Clause 2 - Standard Covers

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Clause 2 - Standard Covers

Unless otherwise agreed between an Assured and the Managers in writing, this insurance covers the Assured’s liability in respect of risks set out in Sections 1 to 20 below, including its liability to indemnify the Owner in respect of such risks, to the extent that they arise out of operations or activities ordinarily carried on by, or ordinarily at, the risk and responsibility of, a Charterer.

1.      Liability to the Owner incurred by the Assured for:

A.      Physical loss of or damage to the entered ship.

B.      Demurrage, loss of use or hire of the entered ship or any similar financial loss, in each case arising as a direct consequence of physical loss of or damage to the entered ship

C.     Removal and replacement of bunkers

Extraordinary costs and expenses reasonably and necessarily incurred by the Assured in order to avoid or minimise the Assured’s liability for physical damage to the entered ship, as set out below:

a)      to remove the bunkers (including any fuel oil and/or lubricating oil) from the entered ship and/or to replace the bunkers so removed with new and sound bunkers, save that there shall be no recovery for the economic value of the bunkers so removed and/or the new and sound bunkers so supplied;

b)      to clean the entered ship’s engines, tanks, pipelines and/or other similar affected areas; and

c)      to dispose lawfully of removed bunkers from the entered ship as well as substances resulting from the cleaning of the entered ship’s engines, tanks pipelines and/or other similar affected areas.

 2.   For the purposes of Clause 2 Section 1, the expression “entered ship”

shall be deemed to include any equipment, stores, fuel, lubricants, containers and any other unit load devices and any other property on board that ship except if and to the extent that the same are owned or leased by the Assured, or by any co-assured.

Liability to persons

A.     Liability to persons other than seafarers and passengers Liability to pay damages or compensation for personal injury, illness or death of any person (other than a seafarer or a passenger specified in paragraphs B and C of this Section 2) and hospital, medical or funeral expenses incurred in relation to such injury, illness or death,

PROVIDED ALWAYS that where the liability is in respect of a person on another ship, and arises out of a collision between that ship and the entered ship, that liability is not covered under this Section, but may be covered under and in accordance with Section 6 of this Clause.

B.     Liability to seafarers

Liability to pay damages or compensation for personal injury, illness or death of any seafarer, including expenses of repatriating the seafarer and sending abroad a substitute to replace the seafarer and hospital, medical or funeral expenses incurred in relation to such injury, illness or death.

C.     Liability to passengers

Liability to pay damages or compensation:

i.       for personal injury, illness or death of any passenger and hospital, medical or funeral expenses incurred in relation to such injury, illness or death;

ii.      to passengers on board an entered ship arising as a

consequence of a casualty to that ship while they are on board, including the cost of forwarding passengers to destination, returning passengers to port of embarkation and of maintenance of passengers ashore;

iii.     for loss of or damage to the effects of any passenger. PROVIDED ALWAYS that:

a)     the terms of the passage ticket or other contract and any subsequent material changes thereof between the passenger and the Assured have been approved by the Managers in writing and cover for the liabilities set out in this paragraph C has been agreed between the Assured and the Managers on such terms as the Managers may require;

b)     there shall be no recovery from the Club under this paragraph C in respect of liabilities for personal injury or death, or loss of or damage to property, delay or any other consequential loss sustained by any passenger by reason of carriage by air, except where such liability occurs either:

i.       during repatriation by air of injured or sick passengers or of passengers following a casualty to the entered ship; or

ii.      subject always to proviso (c) of this paragraph C, during an excursion from the entered ship;

c)    there shall be no recovery from the Club under this paragraph C in respect of liability of an Assured, incurred under a contract, for death or injury to a passenger whilst on an excursion from the entered ship in circumstances where either:

i.     that contract has been separately entered into by the passenger for the excursion, whether or not with the Assured, or

ii.    the Assured has waived any or all of its rights of recourse against any sub-contractor or other third party in respect of the excursion;

d)    unless and to the extent that the Assured has obtained appropriate separate cover by agreement in writing with the Managers, there shall be no recovery from the Club in respect of claims relating to cash, negotiable instruments, precious or rare metals or stones, valuables or objects of a rare or precious nature; and

e)    for the purpose of this paragraph C, ‘casualty’ means an incident involving either:

i.     collision, stranding, explosion, fire, or any other cause affecting
the physical condition of the entered ship so as to render it
incapable of safe navigation to its intended destination; or

ii.    a threat to the life, health or safety of passengers in general.

