Cargo Liability, P & I and H& M

Cargo Liability
Collateral loss, damage or shortage of goods cargo (Cargo Liability) is one type of collateral in the policy Protection & Indemnity (P & I). Cargo Liability Assurance is very important especially for the type of cargo ship as Cargo ships, Tankers, and Barges and other vessels load cargo owned by third parties.
What is covered?
1. Loss, damage or shortage of cargo
2. Additional costs:
a) the costs, cleaning or disposal of damaged cargo / worthless
b) the costs of rescue or withdrawal of cargo, if it is possible to be able to resume shipping
How much compensation?
Indemnity against loss, damage or shortage of goods cargo (Cargo Liability) is referring to the provisions of Condition: Subject to International Convetion ie the Hague or Hague-Visby Rules, Hamburg Rules, the SDR Protocol
International Convention
1) The limit under the Hague Rules 1924 - Pounds 100 per package or unit, Pounds 100 Pounds being the amount to 100 gold value.
2) The limit under the Hague-Visby Rules 1968 to 10.000 Poincare francs per package or unit or 30 Poincare Francs per kilo of gross weight, whichever is higher
3) The limit under the Hamburg Rules in 1978 - 2.5 Special Drawing Rights (SDR) per kg or 835 SDRs per package or shipping unit
4) The limit under the SDR Protocol 1979-2 SDRs per kg or 666.67 SDRs per package, whichever is higher
What is not covered?

Cargo Liability - Exclusions

• In excess of Hague-Visby Rules
• Rare or precious cargo unless Agreed by underwriter
• Refrigerated spaces, unless certified by Lloyd's Register, inspected by a surveyor and contract of carriage is approved by an underwriter
• Steel products unless surveyed by surveyor
• Special Cargoes unless surveyed by approved surveyors
• Fail any recommendations by underwriter
• Deviation of the insured vessel and approved by an underwriter
• Liability or costs

- Unapproved through transit by underwriters and not paid addl. premium
- Late or non-arrival at a port of lading of the Insured Vessel
- Non-negotiable B / L sent to other party not named in the document
- Delivery of cargo without production of B / L
- Ante or post-dating of B / L
- Delivery of cargo at a non-specified ports
- Arising from incorrect description on B / L
- Delivery of cargo on B / L the which has been carried on the Insured Vessel
- Cargo on deck unless Permitted by B / L (for non Containerized cargo)
- Failure to load all or any part of cargo
- Ad valorem B / L, exceeding U.S. $ 2.400 / unit unless approved by an underwriter

 

Protection & Indemnity Cover

The underwriter shall indemnify the Assured against those liabilities, losses, costs and expenses, arising from events occurring during the Period of Insurance and incurred by the Assured in respect of the operation of the Insured Vessel.

1. Life Salvage: Awards in respect of live salvage
2. Bodily Injury: Bodily Injury to Passengers, Crew and Others
3. Quarantine: Expenses relating to Disease on Insured Vessel, in respect of Disinfecting, Fuel or towage and port of refuge
4. Diversion: Expenses in relation to Diversion to Secure Treatment
5. Repatriation & Forwarding: Expenses incurred in relation to Repatriation & Forwarding of any stowaway, deserter, Crew Member and Passenger
6. Personal Effects: Liability for Loss of Personal Effects of Crew, Passenger and Others
7. Total Loss Crew Compensation: Liability for Crew Wages Following Total Loss
8. Collision: Liabilities Following Collision with Another Vessel
9. Property Damage: Liability for incidental expenses arising from and damages or compensation for infringement of rights in connection with Fixed & Floating Objects, Non Collision Damage and Other Property
10. Pollution: Liability and Expenses relating to Pollution Incidents, Damages or Compensation, Minimisation and Clean-up and Order of an Authority
11. Salvage: Liability for Compensation to Salvor
12. Accommodation & Maintenance: Expenses of Crew Members following Fire, Collision, Stranding or Contact with any substance other than water.
13. Towage of an Insured Vessel: Liability and incidental expenses of the Assured which arise out of a contract for the towage of the Insured Vessel.
14. Towage by an Insured Vessel: Liability arising from towage by an Insured Vessel.
15. Contracts & Indemnities: Liability under the terms of any contract or indemnity made or given by or on behalf of the Assured under the terms of which facilities or services are to be rendered to the Insured Vessel that is for Bodily Injury and Subject to Underwriter prior written approval
16. Wreck Removal: Liability and Expenses in relation to Wreck Removal
17. Cargo Liability: Damage to, Loss or Shortage of, or otherwise arising from the Assured’s responsibility for Cargo
18. Unrecovered Proportion of General Average from Cargo Interest or Others
19. Ship’s Proportion of General Average, special charges or salvage not recoverable under the Hull Policies
20. Fine & Penalties: Fines and penalties upon Assured, Crew Members whom the Assured is legally liable to reimburse in respect of Documentation, Smuggling and Breach of Immigration Laws, Pollution Laws, Act of Employee and Stowaway or Refugee
21. Enquiries: Expenses incurred in relation to enquiry into the loss or casualty to the Insured Vessel
22. Expenses Incidental to Shipowning: Discretionary Costs and Expenses incidental to the business of owning, operating or managing ships
23. Costs & Expenses in relation to Minimisation of Loss
24. Expenses in relation to Stowaways & Refugees
25. Legal Costs & Expenses Cover

