductible(s)

16. New for old

17. Bottom treatment

18. Wages and maintenance

19. Agency commission

22. Freight waiver

23. Assignment

24. Disbursements warranty

25. Cancelling returns

26. Seperate insurances

27. Several liability

15




1 The measure of indemnity in respect of claims for unrepaired damage shall be the reasonable

depreciation in the market value of the vessel at the time this insurance terminates arising from such unrepaired damage, but not exceeding the reasonable cost of repairs.

2 In no case shall the Underwriters be liable for unrepaired damage in the event of a subsequent total loss of the vessel (whether by perils insured under this insurance or otherwise) sustained during the period of this insurance or any

extension thereof.

3 The Underwriters shall not be liable in respect of unrepaired damage for more than the insured value

of the vessel at the time this insurance terminates.

1 In ascertaining whether the vessel is a constructive total loss, the figure to be taken into account as

the repaired value shall be 80% of the insured value. The value of the vessel or wreck is excluded from the calculation.

2 No claim for constructive total loss of the vessel based upon the cost of recovery and/or repair of the vessel shall be recoverable unless such costs exceed 80% of the insured value of the vessel.

In the event of a total loss Underwriters cannot claim freight.

No assignment will be recognised by Underwriters unlessa dated notice of such assignment signed by the Assuredis endorsed on the policy.

Sets out the additional insurances permitted includingincreased value, freight, hire, insurance premiums, warand strikes and now chemical, biological,electromagnetic weapons.

If the insurance is cancelled by agreement, theUnderwriters will pay a pro rata monthly net return ofpremium, provided there has not been a total loss of thevessel.

If more than one vessel is insured, each vessel insured isdeemed to be separately insured.

Underwriters’ obligations are several and not joint andlimited to their individual subscriptions. Underwriters arenot liable for a defaulting Underwriter.

If the vessel is chartered by an associated, subsidiary oraffiliated company of the Assured, Underwriters waivetheir rights of subrogation against such charterers, wherethere is an insured loss, save where charterers haveresponsive liability cover.

Loss, damage, liability or expense due to specified “war”and “strikes” risks are excluded.




Changed (cl. 19.1) The figure to be taken into account inassessing whether the vessel is a CTL is now 80% of theinsured value, rather than 100%.

Changed (cl. 19.2) As above

No change (cl. 20)

No change (cl. 5)

Changed (cl. 21) To permit insurance against the newRACE/Chem-Bio clause (Clause 31)

Changed (cl. 22) Cancelling returns only available,although lay-up returns are optional under Clause 39.

New This is a standard provision. It was very frequentlyincorporated by the terms of the slip.

New This is a standard provision. It was very frequentlyincorporated by the terms of the slip.

New This is based on a standard provision previouslyfrequently incorporated. Unlike some market wordings,however, cover is not extended to the associated, subsidiaryand affiliated companies of the Assured.

Changed (Cl 23-24) The first part of the Strikes exclusion hasbeen included in this clause. The wording of the exclusionsremains unaltered.

20. Unrepaired damage

21. Constructive total loss

28. Affiliated companies

29. War and strikes exclusion

33. Permission for navigating limits

34. Recommissioning condition

35. Premium payment

(cont’d…)



Loss, damage, liability or expense caused by terroristsor any person acting maliciously or from a politicalmotive are excluded. Loss, damage, liability or expensecaused by any weapon or the detonation of anexplosive by any person acting maliciously areexcluded.

Loss, damage, liability or expense due to radiation orcontact with radioactive material or any weapon ordevice employing atomic or nuclear fission and loss,damage, liability or expense caused by any chemical,biological or electromagnetic weapon are excluded.

Changed (cl. 24-25) The second part of the Strikes exclusionhas been included in this clause. The wording of theexclusions remains unaltered, save that the malicious actsexclusion now applies to any weapon, rather than aweapon of war.

Changed (cl 26) This is the new Institute ExtendedRadioactive Contamination, Chemical, Biological, Bio-chemical and Electromagnetic Weapons exclusion. Theextension applies to any “weapon or device” rather than“weapon of war” and radioactive matter not used forpeaceful purposes. This Clause also incorporates the firstpart of the Chem/Bio clause (CL 365), but does not extendto cyber attack.

The vessel shall not enter areas described by theInternational Navigating Limits.

Where Underwriters’ prior permission has been obtainedand any AP and amended terms of cover have beenagreed, the vessel may enter the areas described inClause 32 and Clause 11 shall not apply.

As a condition precedent to the liability of Underwriters,the vessel shall not navigate from lay-up berth followinga lay-up period of more than 180 consecutive days unlessthe Classification Society or a surveyor agreed by theUnderwriters has examined the vessel and the Assuredhas carried out any repairs or requirementsrecommended by the Classification Society or suchsurveyor.

1 The Assured undertakes that the premium shall be paid within 45 days (or other agreed period) of inception or where payment by instalment has been agreed, the first instalment must be paid within the same period from inception and subsequent instalment premiums must be paid when due.