Diversion expenses

Liability for expenses of diversion of an entered ship for fuel, insurance costs, wages, stores, provisions and port charges where and to the extent that those expenses are over and above such expenses as would have been incurred but for the diversion and are incurred solely for the purpose of securing treatment for an injured or sick person or while awaiting a substitute for such person or for the purpose of landing stowaways or refugees, or persons saved at sea, provided that that the Assured is legally liable for the expenses or they are incurred with the agreement in writing of the Managers.

Stowaways and refugees

Expenses, other than those covered under Section 3 of this Clause, incurred by the Assured in discharging its obligations towards or making necessary arrangements for stowaways or refugees, but only if and to the extent that the Assured is legally liable for the expenses or they are incurred with the agreement in writing of the Managers.

Life salvage

Sums legally due to third parties by reason of the fact that they have saved or attempted to save the life of any person on or from an entered ship but only if and to the extent that the Assured is legally liable to pay and such sums are not recoverable from cargo owners or underwriters.

Collision and contact

Liability for loss of or damage to another ship or cargo or other property on the other ship arising out of a collision between the entered ship and the other ship, or to a fixed or floating object arising out of contact between the entered ship and the object.

Loss or damage to property

Liability to pay damages or compensation for physical loss of or damage to any property which is not specified elsewhere in these Terms & Conditions and which is not owned or leased by the Assured or by any co-assured.

Pollution risks

Liability for losses, damages, costs and expenses set out in paragraphs (A) to (D) below when and to the extent that they are caused by or incurred in consequence of the discharge or escape from an entered ship of oil or any other substance, or of the threat of such discharge or escape:

A.     Loss, damage or contamination;

B.     Costs of any measures reasonably taken for the purpose of avoiding or minimizing pollution or any resulting loss or damage together with any liability for loss of or damage to property caused by measures so taken, subject to the prior approval in writing of the Managers;

C.     Costs or liabilities incurred as a result of compliance with any order or direction given by any government or authority, for the purpose of preventing or reducing pollution or the risk of pollution;

D.  Costs or liabilities incurred as a result of pollution damage to the Assured’s own property, subject to the prior approval of the Managers, PROVIDED ALWAYS that:

a)     there shall be no recovery in respect of any liability, loss, damage, cost or expense arising as a consequence of the presence in, or the escape or discharge or threat of escape or discharge from, any land-based dump, storage or disposal facility, of any substance previously carried on the entered ship, whether or not as cargo, fuel, stores or waste, except to the extent that the Club in its discretion, and without having to give any reasons for its decision, otherwise determines.

b)      unless and to the extent that separate cover has been agreed in writing by the Managers, the Club shall not reimburse any liability, loss, cost or expense which would have been recoverable in general average if the cargo on board the entered ship had been carried on terms of the York-Antwerp Rules or similar.

c)      unless and to the extent that separate cover has been agreed in writing by the Managers, the Club shall not reimburse any liability, loss, cost or expense incurred by the Assured in its capacity as cargo owner.

Liability arising out of towage of or by an entered ship

A. Customary towage of an entered ship

Liability, other than for the cost of the contracted services, arising out of, or under the terms of a contract for the customary towage of an entered ship, that is to say:

i.       towage for the purpose of entering or leaving port or manoeuvring within the port during the ordinary course of trading, or

ii.      towage of an entered ship as is habitually towed in the ordinary course of trading from port to port or from place to place.

B. Towage of an entered ship other than customary towage Liability arising out of, or under the terms of a contract for, towage of an entered ship other than the customary towage covered under paragraph (A) of this Section but only if and to the extent that cover for such liability has been agreed in writing with the Managers upon such terms as the Managers may require.

C. Towage by an entered ship

Liability arising out of the towage of another ship or object by an entered ship but only if and to the extent that cover for such liability has been agreed in writing with the Managers upon such terms as the Managers may require.

Liability arising under certain indemnities and contracts 

Liability, in respect of risks set out in this Clause 2, arising under the terms of an indemnity or contract, given or made by or on behalf of the Assured relating to facilities or services provided by, or provided to, or in connection with, an entered ship, but only if and to the extent that such liability arises:

i.       out of any act or omission for which the Assured would be liable under applicable law; or

ii.      under a knock for knock provision; or

iii.      on any other basis agreed in writing by the Managers.

