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HULL INSURANCE

Sr. no.
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Topic
Origin Introduction Hull Proposal Forms Hull Ratings

Pg.No.

! # & ' )

Hull Claus"s Hull $ari%%s Hull Claims Cas" stud( Conclusion

O*+EC$I,ES

Ship-owners and steamer companies, whether big or small are very much concerned and aware about the security of their ongoing vessels, fishing vessels sailing vessels trawlers, barges etc. from the perils at sea which are increasing at a high rate day by day. The nature of sea, ease of connectivity and lack of true control- creates an environment where mishaps happen at a very faster rate. As such any discussion of Business at Sea is made it !uickly becomes a discussion of security. The securiti"ation of #cean $oing %essels is a serious issue to tackle with, in a process of building a self-reliant country, where the technology to restrict and eradicate the mishaps at sea will be one of its most valuable asset, due to which high value of monetary losses are incurred by a country every year, thus reducing its $&'. (n shorts the main ob)ectives of this *ull (nsurance are To understand what e+actly *ull (nsurance is, and it is apart from various other forms and 'olicies of $eneral ,-arin (nsurance. To understand the various risks are involved at sea and types of policies available to minimi"e the monetary risks associated with it, at the time of mishap. To understand the various kinds of .laims 'rocedure to be implemented at times of mishaps. To know the various kinds of clauses to be dealt on like %oyage or for vessels used for /ishing purposes or for #il digging.

-E$HO.OLO/0

0esearch is systematic !uest of knowledge. The means and techni!ues and frames of reference by which a researcher approaches and carries out en!uiry, is known as 1-ethodology.

/or the pro)ect primary and secondary sources used. Thus a library research is don and a literature review is taken up. A literature review is an attempt to identify and to locate materials about specific topic of research. (t helps researcher to get an insight in the given topic. *ere various books, maga"ines are been referred. Tools used for data collection are the website and 2ibrary research.

C1apt"r 1

ORI/IN

#rigins of marine insurance are very ancient. -arine insurance as a techni!ue for providing protection against the perils of seas had its origin in the 3bottomry bonds4 which were issued by the -editerranean merchants as early as the fourth century B... A 3bottomry bonds4 was an advance of money on a ship during the period of voyage. The loan was repayable with the agreed rate of interest on arrival of the ship safely at the destination. (f the ship was lost during the voyage, the obligation to repay the loan was e+tinguished. The interests payable constitute a form of premium for the risk of total loss. Similar loans were granted on the security of cargo and were called 3respondentia bonds4 0eferences to similar practices were also found in 3-anab &harma Shastra4 5codes of -anu6 which contained rules for marine contracts which were observed by traders from Broach and Surat who set sail in (ndian-built sailing vessels with merchandise to 2anka, -isr 57gypt6 and 8rban 5$reece6. Another fore-runner of marine insurance was the practice of general Average 5$A6 whereby losses voluntarily incurred to save the common venture were shared by the $A act. This practice dates backs to 9:; B... <hen the 0hodians practiced it in their -editerranean trade. The ob)ects and functions marine insurance were aptly described in the preamble to the 7li"abethan Act of :;=: in such lucid and e+pressive language, as follows 3>.By means of which policy of assurance it cometh to pass that upon the loss or perishing of any ship there followeth not the undoing of any man, but the loss alighteth rather easily upon many men than heavily upon few, and rather than upon them that adventure not, than those that do adventure, whereby all merchants, especially the younger sort, are allowed to venture more willingly and freely.4 Banking and (nsurance have long been described as 3twin pillars4 of commerce. -arine insurance occupies an important position in overseas commerce. Since it affords protections against fortuitous losses, it enables

all those engaged in overseas trade to venture their capital more freely than would otherwise be possible and thus greatly to e+pand their scope of their operations. (t is also an important invisible e+port in the overseas trade of many countries.

-ARINE INSURANCE -AR2E$ IN IN.IA

'rior to nationali"ation of $eneral insurance business, the marine insurance market in (ndia was composed of private companies, both (ndian and foreign. /oreign companies operated either as their branches of parent company abroad or through agents. Besides the private companies, the $overnment controlled companies also transacted general insurance business. 'rior to nationali"ation in :9?@, general insurance business in (ndia was transacted by :=? companies. 5;@ domestic and AA foreign companies6 operating in the country. These were amalgamated and reconstituted into four companies, as follows-The Bational (nsurance .o. 2td. <ith head office in .alcutta. -The (ndia Assurance .o. 2td. <ith head office in -umbai. -The #riental (nsurance .o. 2td. <ith head office in &elhi. -The 8nited (ndia (nsurance .o. 2td. <ith head office in .hennai.

The $eneral (nsurance .orporation of (ndia 5$(.6 was incorporated in Bovember, :9?C as a holding company and the above four companies were designated as its subsidiaries from :st Danuary, :9?@. All the four companies operate on all-(ndia basis in competition with one another through three tier marketing network of 0egional, &ivisional and Branch #ffices spread throughout the country. Apart from other the classes of general insurance, both -arine .argo and *ull insurance are written freely, but sub)ect to Tariffs and guidelines where applicable. Business generated in the -arine department- both .argo and *ullaccounts roughly C=E of the total gross premium income of the (ndian market. The Tariff Advisory .ommittee 5TA.6, formed under the 'rovisions of the (nsurance Act, :9@F is empowered to lay down rules, regulations, rates, terms and conditions for transaction of marine insurance business in (ndia. TA. administers through four 0egional .ommittees in -umbai, .alcutta, .hennai and Ahemdabad. The tariffs e+tend to the whole on

(ndia and binding on all insurers. Any breach of the tariff is a breach of (nsurance Act, :9@F. There are *ull (nsurance Tariffs covering following types of vessels -/ishing vessels and Trawlers -Sailing vessels -(nland vessels -&redgers -Tariff for builders risks on vessels under construction. The premium rates, terms and conditions of insurance are regulated by the respective sections of the -arine *ull tariffs.

C1apt"r 2

IN$RO.UC$ION $O HULL INSURANCE


-"aning Ship-owners resort to marine insurance for protection of their ships, freight, disbursements and other interests against marine perils. *eavy capital values are locked up in ships, the loss of which could prove financially crippling to the strongest steamer companies.

*ull (nsurance refers to the insurance of *ull and machinery and other interests, of oceangoing vessels, fishing vessels, sailing vessels. Trawlers, barges etc. Subsidiary interests are generally freight and disbursements. *ull insurance for vessels when they are under construction are called 3construction,builders risks 3insurance. Also, there are certain special types of hull covers like charterers liability risks, ship repairers liability risks, etc. 0ecent developments of hull insurance are insurance of #il &rilling 0igs and #ffshore #il 'latforms as well as allied construction risks.

(n (ndia, <ar 0isks insurance of marine hulls is governed by the $overnment <ar 0isks (nsurance scheme. This is a voluntary scheme applicable to all ships registered under the -erchant Shipping Act, :9GF and includes such ships under construction and mechani"ed sailing vessels. 'olicies are issued by any of the (ndian (nsurance companies and every policy is fully reinsured with the government at the original rate of premium. The rate of premium for each year is fi+ed in advance by the government and the premium for each year is fi+ed in advance by the government and the premium is payable in four !uarterly installments in advance of each !uarter. There is no stamp duty. Broadly, the insurance covers the following A3 Loss4damag" to t1" insur"d s1ip arising %rom5 a6 .apture, sei"ure, arrest, restraint or detainment, also from conse!uence of hostilities or warlike operations, whether there is a declaration of war or not. b6 .ivil war, revolution, insurrection or civil strike. c6 -ines, torpedoes, bombs or other engines of war.

*3 Loss4damag" to t1" insur"d s1ip dir"ctl( caus"d 6(5 Strikes, locked- out workmen or persons taking part in political or labour disturbances, riots and civil commotions and malicious damage H so far as the same are not covered by other insurance.

C3 Lia6iliti"s and "7p"ns"s o% t1" assur"d on account o%5 a6 2ife salvage, loss of life, personal in)ury and illness, and hospital, medical funeral and other e+penses resulting there from, putting in to port to land sick or in)ured crewmen, loss of crews effects and wages during unemployment conse!uent on shipwreck, cost of removal of wreck, when such liability,e+pense arises from the operation of the insured perils.

b6 2iability of the assured for payments under Bational -aritime Board and -aritime 8nion of (ndia agreements in respect of crew member who are captured or detained.

.3 Lia6ilit( o% t1" assur"d %or 6r"ac1 o% outstanding contracts o% carriag" and "7tra "7p"ns"s incurr"d in cons"8u"nc" o% d"t"ntion or di9"rsion o% s1ip: all r"sulting %rom complianc" ;it1 go9"rnm"nt ord"rs3 a6 A limit is placed on the amount payable in respect of risks mentioned under above items 5@6 and arising from a single event, based on the $0T of the insured ship. b6 The entered value of a ship for war risk insurance shall be the aggregate * and -, /reight, &isbursements and (ncreases %alue insurance of the ship insured, for marine risks. c6 All premiums are credited to the war risks 5-arine *ulls6 0einsurance /und. All payments towards claim and e+penses are from that /und. d6 All casualties must be referred to the insurers promptly and claims will be affected only after such approval becomes available.