2 If the premium is not paid in accordance with Clause 35.1, Underwriters have the right to cancel the insurance by notifying the Assured via the broker in writing.

3 Not less than 15 days’ notice of cancellation must be given by Underwriters. Notice is automatically revoked if the premium is paid. If it is not paid, the insurance terminates automatically.

4 Premium remains due to the Underwriters in respect of the period prior to, but not after cancellation unless there is a recoverable claim prior to termination, in which case the full premium is due.

5 The Leaders may give notice on behalf of the followers in accordance with the Leaders’ clause

New This follows the new standard InternationalNavigating Conditions. A comparison between the old andthe new limits is beyond the scope of this booklet. The newareas can be seen at www.the-lma.com. Bering Sea transitcover is now standard

New This enables the vessel to enter the prohibited areasand where the Assured has obtained prior permission andany amended terms of cover and AP have been agreed.Underwriters remain liable during the period of breachcontrary to Clause 11Bering

New If laid up for 6 months, Underwriters will not beliable if the vessel navigates without survey and withoutany required repairs having been undertaken.

New This is based upon LSW 3000 and provides that thepremium must be paid within a specified period, either 45days or such other period as may be agreed and on asimilar basis for payment by instalment.

32. Navigating limits

Part 2 Additional Clauses (01/11/03)

16

30. Terrorist, political motive and malicious acts exclusion

31. Radioactive contamination, chem-bio exclusion

(…cont’d)



(Clause 42), but, if they do not, this does prevent a follower giving notice in its own right.

6 Where the premium is to be paid through a Market Bureau, payment to the Underwriters will be deemed to occur on the day of delivery of a premium advice note to the Bureau.

1 No benefit of this insurance is intended to be conferred on or enforceable by any party other than the Assured, save as may be expressly provided herein to the contrary.

2 This insurance may by agreement between the Assured and the Underwriters be rescinded or varied without the consent of any third party to whom the enforcement of any terms has been expressly provided for.

If the Underwriters have agreed, then Clauses 6 and 7 areamended to give FFO cover.

If the Underwriters have agreed, Clause 6 is amended bydeletion of “three fourths of”.

1 If the Underwriters have agreed, the agreed percentage of the net premium shall be returned for each period of 30 consecutive days the vessel is laid up not under repair in a port or in a lay-up area provided such port or lay-up area is approved by Underwriters.

2 The vessel is not considered as under repair when work is undertaken in respect of ordinary wear and tear or following recommendations from the Classification Society.

3 Provided always that:

3.1 a total loss has not occurred during the period of this insurance

3.2 no return is allowed when the vessel is lying in exposed or unprotected waters or in a port or lay-up area not approved by Underwriters

3.3 no return is allowed when the vessel is being used for the storage of cargo or for lightering purposes

3.4 pro rata return of premium if the 30 consecutive days (see Clause 39.1) fall on successive insurances.

1 If Underwriters have agreed and subject to Clause 8, the following shall apply in the event of a general average act under the York-Antwerp Rules or under the provisions of the GA clause in the contract of affreightment.

New This Act applies automatically to all contracts subjectto English law and concluded post 11th May 2000.

This clause makes clear that only parties to the insurancecontract can enforce benefits under it, save where thereis contrary provision.

New FFO cover can now be agreed on placing and isprovided by amendment to Clause 6 and necessaryamendments to Clause 7 (sistership). The costs coverunder Clause 6.3 is still subject to a limit of 25% of theinsured value.

New 4/4ths collision liability cover can now be agreed onplacing and is provided by amendment to Clause 6. Thecosts cover under Clause 6.3 is also amended to 4/4ths,although is still subject to a limit of 25% of the insuredvalue.

Changed (cl. 23) Lay-up returns are now only given ifagreed on placing and are limited to Not Under Repair.The percentage return must also be agreed on placing.


Changed (cl. 22.2.2) The proviso has been deleted



New The GA Absorption Clause may now be agreed on placing. The Clause is based on that issued by BIMCO inOctober 2002.

36. Contracts (Rights of Third Parties) Act 1999

37. Fixed and floating objects


39. Returns for lay-up

17


40. General average absorption

(cont’d…)

(…cont’d)



(Clause 42), but, if they do not, this does prevent a follower giving notice in its own right.

6 Where the premium is to be paid through a Market Bureau, payment to the Underwriters will be deemed to occur on the day of delivery of a premium advice note to the Bureau.

1 No benefit of this insurance is intended to be conferred on or enforceable by any party other than the Assured, save as may be expressly provided herein to the contrary.

2 This insurance may by agreement between the Assured and the Underwriters be rescinded or varied without the consent of any third party to whom the enforcement of any terms has been expressly provided for.

If the Underwriters have agreed, then Clauses 6 and 7 areamended to give FFO cover.

If the Underwriters have agreed, Clause 6 is amended bydeletion of “three fourths of”.

1 If the Underwriters have agreed, the agreed percentage of the net premium shall be returned for each period of 30 consecutive days the vessel is laid up not under repair in a port or in a lay-up area provided such port or lay-up area is approved by Underwriters.