Wreck liabilities

A.     Liability for costs or expenses relating to the raising, removal, destruction, lighting or marking of the wreck of an entered ship, when such raising, removal, destruction, lighting or marking is compulsory by law or the costs thereof are legally recoverable from the Assured.

B.     Liability for costs or expenses relating to the raising, removal or destruction of any property being carried or having been carried on an entered ship, not being oil or any other substance within the scope of Section 8 of this Clause, when such raising, removal or destruction is compulsory by law or the costs thereof are legally recoverable from the Assured,

PROVIDED ALWAYS that:

a)    the entered ship became a wreck as the result of a casualty occurring during the period of that ship’s entry in the Club;

b)    the Assured has used best efforts to have the wreck removed by the Owner or its underwriters;

c)    in respect of a claim under paragraph (A) and (B) of this Section, the value of all stores, fuels, and materials saved, shall first be deducted from such costs or expenses and only the balance thereof, if any, shall be recoverable from the Club.

d)    Where the liability arises under the terms of an indemnity or contract, and would not have arisen but for those terms, such costs and expenses are only recoverable under this Section if and to the extent that:

i.       the terms of the indemnity or contract have previously been approved by the Managers and cover has been agreed between the Assured and the Managers on such terms as the Managers may require, or

ii.      the Club in its discretion decides that the Assured should be reimbursed.

e)    For the purpose of this rule only, ‘casualty’ means collision, stranding, explosion, fire or similar fortuitous event.

Obstruction liabilities

Liability to Owners arising out of the entered ship causing an obstruction as a result of a casualty.

Quarantine expenses

Liabilities for additional expenses necessarily and solely incurred as a direct consequence of an outbreak of infectious disease on the entered ship, including quarantine and disinfection expenses and the extra costs (over and above such expenses as would have been incurred but for the outbreak) in respect of the cost of fuel and port charges.

Cargo liabilities

 Liabilities and costs set out in paragraphs (A) to (D) below when and to the extent that they relate to cargo intended to be or being or having been carried in an entered ship:

A    Loss, shortage, damage or other responsibility

Liability for loss, shortage, damage or other responsibility arising out of any breach by the Assured, or by any person for whose acts, neglect or default the Assured may be legally liable, of its obligation properly to load, handle, stow, carry, keep, care for, discharge or deliver the cargo or out of unseaworthiness or unfitness of the entered ship.

     B    Disposing of damaged cargo or sound cargo from a damaged ship

The additional costs (over and above those which would have been incurred by the Assured if the cargo or the entered ship had not been damaged) incurred by the Assured in discharging or disposing of damaged cargo or sound cargo following damage to an entered ship, always excepting such costs as are claimable in general average or for which the Assured has a right of recourse against any other party.

C    Failure of consignee to remove cargo

The liabilities and additional costs (over and above the costs which would have been incurred by it if the cargo had been collected or removed) incurred by an Assured solely by reason of the total failure of a consignee to collect or remove cargo at the port of discharge or place of delivery, but only if and to the extent that such liabilities or costs exceed the proceeds of sale of the cargo and the Assured has no recourse to recover those liabilities or costs from any other party.

D    Through or transhipment bills of lading

Liability for loss, shortage, damage or other responsibility to cargo carried by a means of transport other than the entered ship, when the liability arises under a through or transhipment bill of lading, or other form of contract, agreed in writing by the Managers, providing for carriage partly to be performed by the entered ship, provided that the Assured has contracted on terms that seek to preserve rights of recourse against others involved in the performance of the contract of carriage.

Note: For the purpose of this paragraph D, a contract is deemed to be approved if it incorporates the ICC Rules or the internationally accepted conventions such as CMR 1956 (Convention relative au Contrat de transport international de Marchandises par Route), CIM 1980 (Les régles uniformes concernant le Contrat de transport International ferroviaire de Marchandises), or the Warsaw Convention 1929 or 1955, as appropriate.

 PROVIDED ALWAYS that:

       a)     Standard Terms of Contracts of Carriage

Unless and to the extent that the Club in its discretion otherwise decides, or separate cover has been agreed in writing by the Managers, there shall be no recovery from the Club in respect of liabilities which would not have been incurred or sums which would not have been payable by the Assured if the cargo (including cargo on deck) had been carried under a contract incorporating terms no less favorable to the Assured than the Club’s recommended standard terms of carriage which shall be the Hague Visby Rules or such other rules which are of mandatory application or such other conventions as the Club may from time to time determine.