Ris<s Co9"r"d5

a6 2oss,&amage to the sub)ect-matter insured caused by strikers, locked out workmen or persons taking part in labour disturbances, riots or civil commotions. b6 &estruction,damage to sub)ect-matter insured caused by persons acting maliciously. E7clusions5

2oss,damage, e+penses arising from -re!uisition or pre-emption. -capture, sei"ure, arrest, restraint, detainment or confiscation by government authority. -Arrest, restraint or detainment under !uarantine regulations or by reason of infringement of any .ustoms regulations. -/rustration of insured voyage caused by arrests, restraints or detainments. -*ostilities, war-like operations, civil wars, revolutions, rebellions, insurrections or civil strife arising there from. Canc"llation5 7ither by insurers or by the insured giving AF hours notice.

,"ss"ls ar" 6roadl( cat"gori="d into %ollo;ing 2 groups5 a6 -echanically self-propelled vessels of steel construction classed with 2loyds 0egister of shipping or any other internationally recogni"ed classification society including (ndian 0egister of Shipping. These vessels may be liners or tramps carrying cargo and or passengers employed in home or foreign trade. b6 Smaller crafts, generally of local origin, built of steel, wood or fiber-glass which is not sub)ect to classification. Bormally such crafts are used in inland waters, coastal ports or within port areas. $(., in consultation H with TA., has introduced a scheme necessitating classification of coastal crafts like barges, trawlers and tugs by (0S, and certain incentives in rating are offered for such vessels so classified by (0S. Acceptance of these risks is governed by *ull Tariff in (ndia.

C1apt"r 3

HULL PROPOSAL FOR-S


Cont"nts o% proposal Form
A.

$"c1nical d"tails o% t1" 9"ss"ls:

>Type of vessel, e.g. tanker, general cargo, dry bulk, dredger, passenger liner container vessel, fishing vessel,trawler, etc. -.onstruction of vessel 5steel, wood, composite or fiberglass6 -Bame of builders and place built -Age of vessel 5year built6 -Tonnage 5$0T and &<T6 $0T means 3$ross 0egister Tonnage4 $0T is the volume of the interior of the vessel including all spaces which are permanently closed in 5but e+cluding the double bottom6 e+pressed in tons of :== cubic feet. &<T means 3&eadweight Tonnage4 &eadweight means the capacity in tons of the cargo re!uired to load a ship to her load line level.

-&imensions 5to verify the tonnage information6 i.e. length, breadth, draught etc. -<hether the vessel is e!uipped with 5a6 Twin Screws, 5b6 &ouble Bottom and 5c6 .ollision Bulkhead. --ethod of propulsion and particulars of engine,-achinery 5main, au+iliary or refrigeration6. -'articulars of fire e+tinguishing e!uipment.

*3 Ot1"r d"tails o% ,"ss"l5 -%aluation of the vessel. -(f entered with a classification Society for hull and machinery, which the dates of survey related to each aspect, have been complied with in order to maintain .lass. <hen war the vessel last surveyed and by whom -(s the vessel registered under the -erchant Shipping Act or by competent authorityI -'ort of 0egistry and 0egistration .ertificate number. -/lag 5to ascertain if the vessel is registered in a /lag of .onvenience H /.#... - country6

C3 $rad" r"lat"d d"tails5 -Trade the vessel is engaged in and whether as liner or tramp. -Trading warranties and navigational limits. -Bature of cargo usually carried. - <hether single ship- 3singleton4 H or fleet or part thereof. -0ecord of ownership and !uality of management.

-<hether the vessel is mortgaged for any loan, and if so, details and arrears of repayment, if any. -(f laid up in monsoon, place and period.

.3 Insuranc" r"lat"d d"tails -.onditions of insurance re!uired and the si"e of deductible. -'eriod of insurance for time policy and details of voyage for a voyage policy -.laims e+perience of last G years 5premium and claims paid and outstanding statistics.6 -previous insurance history and whether cover was declined at any time by any insurer. -<hether the vessel is covered against 'rotection and (ndemnity 5'J(6 risks.

Supporting .ocum"nts Bormally, along with the 'roposal /orm, following supporting documents are called for a6 0egistration , 2icense .ertificate of the vessel.

b6 %aluation .ertificate on *ull and -achinery and accessories.

c6 're- insurance Survey 0eport, when re!uired by underwriters.

d6 /orm 1B when rate is to be fi+ed by Tariff Advisory committee 5TA.6. Additional !ueries need to be answered if the vessel is not listed in 2loyds 0egister of Shipping.

e6 (n case of /ishing and Sailing vessels, details of arrears of loan payments to the Bank,/inancier and also confirmation that there is no default.

Sp"cim"n o% a Proposal Form

Agency KKKKKKKKK Branch KKKKKKKKKKK (nspector KKKKKKKKKKK 'olicy Bo. KKKKKKKKK Proposal Form %or Insuranc" o% Hull>-otor Launc1"s: .r"dg"rs: $ra;l"rs: $ugs *arg"s: Sailing4Fis1ing ,"ss"ls: "tc3 Propos"r?s@ ?O;n"rAs@ Nam"5

Addr"ss

Nam" o% ,"ss"l

$(p" /ross R"gist"r"d R"gist"r"d R"gist"r"d .ra%t o% R"gd3 L"ngt1 *r"adt1 ."pt1 ,"ss"l $onnag"

Nam" o% *uild"rs

Plac" ;1"r" *uild

-at"rial o% ;1ic1 6uilt

I% 6uilt o% ;ood: stat" ;1"t1"r Copp"r S1"at1"d or not

0"ar in ;1ic1 *uilt

0"ar o% purc1as"

Pric" Pr"s"nt Estimat"d ,alu" o% paid 6( Propos"d

Amount propos"d %or Insuranc" Rs3

Hull

-ac1in"r( Acc"ssori"s

Port o% R"gistr(

Nam" o% R"gistration Aut1orit(

Num6"r o% R"gistration C"rti%icat"

*( ;1om ;1"r" B ;1"n ;as t1" 9"ss"l last sur9"("d

(f rebuilt state when and give details of reconstruction carried out

(f e+act year of built is not known particularly for old %essels give appro+imate age of vessel. :. (s the vessels classed with a recogni"ed classification societyI (f so state symbols allotted. C. a. (s the vessel licensed or approved by any local authorityI (f so, please give full particulars. C.b. &ate up to which current license is valid. @. (s the vessel e!uipped with 5a6 <indlassI 5b6 0ubbing BandsI 5c6 /ire /ighting AppliancesI 5State type6 5d6 Twin ScrewI 5e6 &ouble BottomI 5f6 .ollision Bulk *eadI A. (s the vessel covered in /orward, Aft and 0ound Sides G. State the cruising speed of the vessel.

Particulars o% Engin" 4 -ac1in"r(5

-a<"rAs Nam"

$(p" o% Fu"l Is No3 o% Hors" No3 o% $(p" Engin" and us"d R"9"rs" Prop"ll"r Po;"r C(lind" o% ("ar o% and /"ar s rs Engin -anu%actur" capacit( pro9id"d " o% %u"l Casing tan<

Particulars r"lating to "mplo(m"nt o% t1" 9"ss"l5 :. /or what purpose is the vessel usedI (f the vessel is trading give full particulars of the trade engaged in C. /or what geographical limits is insurance re!uiredI B.B As the insurance of the vessel will be restricted to the above geographical limits, it is important to state your re!uirements clearly. @. <ill the vessel be laid up during the South <est or Borth 7ast -onsoonI (f so, please state. 5a6 <here she will be laid up 5b6 'eriod for which she will laid up A. &oes the vessel ever undertake any towI (f so, please attach from used by you laying down conditions on which towage is accepted L

Particulars o% -ast"r and Cr";5

:. 5a6 (s the vessel in charge of 5a6 a !ualified master 5b6 State his !ualifications 5c6 *ow long has he been in 5b6 your employI 5c6 5d6 <ill he live aboard the vesselI 5d6 C. <hat is the total number of crew on board the vesselI $eneral :. 5a6 <hat accidents have 5a6 happened during the past three years to any vessels owned by youI 5b6 (f any, which of them are occurred in connection with 5b6 the vessel herein proposed. C. *as any .ompany or (nsurer in respect of any of the risks to which this proposal applied 5a6 &eclined to accept your insuranceI 5b6 0efused to renew your insuranceI 5c6 (ncreased the premium on renewalI @. A. (s the vessel at present insured with any other insurers State the risks against which you wish to insure your vessel 5a6 5b6 5c6

G.

;.

5a6 State whether any Bank or other financing authority is interested. (f so give details of loan granted. 5b6 Also confirm that you will assign the policy in their favor 5c6 Also indicate details of loan repayment and confirm repayment is regularly done. (f not state reasons for default in repayment of loan. State amount of your paid-up .apital /or what period or voyage is the /romKKKKKKKKKK (nsurance re!uiredI To KKKKKKKKKK

(,<e, the undersigned, hereby declare that the above statements and particulars are true and complete and further declare that (,<e have not with-held any information which is calculated to influence the decision of the .ompany in accepting this (nsurance and agree that this declaration shall be the basis of the contract between me,us and T*7 B7< (B&(A ASS80AB.7 .#-'ABM 2(-(T7&. &ated at KKKKKKKKKKKKthis KKKKKKKKday KKKKKKKKof KKKKKKKKKC= KKKK.