Hull & Machinery (H & M)

Hull & Machinery (H & M) Insurance provides insurance against damage or loss of ships, machinery and equipment from the dangers of the sea and the risk of shipping (navigational Perils)

Perils: H & M ensures risk-the risks of:

1)       marine hazards such as bad weather, sinking, collision, etc. (Perils of the Seas)

2)       fire, explosion

3)       theft with violence by people from outside the vessel

4)       the disposal of the sea (jettison)

5)       piracy (piracy)

6)       breakdown or accident to nuclear installations or reactors (on ship)

7)       a collision with aircraft or other celestial body, ground transportation equipment, dock etc.

8.)      eruption earthquakes, volcanoes, lightning strikes

9)       accidents due to loading-unloading cargo or fuel

10)     bursting of boilers on ships, etc.

11)     negligence of the master, crew or pilot

12)     negligence of repairers or charterers

13)     insurrection or forcible takeover by the captain and crew (barratry)

14)     measures the authorities in preventing or reducing the impact of pollution (Pollution Hazard)

15)     legal liability due to ship collisions (Collission Liability)

16)     the contribution of General Average and Salvage

17)     the costs of rescue (Sue and Labour)

Warranty Type H & M (Type of Cover)

1. 1.10.83 Hull ITC Clause 280 (All Risks / Comprehensive)
2. ITC Hull Clause 1.10.83 284 - Total Loss, General Average and 3 / 4 Collision Liability (Including Salvage, Savage and Sue and Labour Charges)
3. ITC Hull Clause 1.10.83 289 - Total Loss Only (Including Salvage, Savage and Sue and Labour Charges)

Total Loss All Risks vs.

All Risks (Comprehensive) ensure the most damage (partial loss), and total damage (total loss)

Total Loss ensures total damage only (no guarantee of partial damage)

Total Loss consists of Actual Total Loss (ATL) and Constructive Total Loss (CTL)

What is a Total Loss? Does 75% damage can claim Total Loss? How many claims are paid? Insured value or market value?

See next page

Pollution Hazard

H & M guarantee damage or loss to the vessel caused by the act of the authorities (governmental authority) in an effort to prevent or reduce the impact of pollution that occurs as a direct result of damage to the vessel due to the guaranteed risk.

3 / 4 Collision Liability

H & M guarantee 3 / 4 legal liability due to ship vs. ship collision:

-          Damage or loss on the opponent ship or cargo ship loaded opponent

-          The cost of delay in the ship or its cargo opponent

-          General average and opponent's ship or its cargo salavage

Deductible

Pieces claim for each incident listed in the schedule (usually about 1% of Insured Value)

New for Old

Claims are paid without any piece of new for old (or without depreciation)

Warranty Extension (Extension Clauses)

4 / 4 Collision Including LIABILITY FIXED FLOATING OBJECTS (RDC & FFO)

INSTITUTE WAR & Strikes - TIME hulls Clause 281 1/10/83

WHEN A VESSEL IS Missing FOR 6 (SIX) Consecutive Months Sailing FROM THE DATE OF LAST PORT FROM HER, SHE Shall Presumed TO BE AN "Actual TOTAL LOSS"

REMOVED PART clause

Leased clause EQUIPMENT

PILOT NON LIABILITY Clause

Source: ITC - hulls 1.10.83

Warning! Read your policy carefully it May Vary from those outlined above