 

b)     Deviation

Unless and to the extent that the Club in its discretion otherwise decides, or cover has been confirmed in writing by the Managers prior to the deviation, there shall be no recovery from the Club in respect of liabilities, costs and expenses which arise out of or which are incurred as a consequence of a deviation, in the sense of a departure from the contractually agreed voyage or adventure which deprives the Assured of the right to rely on defences or rights of limitation which would otherwise have been available to it on the basis of the standard terms of carriage referred to in proviso (a) above to reduce or eliminate its liability.

c)     Claims payable only at the discretion of the Club

Unless and to the extent that the Club in its discretion otherwise decides there shall be no recovery from the Club in respect of liabilities, costs or expenses arising out of:

i.       discharge of cargo at a port or place other than the port or place provided in the contract of carriage;

ii.      delivery of cargo carried under a non-negotiable bill of lading, waybill or similar document without production of such document by the person to whom delivery is made, where such production is required by the express terms of that document or the law to which that document, or the contract of carriage contained in or evidenced by it, is subject, except where the Assured is required by any other law to which the carrier is subject to deliver, or relinquish custody or control of, the cargo, without production of such document;

iii.     delivery of cargo carried under a negotiable bill of lading or similar document of title without production of that bill of lading or document by the person to whom delivery is made, except where cargo has been carried on the entered ship under the terms of a non-negotiable bill of lading, waybill or other non-negotiable document, and has been properly delivered as required by that document, notwithstanding that the Assured of that entered ship may be liable under the terms of a negotiable bill of lading or other similar document of title issued by or on behalf of a party other than that Assured providing for carriage partly by a means of transport other than the entered ship;

iv.     the issue of an ante-dated or post-dated bill of lading, waybill or other document containing or evidencing the contract of carriage, recording the loading or shipment or receipt for shipment on a date prior or subsequent to the date on which the cargo was in fact loaded, shipped or received as the case may be;

v.      a bill of lading, waybill or other document containing or evidencing the contract of carriage, issued with the knowledge of the Assured or its agent with an incorrect description of the cargo or its quantity or its condition;

vi.     either the failure to arrive or late arrival of the entered ship at a port of loading, or the failure to load any particular cargo or cargoes in an entered ship other than liabilities, loss and expenses arising under a bill of lading already issued.

       d)     Ad Valorem Bills of Lading

Unless and to the extent that separate cover has been agreed in writing by the Managers, the Club shall not pay for liability arising from carriage under an ad valorem bill of lading or other document of title, waybill or other contract of carriage in which a value of more than US$2,500 (or the equivalent in any other currency) is declared and/or inserted by reference to a unit, piece, package or otherwise, where the effect of such a declaration/ insertion is to deprive the carrier of any right or rights of limitation to which it would otherwise have been entitled and cause it to incur a greater liability than it would have done but for such declaration/insertion, to the extent that such liability thereby exceeds US$2,500 (or the equivalent in any other currency) in respect of any such unit piece or package.

       e)      Rare and valuable cargo

Unless and to the extent that the Managers have been notified prior to any such carriage, and any directions made by the Managers have been complied with, there shall be no recovery from the Club in respect of claims relating to the carriage of specie, bullion, precious or rare metals or stone, plate or other objects of a rare or precious nature, bank notes or other forms of currency, bonds or other negotiable instruments.

       f)      Charterer-owned cargo

Unless otherwise agreed in writing by the Managers, the Club shall not be liable for liabilities, losses, costs and expenses as set out in Clause 2, Sections 14 and 15, in respect of cargo owned by the Assured or a co-assured or any person affiliated to or associated with the Assured or the co-assured when:

a)     such person has a proprietary interest in the cargo as buyer, seller, or holder of the bill of lading or

b)     has had such an interest and it is determined by the Club in its discretion that the liabilities are the result of

i.       damage to or loss or reduction in the value of the cargo arising out of the condition, quality or specification of the cargo existing prior to the cargo being received for shipment for the expected voyage, or any change to or deterioration in the condition or quality caused other than by its carriage, or which was the result of any treatment or processing, including blending, of the cargo other than such treatment necessary solely for its safe carriage; or

ii.      general monetary loss caused other than by failure properly to carry the cargo.

g)   Electronic Trading Systems

There shall be no recovery from the Club in respect of liabilities, losses, costs and expenses arising from the use of any electronic trading system, other than an electronic trading system approved by the Club in writing, to the extent that such liabilities, losses, costs and expenses would not (save insofar as the Club in its discretion otherwise determines) have arisen under a paper trading system.