2 The vessel is not considered as under repair when work is undertaken in respect of ordinary wear and tear or following recommendations from the Classification Society.

3 Provided always that:

3.1 a total loss has not occurred during the period of this insurance

3.2 no return is allowed when the vessel is lying in exposed or unprotected waters or in a port or lay-up area not approved by Underwriters

3.3 no return is allowed when the vessel is being used for the storage of cargo or for lightering purposes

3.4 pro rata return of premium if the 30 consecutive days (see Clause 39.1) fall on successive insurances.

1 If Underwriters have agreed and subject to Clause 8, the following shall apply in the event of a general average act under the York-Antwerp Rules or under the provisions of the GA clause in the contract of affreightment.

New This Act applies automatically to all contracts subjectto English law and concluded post 11th May 2000.

This clause makes clear that only parties to the insurancecontract can enforce benefits under it, save where thereis contrary provision.

New FFO cover can now be agreed on placing and isprovided by amendment to Clause 6 and necessaryamendments to Clause 7 (sistership). The costs coverunder Clause 6.3 is still subject to a limit of 25% of theinsured value.

New 4/4ths collision liability cover can now be agreed onplacing and is provided by amendment to Clause 6. Thecosts cover under Clause 6.3 is also amended to 4/4ths,although is still subject to a limit of 25% of the insuredvalue.

Changed (cl. 23) Lay-up returns are now only given ifagreed on placing and are limited to Not Under Repair.The percentage return must also be agreed on placing.


Changed (cl. 22.2.2) The proviso has been deleted



New The GA Absorption Clause may now be agreed on placing. The Clause is based on that issued by BIMCO inOctober 2002.

36. Contracts (Rights of Third Parties) Act 1999

37. Fixed and floating objects


39. Returns for lay-up

17


40. General average absorption

(cont’d…)

2 The Assured shall have the option of not claiming the total general average, salvage, special charges up to the amount agreed by Underwriters, without claiming from the other contributing interests

3 Underwriters will also pay the reasonable fees of the average adjuster.

4 If the Assured claims from Underwriters, no claim shall be made against the contributing interests.

5 Claims to be adjusted under the York-Antwerp Rules 1994, excluding commission and interest.

6 Claims payable without application of the Clause 15 deductible.

7 Underwriters waive any defences to payment of the GA amount which would have been available to the contributing interests.

8 Underwriters waive rights of subrogation against the contributory interests save where the accident or occurrence is attributable to fault on their part.

9 Claims payable without reduction for underinsurance.

10 Special charges defined.

1 If the Underwriters have agreed, this insurance covers

1.1 the costs of repairing or replacing any boiler which bursts or shaft which breaks, where suchbursting or breakage has caused loss of or damage to the subject-matter insured covered by Clause 2.2.1 and that half of the costs common to the repair of burst boiler or the broken shaft and repairing the loss or damage caused thereby, not covered by Clause 2.3.

1.2 the cost that would have been incurred to correct the latent defect where such latent defect has caused loss of or damage to the subject-matter insured covered by Clause 2.2.2and that half of the costs common to the correction of the latent defect and repairing the loss or damage caused thereby not covered by Clause 2.4.

1.3 loss of or damage to the vessel caused by any accident or by negligence, incompetence or error of judgement of any person whatsoever.

provided that such loss or damage has not resulted from want of due diligence by the Assured, Owners or Managers

2 Master, Officers, Crew or Pilots shall not be considered Owners within the meaning of Clause 41.1 should they hold shares in the vessel.

New Additional Perils cover, based upon the InstituteAdditional Perils Clause (CL294), may be agreed on placing.

Changed This is amended to cover the costs of repairing orreplacing the burst boiler/broken shaft (not covered underClause 2.2.1) and the one half of the common costs notcovered under Clause 2.3.

Changed This is amended to cover the costs of correcting thelatent defect itself, (not covered under Clause 2.2.2) and theone half of the common costs not covered under Clause 2.4.

No change

No change The due diligence proviso applies in respect ofthe loss or damage under Clause 2.2.1 and 2.2.2 by theburst boiler, broken shaft or latent defect and to loss anddamage caused by any accident or negligence under Clause41.1.3.

No change



41. Additional perils

18

(…cont’d)

1 Where there is co-insurance, the followers agree that the Leaders designated in the slip or policy may bind them for their proportions in respect of the following matters in addition to Clause 35 (premium payment)

1.1 the appointment of surveyors, experts, average adjusters and lawyers, in relation to matters which may give rise to a claim

1.2 the duties and obligations to be undertaken by the Underwriters including security

1.3 claims procedures, the handling of any claim and the pursuit of recoveries

1.4 all payments or settlements to the Assured or to third parties other than ‘ex-gratia’ payments.

However, the Leaders may require matters to be referred to the followers.

2 The followers shall, to the extent of their respective several proportions, indemnify and hold harmless the Leaders in respect of all liabilities, costs or expenses incurred by the Leaders in respect of the above.