Propos"rAs Signatur" Bote :. The liability of the company does not commence until the acceptance of the proposal has been formally intimated by the .ompany and full premium paid. C. (f space is found insufficient, please attach separate sheets for details. @. 'remium will be !uoted on application. A. (nsurance is the sub)ect matter of solicitation.

PROHI*I$ION OF RE*A$E >> S"ction 1 o% t1" Insuranc" Act 1)3' No p"rson s1all allo; or o%%"r to allo;: "it1"r dir"ctl( or indir"ctl(: as an induc"m"nt to an( p"rson to ta<" out or r"n"; or continu" an insuranc" in r"sp"ct o% an( <ind o% ris< r"lating to li9"s or prop"rt( in India: an( r"6at" o% t1" ;1ol" part o% t1" commission pa(a6l" or an( r"6at" o% t1" pr"mium s1o;n on t1" polic( nor s1all an( p"rson ta<ing out or r"n";ing or continuing a polic( acc"pt an( r"6at": "7c"pt suc1 r"6at"s as ma( 6" allo;"d in accordanc" ;it1 t1" pu6lis1"d prosp"ctus"s or ta6l"s o% t1" Insur"r3 An( p"rson ma<ing d"%ault in compl(ing ;it1 t1" pro9isions o% t1is s"ction s1all 6" punis1a6l" ;it1 %in" ;1ic1 ma( "7t"nd to Fi9" Hundr"d Rup""s3 FOR OFFICE USE C MARKETING / DEVELOPMENT OFFICER'S REPORT The 'roposer is known to me,my agent , Broker forKKKyears and ( recommend acceptance of this proposal.

Bame and .ode Bo. &ev. #fficer , A,A#-&

Signature of

A..7'T7& BM

&AT7 J T(-7

0AT7

07-A0NS

.#&7S - #//(.7 ,&7%. #//(.70 , A$7BT ,B0#N70.#227.T(#B , S.0#22 B# '#2(.M B#.


.

C1apt"r

HULL RA$IN/S

As a guide to determine an appropriate rate for a hull risk generally, following principal factors need to be taken into account A6 -anagement and ownership with their corresponding claims e+perience. B6 .onsideration of the type, trade, age, tonnage, all aspects of machinery, whether main, au+iliary or refrigerating. .6 The valuation of the vessels. &6 (f entered with a .lassification Society for *ull and -achinery that dates of survey related to each aspect have been carried out to maintain .lass. 76 .onditions of insurance being offered. /6 'revailing repair costs.

$6 8nderwriting e+perience of similar risk. (n calculating the rate of premium to be charged, the hull underwriter will, when considering any risk, take account of the following aspects A6 Total loss B6 'articular Average. i.e. accidental partial loss .6 $eneral average contribution &6 .ollision liabilities 76 Salvage charges, sue and labour charges. (n calculating rates to be charged, the hull risk is divided into two parts as under A6 The 1Total 2oss element of the risk. B6 1Average 2oss element 5that is. #ther total loss element often risk, often termed 3e+ T.2.46 Accordingly, it is customary to agree a separate rate for each part of the risk and to combine these to arrive at the overall rate that will appear in the policy. The Total 2oss rate is rate percent applied to insured value of the vessel and is thus conditioned mainly by the value factor of the ship.

The 3e+ T.2.4 element of the risk is mainly determined by the si"e of the ship. (t is fi+ed as a certain amount, says 0s. @=,- multiplied by the &eadweight Tonnage 5&<T6 of the vessel or the $ross 0egister Tonnage 5$0T6. &ead weight means the capacity in tones of the cargo re!uired to load a ship to her load line level. &eadweight tonnage represents a vessels carrying capacity and therefore it gives a more reliable indication of the si"e and earning potential of a general cargo vessel, tankers J bulk carriers. $0T is the volume of the interior of the vessel. <ith cruise,passenger vessels the $0T is more likely to be used for calculation. Since the purpose of these vessels is to transport people, the vessel is devoted to the cabin services and social accommodation as this varies greatly, the $0T is the most consistent feature to be use in case of cruise, passenger liners. Both the premiums are combined and the

resultant premium, divided by insured value, is then e+pressed as rate percent in that insured value, and that single rate 5 called the 3slip rate46 will be !uoted to the client.

Follo;ing "7ampl" ;ill illustrat" 1o; t1" rat"s ar" appli"d and pr"mium calculat"d5 2ine H %essel H Mear Built H $0T H (nsured %alue H Type H Trading > Total 2oss 0ate H 7+. T.2. 0ate H &eductible H Calculation o% pr"mium5 A3 Total 'remium O =.?GE #n 0s. :G,==,==,==,=== *3 7+. T.2. premium O 0s.A=,- per $0T i.e. A= + :=,=== Total premium i.e. 1A PB 3Slip 0ate4 is e+pressed as :G, CG,=== + :== Q :G==, ==,=== R :.=:? 0s. A, ==,=== 0s. ::, CG,=== Bational Shipping 2ine -.%. 30ATBA4 :9F? :=,=== 0s. :G, ==, ==,=== $eneral .argo .arrier <orldwide =.?GE 0s.A=,- per $0T 0s. A, ==,===

Rating R"n";als The Doint *ull .ommittee in 2ondon, compromising underwriters from 2loyds and member companies of the (28 5(nstitute of 2ondon 8nderwriters6, is responsible for the structure of the Doint *ull /ormula, which is a basis recommended for rating renewal insurances in respect of ships insured in the 2ondon market. /igures for hull renewals are prepared in accordance with Doint *ull 8nderstandings 5D*86 (n (ndia, rating of ocean-going vessels in a fleet on renewal is done by T.A... Based on (ndian *ull 8nderstanding, which is more or less molded on the 2ondon Doint *ull 8nderstanding /ormula. 0ating of new attachments on /leet is also done by T.A... premium and claims record for four completed years plus current year are taken as the basis in fi+ing renewal rate. 0enewal rates of premium are based on claims e+perience 5good or bad6 as per a formula.

C1apt"r !

HULL CLAUSES

Institut" $im" Claus"s ?131D3'3@ (nstitute Time .lauses- *ulls 5(T.-*ulls6 provide the widest cover for the hull and machinery interests. (n other words, they cover hull and machinery 3on full conditions4 There are C; clauses compromising the set of (T.- *ulls 5:.:=.F@6 and the study will now will be made of the more important clauses , of (T.*ulls 5:.:=.F@6 version although the Doint *ull .ommittee in 2ondon has issued a revised version of (T.- *ulls clauses dated :.::.9G. *owever, these latest clauses have yet to be universally adopted.

PERILS CO,ERE. .lause Bo.; specifies the perils in two groups ;.: and ;.C #31 $1is insuranc" co9"rs damag"s4loss to t1" su6E"ct matt"r insur"d caus"d 6(5 - 'erils of the seas, rivers, lakes or other navigable waters. - /ire, e+plosion. - %iolent theft by persons from outside the vessel. - Dettison. - 'iracy.

- Breakdown of or accident to nuclear installations or reactors. - .ontact with aircraft or similar ob)ects or ob)ects falling there from, land conveyance, dock or harbor e!uipment or installation. - 7arth!uake, volcanic eruption or lightening. #32 $1is insuranc" co9"rs loss4damag" to t1" su6E"ct matt"r insur"d caus"d 6(5 - Accidents in loading, discharging or shifting cargo or fuel. - Bursting of boilers, breakages of shafts or any latent defect in the machinery or hull. - Begligence of master, #fficers, .rew or 'ilots. -Begligence of repairers or charters provided they are not the Assured hereunder. - Barratry of masters, officers or .rew. 'rovided such loss,damage has net resulted from want of due diligence by the Assured, #wners or -anagers. The perils contained in the first section 5 i.e. ;.:6 of the clause are perils ever which the Assured may have some control and for is upon the insures if they wish to avoid a claim on the grounds of the assureds want of 3due diligence4.

POLLU$ION HAFAR. ?Claus" No3&@ These clauses provides cover if the vessel is damaged or destroyed by a government authority to avoid or mitigate pollution, for e+ample, a badly damaged tanker leaking oil and polluting the environment, is deliberately set on fire. The act of the government must flow directly from the casualty who is covered by the insurance, and the assured must have used his best endeavors to prevent pollution.

/ENERAL A,ERA/E AN. SAL,A/E ?Claus" 11@

This clause provides that general average and,or salvage will be paid if the less was incurred to avoid, or in connection with the avoidance of, an insured perils.

.U$0 OF $HE ASSURE. ?SUE B LA*OUR@ C ?Claus" No313@ A sue and labour charge is an e+pense incurred by the assured, their servants or agents, with the intention of preventing or minimi"ing any less or damage that would be recoverable under the policy. The *ull and -achinery 5* J -6 policy pays sue and labour charges in addition to any claim under the policy, even in addition to a total loss.

