Other hull clauses, insurances, and principles

Question 1

Institute Additional Perils Clauses - Hulls 1/10/83

Answer 1

1. In consideration of an additional premium this insurance is extended to cover
   1.1 the cost of repairing or replacing
   1.1.1 any boiler which bursts or shaft which breaks
   1.1.2 any defective part which has caused loss or damage to the Vessel covered
   by Clause 6.2.2 of the Institute Time Clauses - Hulls 1/10/83,
   1.2 loss of or damage to the Vessel caused by any accident or by negligence, incompetence
   or error of judgement of any person whatsoever.
2. Except as provided in 1.1.1 and 1.1.2, nothing in these Additional Perils Clauses shall allow any
   claim for the cost of repairing or replacing any part found to be defective as a result of a fault or
   error in design or construction and which has not caused loss of or damage to the Vessel.
3. The cover provided in Clause 1 is subject to all other terms, conditions and exclusions contained in
   this insurance and subject to the proviso that the loss or damage has not resulted from want of due
   diligence by the Assured, Owners or Managers. Master Officers Crew or Pilots not to be considered
   Owners within the meaning of this Clause should they hold shares in the Vessel.

Extension of cover compared to ITCH:
- Under the terms of IAPC, there is cover for the cost of repairing or replacing any boiler which bursts or shaft that breaks and it is not required for the assured to demonstrate exactly what caused the event to happen. If underwriters wish to deny liability, the onus is upon them to prove.

• In practice, most accidents’ claim is based on known causes, e.g. heavy weather. With IAPC, the wording “…any accident…” are likely to be used when cause of loss or damage is unexplained.

Question 2

IUA Cyber Loss Exclusion Clauses - IUA 09-081 / IUA 09-082

Answer 2

1. IUA 09-081

The clauses wording provides to exclude, in the broadest possible manner, any loss arising out of the use of (or inability to use) a Computer System, Computer Network or Data, each of which are specifically defined within the clause.

Additionally, the clause would remove liability arising from losses stemming from the hoax of such and any error, omission or accident in respect of a Computer System, Computer Network or Data.

2. IUA 09-082

This clause provides narrower exclusion than IUA 09-081. Paragraph 2 refers to ‘Cyber Loss… directly caused by’, rather than ‘directly or indirectly caused by’, which ties the proximate cause within the wording to a cyber event.

Question 3

General Average Absorption Clauses

Answer 3

The clauses requires the underwriters to ‘absorb’, up to an amount, a claim in GA that the assured has against another party. Thus, this clause enables shipowner to avoid the need to claim against another party for their contribution of GA.

Question 4

Increased value policy

Answer 4

Increased value policy provides an additional source of coverage over and above the H&M insured value in the case of total loss, essentially protecting against underinsurance.

The assured will receive the total value insured under the primary insurance and all additional amounts insured by the increased value policy, regardless of the sound value of the vessel at the time of the event giving rise to the constructive total loss.

Question 5

Excess liability policies

Answer 5

Excess liabilities policies provide coverage in respect of the balance of any general average, salvage, sue and labour charges and collision liabilities which are not recoverable under the original policy by reason of underinsurance.

Question 6

Loss of Hire under A.B.S Loss of Charter Hire Insurance 1/10/83

Answer 6

• For there to be a claim on LOH, the assured must demonstrate that there is physical loss/damage to the vessel and that the vessel was prevented from earning hire in consequence of any of the following events:
  (a) loss, damage or occurrence covered by ITCH, Norwegian Hull Form, or
  American Institute Hull Clauses
  (b) breakdown of machinery, provided that such breakdown has not resulted from wear and tear or want of due diligence by the Assured.
  For example, if the vessel stranded for a long period but sustains no damage, no claim would arise on the LOH policy.
• LOH provide for the assured to be indemnified at a fixed daily rate, subject to a deductible period of X, and a period not exceeding X amount of days.
• No claim under LOH if the occurrence of which such claim arises is the cause of the vessel becoming a Total Loss (Actual or Constructive).

Question 7

P&I Insurance (main areas of cover provided)

Answer 7

• P&I club provides cover for open-ended risks that traditional insurers are reluctant to insure.
• Cover is provided for members’ legal liability to third parties, which includes:
  1) Loss of life or injury, repatriation expenses, medical expenses of crew;
  2) Costs of wreck removal;
  3) Pollution;
  4) Collision liabilities not covered under hull and machinery insurance policies;
  5) Ship’s proportion of general average, special charges or salvage not recoverable from hull and machinery insurers by reason of the contributory value being in excess of the insured value, provided that the club can be satisfied that the vessel was insured for a reasonable value when the policies were effected.
• Does not cover damage to own ship, stores, fuel.

Question 8

Lloyd’s Open Form 2011

Answer 8

Provisions:

• Follows English Law
• In the event of success, award is made to the salvor; in the event of failure, nothing will be payable to the salvor.
• Under the terms of LOF, salvors will be paid only if the ship is salved and taken to a place of safety.
• Amount of salvage reward will depend on how much is saved of the property.
• When there is no longer any reasonable prospect of a useful result, owners / contractors shall be entitled to terminate the services hereunder by giving reasonable prior written notice