3 If the Leaders require expenses to be collected for a party instructed by them, the collecting party maycharge 5% of the amount collected for this service or such other amount as may be agreed in advance.

4 The agreement in this Clause between the Leaders and the followers is subject to the exclusive jurisdiction of the English High Court of Justice and to English law and practice.

1 In the event of an accident or occurrence whereby loss, damage, liability or expense may result in a claim under the insurance, notice must be given to the Leaders as soon as possible after the Assured, Owners or Managers become aware of such loss, damage, liability or expense. A surveyor may be appointed if the Leaders so desire.

2 If notice is not given to the Leaders within 180 days of the Assured, Owners or Managers becoming aware of any such loss, damage, liability or expense, no claim shall be recoverable under this insurance in respect of such loss, damage, liability or expense, unless the Leaders agree to the contrary in writing.

1 The Leaders can decide where the vessel is to be repaired and can veto a place or repair/repairing firm.

2 The Leaders may take tenders or require further tenders to be taken for the repair of the vessel. The Assured may be entitled to specified compensation in this event.

3 Credit to be given against the allowance in Clause 44.2 for specified amounts recovered in general average or from third parties by way of damages for detention and so on.

New The status of the Leaders is now formally set out inrelation to claims matters and the giving of notice underthe premium payment clause (Clause 35).

This enables fees of surveyors, experts and so on to becollected by a third party agency and for the costs of thatcollection to be borne by Underwriters. This is relevant incircumstances where the brokers are unwilling or unable tocollect fees.

Changed (Cl. 13.1) An Assured must now give notice to theLeaders of potential claims as soon as possible. The obligation arises when the Assured, Owners orManagers become aware of the loss or damage giving riseto the potential claim. There is no longer a requirement togive notice to Lloyd’s Agents.

New If notice is not given to the Leaders within 180 days ofthe Assured, Owners or Managers becoming aware of theloss or damage giving rise to the potential claim,Underwriters are discharged from liability for any resultingclaim. The Leaders can waive a breach of the noticeprovision and such waiver will be binding on the followers.

No change (Cl. 10.2) Reference to Underwriters is replacedby the Leaders.


No change (Cl. 10.3)



42. Leading Underwriters

19


43. Notice of claims

44. Tender provisions

(cont’d…)

Part 3 Claims Provisions - 01/11/02

2 The Assured shall have the option of not claiming the total general average, salvage, special charges up to the amount agreed by Underwriters, without claiming from the other contributing interests

3 Underwriters will also pay the reasonable fees of the average adjuster.

4 If the Assured claims from Underwriters, no claim shall be made against the contributing interests.

5 Claims to be adjusted under the York-Antwerp Rules 1994, excluding commission and interest.

6 Claims payable without application of the Clause 15 deductible.

7 Underwriters waive any defences to payment of the GA amount which would have been available to the contributing interests.

8 Underwriters waive rights of subrogation against the contributory interests save where the accident or occurrence is attributable to fault on their part.

9 Claims payable without reduction for underinsurance.

10 Special charges defined.

1 If the Underwriters have agreed, this insurance covers

1.1 the costs of repairing or replacing any boiler which bursts or shaft which breaks, where suchbursting or breakage has caused loss of or damage to the subject-matter insured covered by Clause 2.2.1 and that half of the costs common to the repair of burst boiler or the broken shaft and repairing the loss or damage caused thereby, not covered by Clause 2.3.

1.2 the cost that would have been incurred to correct the latent defect where such latent defect has caused loss of or damage to the subject-matter insured covered by Clause 2.2.2and that half of the costs common to the correction of the latent defect and repairing the loss or damage caused thereby not covered by Clause 2.4.

1.3 loss of or damage to the vessel caused by any accident or by negligence, incompetence or error of judgement of any person whatsoever.

provided that such loss or damage has not resulted from want of due diligence by the Assured, Owners or Managers

2 Master, Officers, Crew or Pilots shall not be considered Owners within the meaning of Clause 41.1 should they hold shares in the vessel.

New Additional Perils cover, based upon the InstituteAdditional Perils Clause (CL294), may be agreed on placing.

Changed This is amended to cover the costs of repairing orreplacing the burst boiler/broken shaft (not covered underClause 2.2.1) and the one half of the common costs notcovered under Clause 2.3.

Changed This is amended to cover the costs of correcting thelatent defect itself, (not covered under Clause 2.2.2) and theone half of the common costs not covered under Clause 2.4.

No change

No change The due diligence proviso applies in respect ofthe loss or damage under Clause 2.2.1 and 2.2.2 by theburst boiler, broken shaft or latent defect and to loss anddamage caused by any accident or negligence under Clause41.1.3.

No change



41. Additional perils

18

(…cont’d)

1 Where there is co-insurance, the followers agree that the Leaders designated in the slip or policy may bind them for their proportions in respect of the following matters in addition to Clause 35 (premium payment)

1.1 the appointment of surveyors, experts, average adjusters and lawyers, in relation to matters which may give rise to a claim

1.2 the duties and obligations to be undertaken by the Underwriters including security

1.3 claims procedures, the handling of any claim and the pursuit of recoveries

1.4 all payments or settlements to the Assured or to third parties other than ‘ex-gratia’ payments.