COLLISION LIA*ILI$0 ?Claus" No3'@ This clause cover legal liability the assured may incur by way of damages paid to the owners of the either ship or cargo thereon, owing to a collision caused by the negligence of the insured vessel. The insurers provide this supplementary cover to the assured 5in addition to the insurance on the vessel itself6 to the e+tent of @,Ath of such liability. (n no case shall the total liability of insurers e+ceed @,Ath of the Sum (nsured, any one collision. The insurers will also pay @,Ath of the legal .osts incurred by the assured, with the insurers consent, in contesting liability or taking proceedings to limit liability. E7clusions5 There is no liability under this clause in respect of - 0emoval or disposal of obstructions, wrecks, cargos or any other thing whatsoever. - Any property, other than vessels or property thereon. - Argo or other property on, or the engagements of the insured vessel. - 2oss of life, personal in)ury or illness.

- 'ollution or contamination of any property other than the slip or goods on board it, which the insured ship has been in collision.

These e+cluded liabilities, apart from the engagements of the insured vessels, are customarily covered, together with the remaining one-fourth of the collision liabilities and costs by entry in a 'rotection and (ndemnity 5'. J (.6 Association. This clause is a supplementary agreement to the policy and any claim there under recoverable in addition to a total loss.

SIS$ERSHIP ?Claus" No3)@

This clause provides that if the insured vessel is in collision with or receives salvage services from a vessel under common ownership or management, the assureds rights under the policy are assured as if the other vessel was of separate ownership.

.E.UC$I*LE ?Claus" No312@

An amount specified in the &eductible clause is deducted from the total amount of claim caused by an insured peril arising out of each separate accident or occurrence. The deductible is an 3e+cess4 and only the balance amount, is payable. (f the amount of the claim is less than the deductible, nothing is payable. The deductible applies to all claims in respect of damage to the ship, collision liability claims, and $A and salvage charges and sue and labour charges. The deductible shall not apply to claim for total loss, actual or constructive, of the vessel. *owever, when sue and labour e+penses are incurred but a total loss result despite attempts to save the vessel, the

deductible is not applied to sue and labour charges, nor to any e+pense of service in the nature of salvage.

NO$ICE OF CLAI- AN. $EN.ERS ?Claus" No31D@

(n the event of an accident the assured must give the notice to insurers and also if the vessel is abroad to the nearest 2loyds agent so that insurers can arrange for a survey. 8nder the clause, the insurer may go to a place of repair or repairing firm or may decide to which port or firm the repair is entrusted. (nsurer are also given the right to take tenders and when they e+ercise this right, the assured is entitled to an allowance at the rate of @=E per annum on the insured value for time lost between the dispatch of invitations to tender and the acceptance of a tender. /ailure to comply with conditions of this .lause is penali"ed by a deduction of :GE from the ascertained claim.

NA,I/A$ION ?Claus" No31@

The clause allows the vessel to assist or tow vessels in distress or to be towed when it is customary or to the first safe port when in need of assistance. #therwise, it is warranted that the vessel shall not be towed, or shall not undertake towage or salvage services under previously arranged by the insured.

*REACH OF GARRAN$0 ?Claus" no33@

The Assured is held covered in the event of a breach of warranty as to cargo, trade, and locality, towage, or salvage service. 1*eld covered4 means cover can be arranged, sub)ect to due notice and payment of additional premium.

.IS*URS-EN$S GARRAN$0 ?Claus" No321@

The ob)ect of this e+press warranty is to restrict the amount of ancillary insurances which a ship-owner may affect on limited conditions as additional cover to the amount insured on hull and machinery sub)ect to (T.-*ulls. The measures of indemnity for partial losses under (T.-*ulls is the reasonable cost of repairs. 8nder Hinsurance does not affect the amount recoverable, sub)ect only to the sum insured being sufficient to cover the :=GG. The rate of premium payable for insurance on 3full conditions4 5under which repair costs are payable in full up to the insured value6 is higher than that for 3limited conditions4, such as Total 2oss #nly. 8nless a restriction is imposed, a ship-owner may insure his vessel an 3full conditions for a sum considerably less than its true value and the balance under the 32imited conditions4, thereby obtaining almost complete insurance cover at low cost. /urther, the lower the value insured on hull and machinery, the easier it is for the assured to prove a .T2. The disbursements <arranty was therefore farmed to prevent this abuse and to ensure an ade!uate sum insured on * J - policy. /or e+ample, the clause provides that sum insured under &isbursements insurance cannot e+ceed CGE of the sum insured under * J - policy. &isbursements are ship-owners costs in fitting out and provisioning the vessels and other items of a nebulous or indescribable nature but which are very real in case of loss. Similarly, the clause allows freight to be insured for time only up to @GE of the *ull J -achinery value less any amount covered on disbursements.

$ER-INA$ION ?Claus" No3 @

8nless the insurers agree to the contrary in writing, the insurance shall terminate automatically if any of the following occur during the policy period.

a6 .hange of .lassification Society. b6 .hange, suspension, discontinuance, withdrawal or e+piry of .lass of the vessel. (f the is at sea, such automatic termination shall be deferred until arrival at her ne+t port of call. c6 .hange, voluntary or otherwise, in the H#wnership or flag H Transfer to new management, etc.

<hen the Termination .lause operates, a pro-rata daily net return of premium is allowed. Assignment of policy is made sub)ect to underwriters agreement. 5.lause no.G6 0eturns of lay-up and cancellation 5.lause no.CC6 provides for pro-rata return of premium.

a6 <hen the policy is cancelled for reasons other than sale or transfer or b6 <hen the vessel is laid up in port. *owever, no return of premium is allowed if the vessel is a total loss during the period of insurance. Therefore, settlement of returns is postponed until after the e+piry of the insurance.

.lauses C@ to C; e+clude war, strikes, malicious acts and nuclear risks.

Institut" ,o(ag" Claus"s ?131D3'3@


(nstitute Time .lauses- *ulls are used a vessel is insured for a period of :C months. (n case the insurance is for a particular voyage, then (nstitute %oyage .lauses- *ulls are incorporated in the policy. These differ from (T. H*ulls in the inclusion of 3.hange of %oyage .lause4 5Bo.C6 and the omission of Termination .lause, Breach of <arranty .lause, etc. The 3.hange of %oyage .lause4 is held covered situation in case of deviation or change of voyage or any breach of warranty as to towage or salvage services, provided notice be given to the insurers immediately after receipt or advices and any amended terms of cover and cover additional premium re!uired by them to be agreed.

Limit"d co9"rs The (T.-*ulls provide the widest cover on hull and machinery interests. .overs with 1limited conditions are available. Some e+amples are a6 (T.-*ulls HTotal loss, $eneral Average and S collision liability 5including Salvage, Salvage charges and sue and labour6. b6 (T.-*ulls- Total 2oss only 5including Salvage, Salvage charges and sue and labour6. c6 (T.-*ulls-&isbursements 5Total loss only6.

Insuranc" o% %r"ig1t /reight is the remuneration received by the ship-owner for carriage of goods from one port to another. The - ( Act :9;@ refers to freight as follows 3The term 1freight includes the profit derivable by the ship-owner from the employment of his ship to carry his own goods or movables as well as freight payable by a third party, but does not include passage money.4 The ship-owner may also receive remuneration by hiring his vessel out to those of others. Such arrangements to carry cargo or hire a vessel for time or voyage are embodied in contracts of affreightment, such as bills of lading, time charters and voyage charters. Loss o% %r"ig1t <here freight is paid in advance, it is not returnable whatever subse!uently happens to the cargo. Therefore, pre-paid freight is at the risk of the owner of the goods and is included in the value of goods insured under a cargo policy. A loss of freight to the carrier 5who may be ship-owner or charter6 can run the risk of not receiving it by reason of the loss of ship and, or damage or loss of cargo. The ship-owner obviously has insurable interest and so he can insure such freight. The form of policy used for insurance of freight is the *ull form

with the (nstitute Time .lauses- /reight or (nstitute %oyage .lauses/reight attached to it. $im" and ,o(ag" Fr"ig1t Claus"s compar"d The (nstitute Time .lauses- /reight and (nstitute %oyage .lauses/reight is identical e+cept that the following clauses, which do not apply to voyage insurances, are omitted from the (nstitute %oyage .lauses/reight - .ontinuation .lause. - Termination .lause. - 0eturns for 2ay-up and .ancellation.

The perils covered under both the /reight .lauses are the same as those covered under the 'erils .lause of (nstitute Time .lauses- *ulls and (nstitute %oyage .lauses- *ulls.

,alu"d and Un9alu"d Polici"s

/reight policies may be issued on valued basis or unvalued basis. (n practice, unvalued policies are issued. Section:F 5C6 of the -(A, :9;@ provides that the insurable value of freight is the $0#SS A-#8BT of freight at risk of the assured plus the charges if insurance. The gross amount includes the e+penses of earning the freight. The 3-easure of (ndemnity .lause4 of the Time and %oyage .lauses provides, inter---, that4 the amount recoverable under this insurance for any claim for loss of freight shall not e+ceed the $ross /reight actually lost.4 This clause may be e+plained with the following e+amples

E7ampl" 13

%alued policy for sum (nsured on freight $ross freight at risk 2oss of freight by insured perils 0s.:=, ==,=== 0s.F, ==,=== 0s. :, ==,===

.laim on 'olicy 5e!ual to :,Fth of gross freight at risk6 (.e. :,Fth of 0s.F, ==,=== 0s.:, ==,===

Because of the provisions of this clause limiting the claim to be the proportion of the $0#SS /07($*T actually lost, the insured is entitled to only 0s.:,CG,=== 5:,Fth of 0s.:=,==,===6. This e+plains why valued policies are not used for freight insurances.