General Average and Salvage

A.     General average and salvage

Liability to Owners for the ship’s proportion of general average, special charges or salvage as stated in the general average adjustment or as determined by a court, competent tribunal or independent adjudicator appointed by the Managers or as otherwise agreed.

B.     Unrecoverable general average contributions

The proportion of general average, special charges or salvage which an Assured may be entitled to claim from cargo or from some other party to the marine adventure and which is not legally recoverable solely by reason of a breach of the contract of carriage by the Assured, PROVIDED ALWAYS that:

Proviso (a) (Standard terms of carriage), Proviso (b) (Deviation) and Proviso (c) (Claims payable only at the discretion of the Club) of Section 14 of this Clause shall apply to any claim under this Section.

C.     Assured’s proportion of general average

Liability for the proportion of general average, special charges or salvage in respect of the Assured’s interest in property (other than cargo) and or bunkers owned by the Assured, hire or freight, provided that such liability is not covered by any other insurance.

Fines

A       Liabilities for fines as set out in paragraphs (B) to (E) below when and to the extent that they are imposed in respect of an entered ship by any court, tribunal or authority and are imposed:

i.       upon the Assured, or

ii.      upon any person whom the Assured may be legally liable to reimburse or reasonably reimburses with the approval of the Managers, or

B       Liabilities for fines for short or overlanding or over delivery of cargo, or for failure to comply with regulations relating to declaration of goods or to documentation of the entered ship in respect of its cargo (other than fines or penalties arising from the smuggling of goods or cargo or any attempt thereat);

C [not used]

D      Liabilities for fines for contravention of any law or regulation relating to immigration;

E       Liabilities for fines in respect of an accidental discharge or escape of oil or other substance, or the threat thereof;

F       Liabilities for any fine to the extent that

i.       the Assured has satisfied the Club that it took such steps as appear to the Club to be reasonable to avoid the event giving rise to such fine and

ii.      the Club in its discretion and without having to give any reasons for its decision, decides that the Assured should recover.

PROVIDED ALWAYS that:

there shall be no recovery from the Club in respect of any fines arising out of

i)       overloading of an entered ship,

ii)      carriage of more passengers than permitted,

iii)     illegal fishing,

iv)     lack of valid or prescribed certificates relevant in the Assured’s operation, or

v)      any breach, disregard or contravention of Section 14 Provisos (b), (c) and (g).

Enquiry expenses

Costs and expenses incurred by an Assured in defending itself or in protecting its interests before a formal enquiry into the loss of or into a casualty involving the entered ship but only to the extent and on such conditions as the Club in its discretion may determine.

Expenses incidental to the operation of ships

Liabilities, costs and expenses incidental to the business of chartering ships incurred by the Assured which in the opinion of the Club fall within the scope of the Club,

PROVIDED ALWAYS that:

a)     There shall be no recovery under this Section in respect of liabilities, costs and expenses, which are expressly excluded by other provisions of these Terms & Conditions;

b)     The Club may authorise payment of claims which are excluded by Rule 5(G) of these Terms & Conditions but only if a majority of three-quarters of the Members’ Committee present when the claim is considered so decide;

c)      Any amount claimed under this Section shall be recoverable to such extent only as the Club in its discretion may determine without having to give any reasons for their decision.

Sue and labour and legal costs

A.     Extraordinary costs and expenses (other than those set out in paragraph (B) of this Section) reasonably incurred on or after the occurrence of any casualty, event or matter liable to give rise to a claim upon the Club and incurred solely for the purpose of avoiding or minimizing any liability or expenditure against which the Assured is wholly or, by reason of a deductible, partly insured by the Club, but only to the extent that those costs and expenses have been incurred with the agreement of the Managers or to the extent that the Club in its discretion decides that the Assured should recover from the Club.

B.     Legal costs and expenses relating to any liability or expenditure against which the Assured is wholly, or, by reason of a deductible, partly insured by the Club, but only to the extent that those costs and expenses have been incurred with the agreement of the Managers or to the extent that the Club in its discretion decides that the Assured should recover from the Club.

Expenses incurred by direction of club 

Costs, expenses and loss which an Assured may incur either (i) by reason of a special direction of the Club in cases in which the Club decides that it is in the interests of the Club that the direction be given, or (ii) in the absence of such special direction, as a result of action which the Assured has taken or refrained from taking if the Club in its discretion decides that such action was in the interests of the Club and that the Assured should recover from the Club.