However, the Leaders may require matters to be referred to the followers.

2 The followers shall, to the extent of their respective several proportions, indemnify and hold harmless the Leaders in respect of all liabilities, costs or expenses incurred by the Leaders in respect of the above.

3 If the Leaders require expenses to be collected for a party instructed by them, the collecting party maycharge 5% of the amount collected for this service or such other amount as may be agreed in advance.

4 The agreement in this Clause between the Leaders and the followers is subject to the exclusive jurisdiction of the English High Court of Justice and to English law and practice.

1 In the event of an accident or occurrence whereby loss, damage, liability or expense may result in a claim under the insurance, notice must be given to the Leaders as soon as possible after the Assured, Owners or Managers become aware of such loss, damage, liability or expense. A surveyor may be appointed if the Leaders so desire.

2 If notice is not given to the Leaders within 180 days of the Assured, Owners or Managers becoming aware of any such loss, damage, liability or expense, no claim shall be recoverable under this insurance in respect of such loss, damage, liability or expense, unless the Leaders agree to the contrary in writing.

1 The Leaders can decide where the vessel is to be repaired and can veto a place or repair/repairing firm.

2 The Leaders may take tenders or require further tenders to be taken for the repair of the vessel. The Assured may be entitled to specified compensation in this event.

3 Credit to be given against the allowance in Clause 44.2 for specified amounts recovered in general average or from third parties by way of damages for detention and so on.

New The status of the Leaders is now formally set out inrelation to claims matters and the giving of notice underthe premium payment clause (Clause 35).

This enables fees of surveyors, experts and so on to becollected by a third party agency and for the costs of thatcollection to be borne by Underwriters. This is relevant incircumstances where the brokers are unwilling or unable tocollect fees.

Changed (Cl. 13.1) An Assured must now give notice to theLeaders of potential claims as soon as possible. The obligation arises when the Assured, Owners orManagers become aware of the loss or damage giving riseto the potential claim. There is no longer a requirement togive notice to Lloyd’s Agents.

New If notice is not given to the Leaders within 180 days ofthe Assured, Owners or Managers becoming aware of theloss or damage giving rise to the potential claim,Underwriters are discharged from liability for any resultingclaim. The Leaders can waive a breach of the noticeprovision and such waiver will be binding on the followers.






42. Leading Underwriters

19


43. Notice of claims

44. Tender provisions

(cont’d…)

Part 3 Claims Provisions - 01/11/02

20

4 Where a part of the cost of repair (other than by reason of deductible) is not recoverable, the allowance is reduced.

5 Deduction of 15% from the net claim in the event the Assured fails to comply with Clause 44

1 The Assured shall, upon request and at their own expense, provide the Leaders with all relevant documents and information that they might reasonably require to consider any claim.

2 Upon reasonable request, the Assured shall also assist the Leading Underwriter(s) or their authorised agents in the investigation of any claim, including, but not limited to

2.1 interview(s) of any employee, ex-employee or agent of the Assured

2.2 interview(s) of any third party whom the Leading Underwriter(s) consider may have knowledge of matters relevant to the claim

2.3 survey(s) of the subject-matter insured

2.4 inspection(s) of the classification records of the vessel.

3 It shall be a condition precedent to the liability of Underwriters that the Assured shall not at any stage prior to the commencement of legal

proceedings knowingly or recklessly

3.1 mislead or attempt to mislead Underwriters in the proper consideration of a claim or the settlement thereof by relying on any evidence which is false

3.2 conceal any circumstance or matter from Underwriters material to the proper consideration of a claim or a defence to such a claim.

4 Clause 45.3 does not require the Assured to disclose any document or matter which under English law is protected from disclosure by legal

advice privilege or litigation privilege.

1 The Leaders may, at their sole discretion, upon the notification of an accident or occurrence which may result in a claim

1.1 instruct a surveyor who shall report to them concerning cause and extent of damage, necessary repairs, fair and reasonable costs thereof and any other matter which the Leaders or the surveyor consider relevant

1.2 confirm the appointment of an independent average adjuster to assist the Assured in the preparation of the claim. If not already agreed,



New Clause 45 sets out the responsibilities of the Assured inrelation to claims and the consequences of any attempts tomislead Underwriters.

This Clause sets out those matters in which the Assuredwould normally be expected to assist in relation to a claim.These are new contractual obligations.

This follows Clause 4.4 of the 1995 Clauses, although is limited to class records, rather than “information and documents”.

On the present state of the law, claims involving “purefraud” (scuttling, arson and so on) may result in theAssured forfeiting all benefit under the insurance. However,on the recent authorities, the position in relation tofraudulent devices, such as fabricated evidence or anexaggeration of the loss, is unclear. This Clause provides fora remedy, namely that Underwriters are, in effect,discharged from liability in respect of the claim. The entirecontract is not forfeited.

The Assured cannot be required under Clause 45.3 todisclose documents or matters which are subject to legal privilege.