E7ampl" 23 %alued policy for sum (nsured on freight $ross freight at risk 2oss of freight by insured perils The claim is ad)usted as follows (nsurable value of fright 0s. :=, ==,=== pays :,Gth 0s.C, ==,=== 0s.F, ==,=== 0s.:=, ==,=== 0s.C, ==,===

Therefore, sum insured of 0s. F, ==,=== pays in proportion F,:= of 0s.C, ==,=== i.e. 0s.:, ;=,===

This is a case of under- insurance. (f amount insured was 0s. :=, ==,=== the loss would have been recovered in full.

Partial Loss o% Fr"ig1t

'artial loss may occur, for e+ample, when there is a non-delivery of part of the goods on which freight is payable on delivery. The /ranchise .lause of (nstitute /reight .lause provides that loss is not covered if the amount of loss falls below @E of insurable amount. The @E limit does not apply. a6 To general average loss 5This is beyond the control of the ship-owner6 b6 <hen the partial loss is caused by the sinking, stranding or collision with another vessel. 5This is so because the ob)ect of the franchise is to be eliminated small and fre!uent claims6 $otal Loss o% Fr"ig1t A total of freight can occur when the cargo being carried is totally lost, say by fire, and the ship-owner conse!uently does not receive the freight due to him under the contract. The same situation would arise if the ship and the cargo were totally destroyed, say, by sinking in heavy weather. .lause :G 5Total 2oss6 of the (nstitute /reight .lauses provides (n the event of total loss 5actual or constructive6 of the vessel named herein, the amount insured shall be paid in full, whether the vessel by fully or partly loaded or in ballast, chartered or unchartered. An insurable interest in freight arises as soon as the contract of affreightment is concluded, the fulfillment of which may be prevented by maritime perils. The whole amount insured by the freight policy becomes payable in the event of T2 or .T2 of the vessel, whether the vessel is chartered or not or whether she is fully or only partly loaded at the time of the loss. Thus it is possible for ship-owner to arrange his main policy on hull and machinery on full conditions 5(T. *ulls6 for a lower sum insured and additionally Total 2oss only insurance on freight at a lower rate of premium. Therefore, the disbursements warranty of (T.-*ulls restricts such sum insured to CGE of sum insured on * J - insurance. Loss o% $im" Claus" This clause reads as follows

3This insurance does not cover any claim conse!uent on loss of time, whether arising from a peril of the sea or otherwise4. This clause effectively e+cludes losses pro+imately caused by delay. (f a vessel is damaged and can be repaired, no claim can arise on the ground that the vessel cannot be repaired in time to earn the freight.

Institut" Fis1ing ,"ss"l Claus"s ?2D3D&3'&@


The tariff provides for insurance of /ishing %essel sub)ect to (nstitute /ishing %essels .lauses 5C=.=?.F?6. The cover provided by these .lauses bears a close resemblance to the (T.-*ulls 5:.:=.F@6, but with some ma)or differences. 7+amples a6 /ishing $ear 5.lause Bo.:G6 no claim is payable for loss,damage to fishing gear unless 5i6 5ii6 caused by fire, lightening or violent theft by persons from outside the %essel totally lost following total loss of vessel by insured perils.

b6 .ollision 2iability 5.lause Bo. :F6 8nlike the similar clause in (T.*ulls, this covers A,A months .ollision 2iability. c6 'rotection and (ndemnity 5.lause no.C=6 %arious 'rotection and (ndemnity risks are covered under this clause. There is no ' J ( .lause in (T.-*ulls.

C1apt"r #

HULL $ARIFFS
(n (ndia, insurance of ships and ship owing interests are governed by tariffs. The Tariffs indicate in detail the rates of premium for various types of covers, additional premium 5A.'.6 for e+tra and for breach of trading and other warranties, fleet and other discounts for favorable features and Agency .ommission and #wnersL discounts, as applicable. .urrently, there are hull Tariffs which govern the insurance of a6 /ishing %essels b6 Sailing %essels c6 (nland %essels d6 &redgers e6 Detties, 'ontoons, <harves etc. f6 Builders 0isks g6 Ship 0epairers liabilities 5S026 h6 .harterers liability 5.026

Ris<s to 6" r"%"rr"d to $AC %or rating

5a6 All interests relating to ship-owners, that is, insurance of hull and machinery, freight, disbursements, etc. 5b6 .harterers liabilities, .harterers /reight, *ire and,or &isbursements and ship-owners liabilities. 5c6 (ndian ship-owners interests in foreign vessels bare-boat chartered by them. 5d6 .ases where vessels are dry-docked with cargo on board.

$ari%% %or Fis1ing ,"ss"ls

This tariff is applicable to all /ishing %essels, Trawlers 5mechani"ed or non-mechani"ed 6 valued up to 0s.:==2akhs and engaged in fishing operations only 5including towage6 and plying up to :== nautical miles 5B-6 in sea from shore 5:B-R:.FGC Nm6 Conditions o% Insuranc"

/ishing %essels can be covered on anyone of the following terms at rates of premium indicated in the $ari%%5 5a6 (nstitute /ishing %essels .lause 5(/%.6 C=.?.F? but limited to pay only T8.T2 5including Salvage, salvage charges and sue and labour6. 5b6 (/%., C=.?.F? with ' J ( risks 5.lause C=6 deleted. 5c6 (/%., C=.?.F? All policies sub)ect to the warranty 3<arranted %essel to comply with local laws and regulations with regard to registration and licensing.4

No co9"r s1all 6" grant"d on Fis1 Catc1 on 6oard t1" Fis1ing ,"ss"ls4 $ra;l"rs3 /ishing nets whilst on shore under repair or whilst stored in godowns can be covered against perils like /ire, Theft and Burglary in other departments concerned and no cover shall be granted under -arine *ull 'olicy. <hilst vessels are laid-up for repair or painting, cover for fishing nets on board the %essel shall continue sub)ect to the relevant insurance covering the %essel. *owever, when the net is not on the %essel, the sum interested of the %essel shall not be reduced. &uring such items, (f the %essel becomes a total loss, claims will be paid sub)ect to deduction for the net. (t is therefore essential that the value of the fishing net 5s6 should be agreed sub)ect to the 3'remium (nstallment .lause4 with !uarterly installments of A= @= :G :G, Stamp &uty payable with the first installment. Ad9"rs" G"at1"r Garrant(5 All fishing %essels, Trawlers shall contain the following warranty

a6 <arranted %essel, when not employed, shall be safely anchored or moored or secured. b6 <arranted the %essel shall not employed during adverse weather conditions notified by the concerned 'ort Authorities and,or &irectors of /isheries. c6 5i6 <arranted during adverse weather %essel shall remain in safe waters properly moored, and 5ii6 (f already at sea, shall return forthwith as soon as they becomes aware of the adverse weather warningsL and 5iii6 %essel shall be manned ade!uately at all times e+cept in harbour, sheltered, safe waters, when it should be secured properly and ade!uate watch and warp maintained throughout the period it remains therein.

."ducti6l"5> The deductible for vessels valued up to 0s.:== 2akhs is =.G=E of their respective sums insured or :=E of the assessed loss, whichever is higher.

$ari%% %or sailing ,"ss"ls

(nsurance of Sailing %essels 5commonly known as, 3country crafts46 is governed by this Tariff. The Sailing %essel may be mechani"ed or nonmechani"ed, valued up to 0s.G= lakhs and employed for the cargo and operations connected therewith.

Conditions o% Insuranc" Sailing %essels can be covered on the following terms at rates of premium indicated in the Tariff a6 As per (T.-*ulls-Total 2oss #nly 5including Salvage, Salvage .harges and sue and labour6. b6 <ider conditions incorporating the ' J ( liabilities risks of (T.*ulls-'ort 0isks 5C=.?.F?6. &eductible @@ :,@ E assessed loss or 0s.:, === , whichever is higher, each claim. c6 Sub)ect to (T.=*ulls with deductible as above.

Not"5> Salvage .harges and Sue J 2abour e+penses shall be sub)ect to te deductible stipulated above.

$ari%% %or Inland ,"ss"ls

(nland %essels are all types of such as Barges, 'ontoons, /lats, /loating .ranes, 2aunches, 'assenger %essels, Tugs and 'ort .rafts employed in (nland <aters.

Conditions o% Insuranc" (nsurances on * J - interests shall be granted sub)ect to one the following sets of conditions 5a6 (nsured sub)ect to (T.-*ulls T2# 5including Salvage, Salvage charges and sue and labour6 dated :.:=.F@. Sub)ect to deductible of onefourth of sum insured or 0s.F== or 0s.:= per $0T, whichever is the highest, all claims other than T2,.T2, and each occurrence. 5b6 (nsured sub)ect to (T.-*ulls 5:.:=.F@6 with same deductible terms as above. 5c6 (nsured sub)ect to (T.-*ulls 5:.:=.F@6 with @,Ath collision 2iability .lause amended to A,Aths and same deductible as above.

5d6 (nsured sub)ect to (T.-*ulls- 'ort 0isks 5C=.?.F?6 and same deductible terms as above. (nland waters are all sheltered and protected waters such as harbour waters, back waters, sea water within a radius of :CB- from the entrance to harbour, port, river, waters, canal waters, lake waters, and the like. $ari%% %or .r"dg"rs

A &redger is a craft used to bring up sand, mud, gravel, etc. from the sea, river and canal bottoms in order to open and deepen channels and make navigable. These crafts are fitted with the machinery and appliances for dredging work. Conditions o% Insuranc" (nsurance on * J - interests may be granted sub)ect to one of the following sets of conditions 5a6 (T.-*ulls-T2 #nly 5including Salvage, Salvage .harges and Sue and 2abour6- :.:=.F@ 5b6 (T.-*ulls, :.:=.F@ 5c6 (T.-*ulls, :.:=.F@ amended to A,Aths .ollision 2iability 5d6 (T.-*ulls-port 0isks- C=.?.F? &eductible applicable - :,Ath of the sum (nsured for * J - interests or 0s.:, G==, whichever is higher, all claims other than T2,.T2, each accident or occurrence.

$ari%% %or +"tti"s: Pontoons: G1ar9"s: Etc3

This tariff is applicable to all Detties, 'ontoons, <harves, 7tc. in river, canal or sea waters and shall be insured sub)ect to one of the sets of following conditions. 5a6 Gid"r co9"r5 The insurance covers all structural losses or damages to the Detty, 'ontoons, <harfs, etc. and cranes and other e!uipment fitted thereon, occasioned by collision with vessels or any floating ob)ects, cyclone, flood, tidal bore, fire, earth!uake, e+plosion of boilers insured under this policy, including Salvage .harges in connection with the insured peril. 5b6 Limit"d co9"r5 T2,.T2 of Detty, 'ontoons, <harfs, cranes and,or boilers fitted thereon occasioned by collision with vessels,floating ob)ects, cyclone, flood, tidal bore, fire, earth!uake, including Salvage .harges. The insured must produce a satisfactory Survey 0epot every @ years at their own cost and such surveys are to be conducted by surveyors approved by the underwriters.

,aluation C"rti%icat"5 #btained by the assured at his cost, must be produced at the inception of the cover. Thereafter the insured will be at liberty to increase,decrease the sum insured according to the market conditions. <here the insurance is for an amount less than the appropriate value as determined above, the .onditions of Average shall apply.

$ari%% %or *uild"rsA Ris< Insuranc"

This Tariff is applicable to all vessels 5mechani"ed or non-mechani"ed6 whilst under construction in any shipyard in (ndia. (nsurance of ships under renovation, )umboisation 5that is, creating more space6, conversion and,or repairs also come under the preview of this Tariff.

Conditions o% insuranc"5 As per (nstitute .lauses Builders 0isks. Strikes risks may also be covered.

.uration o% co9"r5 /rom 5date6 - to 5date6 or until delivery if delivered at an earlier date. 7+tension of cover beyond the period mentioned in the policy may allowed by charging additional premium as per scale specified in the Tariff.

*asis %or rating5 0ating shall be done on the basis of full estimated value and,or full estimated period of construction, as under 5a6 /ull contract value or full completed value, whichever is greater. 0ating on the basis of gradually progressing value shall be permitted. 5b6 .ontract period or the period from inception of any work in the yards until final delivery, whichever shall be the longer, sub)ect always to the limitation of the &uration of .over,0isk .lause.

Pa(m"nt o% Pr"mium5 'remium is collected on !uarterly basis sub)ect to the following > (nstallment payment facility on !uarterly basis will be granted only when the period of construction is :C months or more. > The first installment will be GE more than the rest.

$ari%% %or S1ip R"pair"rsA Lia6ilit( ?SRL@

This insurance covers liabilities of the ship repairers towards vessels repaired by them. Co9"rag" 8nderwriters agree to indemnify the assured foe all sums which the assured shall become liable to pay reason of the liability of the assured as ship repairers for 5a6 2oss, damage to the vessel,craft which is being worked upon including shifting and moving within port at which the work is being carried out and including trial trips, but not e+ceeding :==B- from such port. 5b6 2oss,damage to machinery or e!uipment of any vessel,craft whilst such machinery or e!uipment is removed such vessel or craft and is in the care, custody or control of the assured for the purpose of being worked upon. 5c6 0emoval of wreck results from negligence of the Assured, his servants, agents or sub-contractors occurring during the period of this insurance. (nsurance is sub)ect to a limit of liability anyone accident or series of

accidents arising out of one occurrence, including liability for costs and e+penses.

$ari%%s %or C1art"r"rsA Lia6ilit( Insuranc" ?CRL@

This policy covers the damage sustained by the vessel during the period of charter for which the .harterers are hold legally liable. The policy also covers demurrage if the vessel is delayed to carry out repairs for which the .harterers are held legally liable. 2iability to cargo and liability arising out of <ar risks are e+cluded.

C1apt"r &

HULL CLAI-S

Introduction

There may be a claim under a hull insurance policy when, by the operation of insured perils, any of the following occurs

$otal Loss

5a6 Actual total loss arises when a ship is destroyed or is so seriously damaged as to cease to be a ship or when the ship-owner is irretrievably deprived of her, for e+ample, the ship may sink in deep water and cannot be salved. 5b6 .onsecutive Total 2oss 5.T26 arises <hen the ships actual total loss appears to be unavoidableL <hen the ship-owner is deprived, of his ship and her recovery is not likely. <hen the recovery cost and repair of damage e+ceed the ships insured value. (t is essential that notice of abandonment is tendered to the insurance promptly. (n the absence of such notice for .T2 cannot be maintained.

Partial loss

This includes claims for the following a6 Particular A9"rag" ?PA@5 This comprises to the ship caused fortuitously. 7+amples are collision damage, contact damage including stranding and grounding, heavy weather damage and fire damage. (t does not include damage by the ordinary of the wind and waves, nor gradual deterioration on account of ordinary use. b6 /"n"ral A9"rag" ?/A@5 Since $A embraces loss suffered or e+penses incurred by other interests 5e.g. cargo, freight6 as well as the shipL a ship owners claim upon hull underwriters may concern>$A sacrifice, being damage to the ship voluntarily sustained for common safetyL >$A e+penditure, incurred by the ship-ownerL >$A contribution, being the amount the ship-owner has to pay towards sacrifices and e+penditure incurred by other parties.

Sal9ag" C1arg"s These are charges paid in settlement of a claim by salvors being their remuneration for salving the ship or both the ship and cargo from a position of danger, together with legal costs. (n reality all insurances, the amounts so paid will be treated as general average e+penditure.

Su" and La6our C1arg"s These are changes incurred by the ship-owner or his agents to preserve or attempt to preserve the ship from the conse!uences of an insured peril or to minimi"e its effect. These charges are reimbursed by the insurers in addition to any loss recoverable under the insurance- whether total or partial.

Collision Lia6ilit( This arises when the Ship-owner has paid damages in respect of his legal liability to the other ship or any property on it, arising out of a collision between the insured ship and another vessel.

Amounts R"co9"ra6l" <idest scope of the cover offered is by (T.-*ulls. <here a claim is admitted under the policy. /or a partial loss the amounts payable under the policy, sub)ect to any 3deductible4 provided therein, are as follows

Particular A9"rag"5

5a6 The reasonable cost of repairs effected, but not e+ceeding the sum insured in respect of anyone casualty. 8nder (T.-*ulls, there is no deduction 3new for old.4

5b6 (n respect of un-repaired damage, the reasonable depreciation in the value of the ship by reason of damage remaining un-repaired at the e+piry of the policy, not e+ceeding the estimated reasonable cost of repairs and provided the ship has not become a total loss during the period of the policy. 5c6 <here a ship sustains damage by an insured peril and such damage is not repaired and during the currency of the policy the ship is subse!uently lost, underwriters are only liable for the total loss and not for un-repaired damage, as the owner has suffered no loss thereby. 5d6 Successive losses becomes payable even through the total amount of such losses may e+ceed the sum insured. 5e6 (n respect of temporary repairs when a vessel is lying damaged at a port where repairs are not practicable and temporary repairs have to effected to make her seaworthy to sail to a repair port, they are properly recoverable as part of the reasonable cost of repairs.

/"n"ral A9"rag"5

5a6 (n respect of sacrifices of the ship, the amount payable is computed in the same way as for 'articular Average less the contribution received from other parties. 5b6 /or $A e+penditure incurred by the ship-owner, the amount payable by the hull underwriter is the proportion which falls upon the insured shipowner. 5c6 /or $A contribution, the policy will pay the proportion attaching to the ship.

(n both these instances, i.e. in case of $A e+penditure as well as $A contribution, the claim is sub)ect to the contributory value of the ship being fully insured, and if it is not, the claim will be reduced in proportion to the underinsurance.

Sal9ag" C1arg"s5 The amount payable under the policy is computed in the same way as for general average e+penditure.

Su" and La6our C1arg"s5 The full sum e+pended sub)ect to the ship being fully insured.