New This Clause sets out the duties of Underwriters inrelation to claims and embodies in contractual termscommon practice. The appointment of surveyors orconfirmation of appointment of an adjuster isdiscretionary on the part of Underwriters.

The Adjuster may be agreed at the outset, alternatively maybe a fellow of the Association of Average Adjusters or anadjuster mutually acceptable to the Assured andUnderwriters.



45. Duties of the Assured

46. Duties of the Underwriters in relation to claims

(cont’d…)

(…cont’d)

21


the Assured shall propose the average adjusterto be appointed who may be a Fellow of the Association of Average Adjusters of the United Kingdom or any other average adjuster mutuallyacceptable to the Assured and the Leaders.

2 Where such appointments are made, the Underwriters shall pay the reasonable fees directly to the surveyor and the average adjuster, whether a claim ultimately arises or not. However, the Underwriters' liability for such fees shall cease no later than when Underwriters pay, settle or deny the claim or it becomes apparent that any claim is unlikely to exceed the deductible.

3 The making of such appointments is not an admission by Underwriters that the accident, occurrence or resulting claim is covered or a waiver of any rights or defences that Underwriters may have under the insurance or at law.

4 The reports of the surveyor shall, subject to no conflict of interest being identified by the Leaders, be released without delay to the Assured and the appointed average adjuster.

5 The Leaders are entitled to request the appointed average adjuster to provide status reports at any stage.

6 The Leaders shall give prompt consideration to the making of a payment on account upon the recommendation of the appointed average adjuster or, if no adjuster is appointed, upon the request of the Assured supported by appropriate documentation.

7 The Leaders shall make a decision in respect of any claim within 28 days of receipt of the final adjustment or, if no adjuster is appointed, a fully documented claim presentation sufficient to enable the Underwriters to determine their liability in relation to coverage and quantum.If the Leaders request additional documentation or information to make a decision, they shall make a decision within a reasonable time after receipt of the additional documents/information requested or a satisfactory explanation why such documents/information are not available.

If the Assured is obliged to provide security to a thirdparty in order to prevent arrest, or obtain release, of thevessel, as a result of a claim alleged to be covered,Underwriters will give due consideration to assisting theAssured by providing security on behalf of the Assured orcounter- security in a form to be determined by theLeaders.

Claims payable under this insurance shall, subject to theterms of any assignment, be paid to the loss payee or, ifno loss payee has been agreed, to the Assured or as theymay direct in writing. Such payment, whether in accountor otherwise, when made shall be a complete dischargeof the Underwriters' obligations under this insurance inrespect of the amount so paid.

1 The Assured shall, whether or not the Underwriters have paid a claim or agreed a claim, take reasonable steps to

What is “appropriate documentation?”. In the absence of apayment on account, recommendation from an adjusterwill be a question of fact in all the circumstances.The Leaders’ agreement to a payment on account will bebinding on the followers.

The 28-day period for Underwriters to “make a decision”runs from the receipt of the adjusters’ final adjustment.Again, what is a “sufficient fully documented claim” willbe a question of fact in all the circumstances. Claimdecisions by the Leaders will be binding on the followers.The decision may be that further information is requiredto consider the claim.

New The provision of security, in common with marineliability policies, is discretionary. It is likely that securitywill be given by way of counter-security where the risk iswritten on a subscription basis. Again, decisions by theLeaders are binding on the followers.

New

New Again, the Clause sets out general common practice,although it imposes a somewhat higher burden upon theAssured than exists at strict law. However, Underwritersare now obliged to share in the costs.



(…cont’d)

47. Provision of security

48. Payment of claims

49. Recoveries

(cont’d…)

20

4 Where a part of the cost of repair (other than by reason of deductible) is not recoverable, the allowance is reduced.

5 Deduction of 15% from the net claim in the event the Assured fails to comply with Clause 44

1 The Assured shall, upon request and at their own expense, provide the Leaders with all relevant documents and information that they might reasonably require to consider any claim.

2 Upon reasonable request, the Assured shall also assist the Leading Underwriter(s) or their authorised agents in the investigation of any claim, including, but not limited to

2.1 interview(s) of any employee, ex-employee or agent of the Assured

2.2 interview(s) of any third party whom the Leading Underwriter(s) consider may have knowledge of matters relevant to the claim

2.3 survey(s) of the subject-matter insured

2.4 inspection(s) of the classification records of the vessel.

3 It shall be a condition precedent to the liability of Underwriters that the Assured shall not at any stage prior to the commencement of legal

proceedings knowingly or recklessly

3.1 mislead or attempt to mislead Underwriters in the proper consideration of a claim or the settlement thereof by relying on any evidence which is false

3.2 conceal any circumstance or matter from Underwriters material to the proper consideration of a claim or a defence to such a claim.

4 Clause 45.3 does not require the Assured to disclose any document or matter which under English law is protected from disclosure by legal

advice privilege or litigation privilege.