Collision Lia6ilit(

This is a supplementary cover over and above the insurance on the vessel itself to the e+tent of @,Ath of such liability but not e+ceeding @,Ath of the sum insured in the vessel. 2egal costs are also payable. -ost forms of hull insurance provided that claims for partial loss will be sub)ect to a 3deductible4, that is to say a fi+ed sum which the assured has to bear in respect of each claim to which the 3deductible4 applies.

*urd"n o% Proo% (n all cases, whether a claim is presented upon a policy of marine insurance or is submitted in general average, the claimant has the burden of providing his claim. This means that the assured must produce evidence to show 5a6 That loss,damage was caused by an insured perilL and 5b6 The e+tent of the claim. A claim payable by the insurer is reduced by an amount which may be recovered from some sources, either at the time when the claim is presented or subse!uently. Such recoveries can arise

Und"r t1" Principl" o% A6andonm"nt This applies when the insurer has settled a claim for a total loss and has e+ercised his right to proprietary interest in the sub)ect-matter of insurance. E7ampl"5 <hen a ship has been wrecked and the, insurer has paid a constrictive total loss, he is entitled to take over the wreck, and if it can be sold, he may retain the full proceeds of sale irrespective of their relation to the insured value or the amount which the insurer has paid. *owever, when the insurer decides to e+ercise his proprietary rights, he is likewise responsible to pay all charges attaching to the property as from the time of the casualty causing the loss.

Und"r t1" Principl" o% Su6rogation These comprise recoveries from third parties on account of their liability for the accident giving rise to the claim under the policy. Some E7ampl"s ar"5 -0ecovery from the owner of a ship which is in fault for a collision. -0ecovery from a charter who is responsible for having ordered the ship to an unsafe berth where she sustains damage. -0ecovery from a repair or dry-dock owner for negligent work.

Proc"dur" o% R"co9"ri"s in Hull Claims

Oc"an>going 9"ss"ls5

<hen any ocean-going ship is involved in an accident and has sustained damage, it is essential that the owners and,or their agents should give prompt notice, with such details as are available, to the insurers.

(n addition, when the vessel is abroad, the master should 3notify the nearest 2loyds Agent. The purpose of giving notice is to enable the insurers or their agents to appoint a surveyor to attend the vessel and survey the damage. *ull policies contain an e+press provision regarding notice to insurers ant (T.-*ulls, for e+ample, provides that in the event of non-compliance with the terms of the Botice of .laim JTenders .lause 5Bo.:=6, a penalty of :GE is to be deducted from the ascertained claim. #wners should give notice also to the ' J 2 Association in any case involving loss or damage to cargo and when there is possibility of claim for $A contribution from cargo interests and possible liability claims arising from the accident. (f the casualty is serious, the ship-owner will wish to send a marine superintendent and,or an engineer superintendent to the casualty or to port to which the damaged ship is proceeding, in order to obtain their reports on the situation and e+tent of damage. (t is desirable at this stage that the damage sustained by the ship by surveyed )ointly and concurrently by the ship owners Superintendent 5s6 and the surveyor appointed by the insurers. As far as possible they should agree upon 5a6 The recommendations for repair. 5b6 (nstructions to be given to the repairers and 5c6 <hen the repair accounts are sustained by the shipyard,repairers, these should be e+amined critically by both the surveyors to check the level of pricing and negotiate any reduction that may appear necessary and fair.

Ad)ustment of the claim is recorded by the Average Ad)uster in a statement which is carefully prepared after going through all the aspects of the claim, insurance cover, surveyors recommendations and other evidences. .laims relating to ocean-going vessels, involve commitments and final disbursements in foreign e+change, particularly under following circumstances

-$uarantees provided on behalf of the assured for Salvage .harges and,or .ollision 2iability. -Satisfying arbitration awards relating to salvage remunerations -0eimbursement of .ollision 2iabilities -2egal e+penses relating to Salvage Award, Arbitration and .ollision 2iability.

Fis1ing ,"ss"ls5

#n receipt of a claim notice, it necessary to ascertain. -(f the loss has taken place within the currency of the policy. -<hether the peril giving rise to the loss, also the loss itself are covered under the policy. -That the ownership of the vessel has not changed without the knowledge of the insurers. -That no premium is due for the period of cover in which the date of the casualty falls, etc. #n the basis of the above, if it can be reasonably assumed that there is an admissible claim under the policy, then the procedure is as follows 5a6 A licensed competent of the damaged or its wreck is possible is to be appointed immediately. 5b6 'ending inspection by the surveyor, the insured is informed in writing to protect the damaged vessel,wreck and ensure that there is no further aggravation of the loss. 5c6 (n case of a sunken vessel, wherever practicable the insured should be advised in writing to make reasonable efforts to refloat,salvage the vessel. 5d6 (n case the vessel is missing, the insured should be advised to make efforts to search for the missing vessel.

5e6 A claim for .T2 must be preceded by a letter of Abandonment from the insured, which is usually declined by the insurers in writing. *owever, this does not legally diminish the insureds claim for .T2 once the 2etter of Abandonment has been issued by him and received by the insurer. Botwithstanding this, the insurer must still refuse acceptance of abandonment of wreck till the liabilities attaching to the wreck 5'ort and other dues, statutory re!uirement of wreck removal in case of vessels sunk in navigable channels, etc6 are fully ascertained. 5f6 Since a missing vessel will not be available for inspection, a competent investigator, preferably a tired senior 'olice #fficial, both e+perienced in the ways of investigation and familiar with the concerned locality, may be accepted as reasonably true. 5g6 'artial loss claims, if covered under the policy, are to be settled on the basis of surveyors findings and recommendations, if found reasonable. 5h6 0epair bills, cash memos in support of purchase of parts, etc. and all such documents in support of e+penditures are to be verified and certified by the surveyor to be reasonable and admissible for the purpose of ad)usting the payable claims. 5i6 <henever possible, the surveyor should be advised to achieve assessments net of salvage. This is because it is difficult and not always economical for the underwrites to get involved in salvage disposal. *owever, where this is not possible, arrangements should be made to take over the salvage from the insured before settlement of the claims, and the same should be disposed of at the price available. 5)6 <here applicable, the surveyor should ensure that, statutory rules and regulations have been fully complied with and he must repot thereon. 5k6 The documents re!uired for the settlement of /ishing %essels *ull claims are as follows -Surveyor and,or (nvestigation 0eport. -0egistration .ertificate, if any, issued by the concerned authorities. - <eather 0eport for the relevant date and time from the competent authority in case adverse weather conditions are involved.

- Affidavits and,or statements by the #wner, Tindal or 1 any member of the crew, if made to any of the authorities. - .ertificate of cancellation of registration of vessel in respect of Total 2oss claims.

Sailing ,"ss"ls5

The preliminary and subse!uent to be followed on receipt of claim intimation with regard to Sailing %essels is same as that above for /ishing %essels. The documents re!uired for settlement of Sailing %essels *ull .laims are as follows 5a6 A certified copy of the Tindals Bote of 'rotest or declarations made before a Botary 'ublic, a -agistrate or any .ustoms,port Authorities nearest to the foreign waters, the Bote of 'rotest or declarations made before a foreign Botary 'ublic or -agistrate or similar authorities, will have to be produced in support of the claim. 5b6 .asualty /orm Bo.;, issued by the -ercantile -arine &ept., when the vessel is totally lost. Alternatively, a .ertificate issued by the -ercantile -arine &ept. confirming the total loss of the vessel. 5c6 Survey 0eport from a competent surveyor showing details of the loss, circumstances giving rise to the loss and signed statements of owners, crew, etc. regarding the loss, and assessment of the loss. An (nvestigator may be appointed whenever necessary to ascertain whether or not reported loss of the vessel is substantially true in view of the circumstantial evidences.

5d6 (n the event of partial losses, claims for salvage charges or sue and labour charges, original repair bills, cash memos and similar documents, duty verified and certified by the surveyor. 5e6 (n the event of T2,.T2 being admitted, the original insurance policy duly discharged, by the insured. 5f6 A certified copy of the -eteorological &epartments report on the weather conditions at the time of the casualty, and particulars about weather signal provided during CA hours before the casualty. 5g6 Sometimes the owners and,or the crew of the affected vessel rendering rescue , salvage services file affidavits are filed, certified copies thereof are to be obtained before settlement of the claim. 5h6 (n addition, following documents may be, called for, if re!uired 5:6 .ertificate of (nspection- S%(.-((( 5C6 .ertificate of (nspection- S%0.. 5@6 /ree Board .ertificate before commencement of voyage. 5A6 .argo manifest. 5G6 2oad 2ine .ertificate. 5;6 'ort .learance .ertificate. 5?6 .ertificate of cancellation of 0egistration of vessel in case of Total 2oss claims.

Inland ,"ss"ls: Fi7"d +"tti"s: and Pontoons5

The procedure to be followed for settlement of claims, both partial and total, under this group will be the same as indicated for Sailing and /ishing %essels. *owever, considering the fact that very large vessels involving substantial sums insured may have to be considered under this group, the processing of claims, including appointment of Surveyors,

Ad)uster, furnishing of guarantees, etc. are to be viewed at times in the same dimension as in the case of ocean-going vessels. %erifying the actual load against the &<T is very important. Since Detties and 'ontoons are fi+ed structures, it is advisable to process such claims as 37ngineering claims4

Sp"cim"n o% Hull Claim Form

(SS8AB.7 #/ T*(S /#0- (S B#T B7 TAN7B AS A&-(SS(#B #/ 2(AB(2(TM (. Bame of the (nsured and Address

((.