1 The Leaders may, at their sole discretion, upon the notification of an accident or occurrence which may result in a claim

1.1 instruct a surveyor who shall report to them concerning cause and extent of damage, necessary repairs, fair and reasonable costs thereof and any other matter which the Leaders or the surveyor consider relevant

1.2 confirm the appointment of an independent average adjuster to assist the Assured in the preparation of the claim. If not already agreed,



New Clause 45 sets out the responsibilities of the Assured inrelation to claims and the consequences of any attempts tomislead Underwriters.

This Clause sets out those matters in which the Assuredwould normally be expected to assist in relation to a claim.These are new contractual obligations.

This follows Clause 4.4 of the 1995 Clauses, although is limited to class records, rather than “information and documents”.

On the present state of the law, claims involving “purefraud” (scuttling, arson and so on) may result in theAssured forfeiting all benefit under the insurance. However,on the recent authorities, the position in relation tofraudulent devices, such as fabricated evidence or anexaggeration of the loss, is unclear. This Clause provides fora remedy, namely that Underwriters are, in effect,discharged from liability in respect of the claim. The entirecontract is not forfeited.

The Assured cannot be required under Clause 45.3 todisclose documents or matters which are subject to legal privilege.

New This Clause sets out the duties of Underwriters inrelation to claims and embodies in contractual termscommon practice. The appointment of surveyors orconfirmation of appointment of an adjuster isdiscretionary on the part of Underwriters.

The Adjuster may be agreed at the outset, alternatively maybe a fellow of the Association of Average Adjusters or anadjuster mutually acceptable to the Assured andUnderwriters.



45. Duties of the Assured

46. Duties of the Underwriters in relation to claims

(cont’d…)

(…cont’d)

21


the Assured shall propose the average adjusterto be appointed who may be a Fellow of the Association of Average Adjusters of the United Kingdom or any other average adjuster mutuallyacceptable to the Assured and the Leaders.

2 Where such appointments are made, the Underwriters shall pay the reasonable fees directly to the surveyor and the average adjuster, whether a claim ultimately arises or not. However, the Underwriters' liability for such fees shall cease no later than when Underwriters pay, settle or deny the claim or it becomes apparent that any claim is unlikely to exceed the deductible.

3 The making of such appointments is not an admission by Underwriters that the accident, occurrence or resulting claim is covered or a waiver of any rights or defences that Underwriters may have under the insurance or at law.

4 The reports of the surveyor shall, subject to no conflict of interest being identified by the Leaders, be released without delay to the Assured and the appointed average adjuster.

5 The Leaders are entitled to request the appointed average adjuster to provide status reports at any stage.

6 The Leaders shall give prompt consideration to the making of a payment on account upon the recommendation of the appointed average adjuster or, if no adjuster is appointed, upon the request of the Assured supported by appropriate documentation.

7 The Leaders shall make a decision in respect of any claim within 28 days of receipt of the final adjustment or, if no adjuster is appointed, a fully documented claim presentation sufficient to enable the Underwriters to determine their liability in relation to coverage and quantum.If the Leaders request additional documentation or information to make a decision, they shall make a decision within a reasonable time after receipt of the additional documents/information requested or a satisfactory explanation why such documents/information are not available.

If the Assured is obliged to provide security to a thirdparty in order to prevent arrest, or obtain release, of thevessel, as a result of a claim alleged to be covered,Underwriters will give due consideration to assisting theAssured by providing security on behalf of the Assured orcounter- security in a form to be determined by theLeaders.

Claims payable under this insurance shall, subject to theterms of any assignment, be paid to the loss payee or, ifno loss payee has been agreed, to the Assured or as theymay direct in writing. Such payment, whether in accountor otherwise, when made shall be a complete dischargeof the Underwriters' obligations under this insurance inrespect of the amount so paid.

1 The Assured shall, whether or not the Underwriters have paid a claim or agreed a claim, take reasonable steps to

What is “appropriate documentation?”. In the absence of apayment on account, recommendation from an adjusterwill be a question of fact in all the circumstances.The Leaders’ agreement to a payment on account will bebinding on the followers.

The 28-day period for Underwriters to “make a decision”runs from the receipt of the adjusters’ final adjustment.Again, what is a “sufficient fully documented claim” willbe a question of fact in all the circumstances. Claimdecisions by the Leaders will be binding on the followers.The decision may be that further information is requiredto consider the claim.

New The provision of security, in common with marineliability policies, is discretionary. It is likely that securitywill be given by way of counter-security where the risk iswritten on a subscription basis. Again, decisions by theLeaders are binding on the followers.

New

New Again, the Clause sets out general common practice,although it imposes a somewhat higher burden upon theAssured than exists at strict law. However, Underwritersare now obliged to share in the costs.



(…cont’d)

47. Provision of security

48. Payment of claims

49. Recoveries

(cont’d…)

22

1.1 assess as soon as possible whether there are any prospects of a recovery from third parties

1.2 protect any claims against such third parties if necessary by the commencement of proceedings and the taking of appropriate steps to obtain

security for the claim from third parties

1.3 keep the Leaders and the appointed average adjuster (if any) advised of the recovery prospects and any action taken against third parties

1.4 co-operate with the Leaders in the taking of such steps as may be reasonably required to pursue any claims against third parties.