Bame of the Assignee, if any

(((.

'articulars of the (nsured %essel

a.

Bame

b.

$0T

c.

0egistration Bo.

d.

'lace of 0egistration

e.

.lassified as

f.

.onstruction

g.

Mear Built

h.

7ngine Bo.

(%.

'articulars of the Tindal J .rew -embers

Tindal Tindals /ather .rew -embers

Bame J Address Bame J Address Bame J Address

:.

C.

@.

A.

G.

;.

%.

'olicy 'articulars Bo. (ssuing #ffice

'eriod of .over

Terms

Sum (nsured 0s. %(. &etailed particulars of the casualty giving to this claim indulging place 5Anchor-bearing6 Time, &ate and the cause of the casualty

%((. Actions taken to save the vessel from imperilment

%(((. Actual loss , damage suffered

(T.

*uman lives lost ,saved H *ow and by whomI

T. *as the casualty been reported to the authorities H 'ort #fficer , 'olice , Botary 'ublicI (f so, give particulars

T(.

<as the vessel seaworthy in all respects before commencement of the ill fated voyage or immediately before the casualtyI

T((. 5a6

<hen was the vessel last repaired I

5b6

<hat was the repair work carried outI

T(((. 'articulars of loss minimi"ation efforts and e+penses incurred, if any

T(%. 7stimated 2oss

The above particulars are true to the best of my knowledge. (,<e further declare that no other person has any interest in the said properly, as #wner -ortgagee, Trustee of otherwise, and that it is not otherwise insured against with this or any other #ffice, e+cept as above stated.

'lace &ate Signatur" o% Insur"d3

C1apt"r '

CASE S$U.0

1@The capsi"ing of the .osta .oncordia has raised many !uestions about
the safety of modern cruise ships.

How crash happened?


At l"ast 11 p"opl" di"d a%t"r t1" Costa Concordia cruis" s1ip ran aground ;it1 mor" t1an :DDD pass"ng"rs and cr"; on 13 +anuar(: onl( 1ours a%t"r l"a9ing t1" Italian port o% Ci9ita9"cc1ia3 $1" maps and grap1ics 6"lo; r"9"al d"tails a6out t1" 9"ss"l and its ill>%at"d Eourn"(3

At )53Dpm ?2D3D /-$@, two and a half hours after leaving the port of .ivitavecchia, the .osta .oncordia hit a rocky outcrop as it sailed past the island of $iglio.

INSURANCE OF COSTA CONCORDIA 50euters6 - The wrecked cruiseliner .osta .oncordia could turn out to be the biggest insured loss in maritime history, analysts and industry e+perts said on -onday, with some suggesting insurers and mutual societies could end up shouldering U: billion in losses. The .osta, a multistory liner carrying over A,=== passengers and crew, ran aground and capsi"ed off (talyVs west coast at the weekend, killing at least five and in)uring do"ens. (n the comple+ world of maritime insurance, there will be two issues to contend with the clubs of cruise ship companies that insure each other for personal in)uries, shipwrecks and environmental damageL and the consortium of insurers who underwrite the ship itself. The ship is insured for A=G million euros 5UG:@ million6 by insurers including T2, 0SA and $enerali, industry sources said. An 0SA spokesperson said the companyVs e+posure to the disaster was below := million euros, while a spokesperson for $enerali said the impact on the company would be small. T2Vs team at the 2loydVs of 2ondon insurance market has been working on the disaster since the weekend but has yet to come to any firm conclusions on cost or liability issues, according to a person familiar with the matter. $1" insuranc" claim against t1" stric<"n Costa Concordia could run to as 1ig1 as H1 6illion as it I6ounc"s around t1" r"insuranc" industr( %or 1D ("arsI: und"r;rit"rs claim"d3 <hile it is too early to tell e+actly how much of a bill insurance companies will cop to cover damage to the ship, personal in)ury and loss of life, analysts have estimated claims could reach anywhere from UG== million up to U: billion. A lot will come down to whether the ship, built for about UG?= million, can be salvaged and repaired or is written off as a Wtotal lossW.

W7ven if thatVs not the case, the claim will still bounce around the reinsurance industry for := years as insurers seek to recover their e+posure,W a Sydney underwriter said. WAfter that comes the recoveries.W The recoveries are what money is recovered by the sale of salvaged and damaged parts of the ::A,G==-tonne ship with its ;=== s! m fitness centre, five )acu""is, :@ bars and si+ <artsila diesel engines.

C6 Hull Insuranc" C P"rils o% t1" S"a C G"ar and $"ar C ,"rmin


!##)3! *3C3 Ltd d363a G"st Coast R"sorts 9 Allian= Insuranc" Co3 o% Canada: 2DD# *CCA #)

The issue in this case was whether the sinking of a barge was due to perils of the sea. The barge had been built in :9@@ and had been used as a floating sport fishing lodge since :99G. She had been laid up for the winter in September :999 and sank in -arch C===. At the time of her sinking ordinary wear and tear had opened her seams allowing the continuous ingress of substantial amounts of sea water and re!uiring continual pumping to keep her afloat. A '%. 3diaper4 had been previously fitted to control the ingress of water but this was in shreds at the time she was laid up in September of :999. After the barge was raised it was discovered that the pump which had been keeping her afloat was working properly. The 'laintiff, the assured, alleged that the shore power to the pump must have been interrupted and that the loss was, accordingly, fortuitous and due to a peril of the sea. The &efendant underwriters alleged that the cause of the sinking was a failure in the planking of the barge due to worm infestation which allowed water to enter at a rate that overwhelmed the pump. The trial Dudge agreed with the underwriters and held that the cause of the sinking was chronic leakage and the failure of a plank. As a conse!uence, the trial Dudge held the loss was caused by ordinary wear and tear or the actions of vermin, e+cluded perils, and not by a peril of the sea and the case was dismissed. An appeal by the 'laintiff was dismissed by the British .olumbia .ourt of Appeal. The British .olumbia .ourt of Appeal noted that Anglo.anadian law re!uired that for a loss to be considered a peril of the sea, the actual entry of sea water must have been caused by a fortuity. *ere, the fortuity alleged by the 'laintiff, the failure of the pump, was not such an antecedent fortuity and the loss was therefore not caused by a peril of the sea. (t is important to note that in reaching this conclusion the British

.olumbia .ourt of Appeal referred to the leading decision of the Supreme .ourt of .anada in ....0. /ishing 2td. v British 0eserve (nsurance .o., X:99=Y : S...0. F:A, wherein it was held that where several factors combine to cause a loss, the loss will be considered to be caused by a peril of the sea if one of the causes was fortuitous. The British .olumbia .ourt of Appeal read this case as re!uiring that the competing causes which combine to produce the loss must all have been operative in relation to allowing the ingress of water. The ..0 /ishing case was held not to be applicable as the failure of the pump, even if a fortuity, did not cause the entry of seawater into the vessel.

C1apt"r )

CONCLUSION

*ull insurance refers to the insurance of *ull and machinery and other interests , of oceangoing vessels, fishing vessels, sailing vessels, trawlers, barges etc. *ull (nsurance covers 2oss,damage to the insured ship arising from or caused by .ivil war, revolution, insurrection or civil strike ,mines, torpedoes, bombs or other engines of war, Strikes, 2ocked-out workmen or persons taking part in political or labour disturbances, riots and civil commotions and malicious damage. 'roposal /orm is re!uired to taking out the policy to safeguard the monetary interests of the ship-owners. 'roposal /orm includes, Technical

details of the vessel, Trade related details, and other documents like 0egistration , 2icense .ertificate on *ull, 're-insurance Survey 0eport, &etails of arrears of loan payments to the Bank, /inancier and also confirmation that there is no default, 7tc. 0ating is a guide to determine an appropriate rate for a hull risk. The )oint hull .ommittee in 2ondon, comprising underwriters from 2loyds and member companies of the (28 5(nstitute of 2ondon 8nderwriters6, in accordance of the )oint *ull /ormula. 5(T.-*ulls6 provide the widest cover for hull and machinery interests. (n other words, they cover hull and machinery 3on full conditions4. (t covers perils the seas, rivers. 2akes or other navigable waters, fire, e+plosion, %iolent theft by persons from outside the vessel, 'iracy, Accidents in loading, discharging or shifting cargo or fuel, Bursting of boilers, breakage of shafts or any latent defect in the machinery or hull, Begligence of -aster, #fficers, .rew or 'ilots. (n (ndia, insurance of ships and ship owing interests are governed by tariffs. The tariffs indicate in detail the rates of premium for various types of covers, additional premium 5A.'.6 for e+tra risks and for breach of trading and other warranties, fleet and other discounts for favorable features and Agency .ommission and #wnersL &iscounts, as applicable. There may be a claim under a hull insurance policy when, by the operation of insured perils a mishap takes place. There are certain procedures which are to be followed in claiming the recoveries.

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