2 Underwriters shall pay the reasonable costs incurred by the Assured pursuant to this Clause 49 in the same proportion as the insured losses bear to the total of the insured and uninsured losses (as defined in Clause 49.4.2).

3 Where the Assured have incurred reasonable costs under Clause 49.1.2 and where there is no recoverable claim under the insurance, provided always that their prior written agreement to the reimbursement of such costs shall have been obtained, Underwriters will reimburse such costs to the extent agreed, notwithstanding that no claim is recoverable under the insurance.

4 In the event of recoveries from third parties in respect of claims which have been paid in whole or in part under this insurance, such recoveries shall be distributed between the Underwriters and the Assured as follows

4.1 the reasonable costs and expenses incurred in making such recoveries from the third party shall be deducted first and returned to the paying party

4.2 the balance shall be apportioned between the Underwriters and the Assured in the same proportion that the insured losses and uninsured losses bear to the total of the insured and uninsured losses. Uninsured losses means loss of or damage to the subject-matter insured and any liability or expense which would have been recoverable under the insurance, but for the application of deductible(s) under Clause 15 and the limits of this insurance.

5 In the event that under this insurance coverage is not provided in accordance with Clause 6, the following shall apply

5.1 Where the insured vessel is in collision with another vessel and both vessels are to blame then, unless the liability of one or both vessels becomes limited by law, any recovery due to Underwriters shall be calculated on the`principle of cross-liabilities as if the respectiveOwners had been compelled to pay to each other such proportion of each other's damagesas may have been properly allowed in ascertaining the balance or sum payable by or to the Assured in consequence of the collision.

Change (Cl. 12.3/12.4) Any recoveries are now on a pro ratabasis rather than first being credited to Underwriters.

New This Clause preserves Underwriters’ interests in anyrecovery for damage to the vessel sustained on a collisionwhere Underwriters do not give RDC cover.



(…cont’d)

23


50. Dispute resolution Subject to the English jurisdiction clause, Underwritersand the Assured may refer any disputes tomediation/alternative form of ADR, with the CEDR Solveprocedures to apply in default of agreement as to theprocedure to be adopted.

New A reference to mediation or other form of ADR is notmandatory. For further information on ADR, see the AAG tomediation in this series.



22

1.1 assess as soon as possible whether there are any prospects of a recovery from third parties

1.2 protect any claims against such third parties if necessary by the commencement of proceedings and the taking of appropriate steps to obtain

security for the claim from third parties

1.3 keep the Leaders and the appointed average adjuster (if any) advised of the recovery prospects and any action taken against third parties

1.4 co-operate with the Leaders in the taking of such steps as may be reasonably required to pursue any claims against third parties.

2 Underwriters shall pay the reasonable costs incurred by the Assured pursuant to this Clause 49 in the same proportion as the insured losses bear to the total of the insured and uninsured losses (as defined in Clause 49.4.2).

3 Where the Assured have incurred reasonable costs under Clause 49.1.2 and where there is no recoverable claim under the insurance, provided always that their prior written agreement to the reimbursement of such costs shall have been obtained, Underwriters will reimburse such costs to the extent agreed, notwithstanding that no claim is recoverable under the insurance.

4 In the event of recoveries from third parties in respect of claims which have been paid in whole or in part under this insurance, such recoveries shall be distributed between the Underwriters and the Assured as follows

4.1 the reasonable costs and expenses incurred in making such recoveries from the third party shall be deducted first and returned to the paying party

4.2 the balance shall be apportioned between the Underwriters and the Assured in the same proportion that the insured losses and uninsured losses bear to the total of the insured and uninsured losses. Uninsured losses means loss of or damage to the subject-matter insured and any liability or expense which would have been recoverable under the insurance, but for the application of deductible(s) under Clause 15 and the limits of this insurance.

5 In the event that under this insurance coverage is not provided in accordance with Clause 6, the following shall apply

5.1 Where the insured vessel is in collision with another vessel and both vessels are to blame then, unless the liability of one or both vessels becomes limited by law, any recovery due to Underwriters shall be calculated on the`principle of cross-liabilities as if the respectiveOwners had been compelled to pay to each other such proportion of each other's damagesas may have been properly allowed in ascertaining the balance or sum payable by or to the Assured in consequence of the collision.

Change (Cl. 12.3/12.4) Any recoveries are now on a pro ratabasis rather than first being credited to Underwriters.

New This Clause preserves Underwriters’ interests in anyrecovery for damage to the vessel sustained on a collisionwhere Underwriters do not give RDC cover.



(…cont’d)

23


50. Dispute resolution Subject to the English jurisdiction clause, Underwritersand the Assured may refer any disputes tomediation/alternative form of ADR, with the CEDR Solveprocedures to apply in default of agreement as to theprocedure to be adopted.

New A reference to mediation or other form of ADR is notmandatory. For further information on ADR, see the AAG tomediation in this series.



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At a Glance Guide - International Hull Clauses

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