INSURANCE AND CLAIM

1.General.

Shipowners always insure their ships to cover unknown contingencies and large losses. It is also a requirement for ship mortgages. The two most important insurances taken up by prudent shipowners are:

1) Hull and Machinery Insurance

2) Protection and Indemnity Insurance.

2.Hull and Machinery Insurance

Vessels are insured on Institute Time clauses (Hull) against the following marine perils:

A) Total loss and Constructive Total loss
B) Particular Average (A partial loss proximately caused by an insured peril)
C) Perils of the sea lakes or other navigable waters
D) Fire, explosion
E) Violent theft by persons from outside the vessel
F) Jettison
G) Piracy
F) Bursting of boilers of shafts etc., etc.

Therefore, the vessels are covered for stranding/ grounding damage, damage due to heavy weather, fire, negligence of crew etc. Vessels are also covered for the ship's proportion of General Average and or salvage charges.

In addition, it is common practice for hull underwriters to bear three fourths of our collision liability caused to another vessel in cases of collision. The remaining one fourth is taken up by the vessel's Protecting and Indemnity

In any insurance policies, there are exclusions i.e. certain type of losses are not covered by the hull underwriters. These are:

Loss due to wilful misconduct of the assured

Loss, caused by delay

Wear and tear


(iv) Rats or vermin

(v) Loss happening when the vessel is out of classification society,

(vi) Loss caused by warlike activities (Such loss is covered under the War Risk policy)

(vii) Loss occurring outside the Institute trading warranty limit. Unless, permission has been given by underwriters for trading outside the trading limit. (Sometimes, insured has to pay an additional premium for this warranty breach).

(Viii) Towage   No restriction is placed on the vessel performing towage of vessels or crafts in peril that are in need of assistance. In which case, the vessel in peril shall be towed to the first safe port. However, where there is intention to undertake towage or salvage services under contract, prior notice shall be given to underwriters: otherwise there would be a breach of warranty.

3. Hull and Machinery Damages
    Whenever an accident occurs which involves the vessel, the Master must notify the office immediately.
    As soon as practical thereafter NCR together with the Master's report and other reports as relevant and extracts of l     log are submitted to the office.

4.Surveys
 On receipt of preliminary advice from a vessel that a damage has occurred, the office will, if necessary, arrange for  the attendance of Underwriter's Surveyor.

To ensure the best possible presentation of claims NO allegation as to the cause of a damage is to be made to Underwriter's surveyor without this first having been discussed with the office.

5. Damage Discovered in Dry dock or at Routine Surveys

If at a dry docking or during a routine survey, damage is discovered, it must be recorded immediately in vessels log book and the Master must notify the office immediately. The normal written reports must then be submitted to the office.

6. General Average

When a General Average situation has arisen, the Office, in consultation with Owners and Underwriters, will decide whether or not General Average is to be declared. Should General Average be declared, the Master will be notified. The cargo must not then be released until the appropriate authority is received from the Office.

In all cases of a General Average call, or what appears as if it may be a General Average call at a port of refuge, the Master must record the details and report to the Office. With this report the Master must include a detailed deviation statement and chart, details of all bunkers, consumable stores and provisions used and a detailed wage statement showing full payment due to all personnel whose wages are paid on board by the Master and overtime payments due to other relevant personnel for the period of the General Average prolongation of the voyage.

7. Institute Trading Warranty Limits:
7.1 Warranted no:¬
(a) Atlantic Coast of North America, its rivers or adjacent islands,
(i)  North of 52 deg 10' N Lat. and west of 50 deg W long;
(ii) South of 52 deg 10' N Lat in the area bounded by lines drawn

between Battle Harbour/Pistolet Bay Cape Ray/Cape North;
Port Hawkesbury/Port Mulgrave and Baie Comeau/Matane,
between 21 st December and 30th April both days inclusive;

West of Baie Comeau/Matane (but not west of Montreal) between 1 st December and 30th April both days inclusive.

Great Lakes or St. Lawrence Seaway west of Montreal

(c) Greenland Waters
(d) Pacific Coast of North America its rivers or adjacent islands north of

54 deg 30' N Lat., or west of 130 deg 50' W Long.

7.2 Warranted no Baltic Sea or adjacent waters east of 15 deg E Long.

(a) North of a line between Mo (63 deg 24'N Lat) and
Vasa (63 deg 06' N Lat) between 1 Oth December and 25th May (both
dates inclusive)



 (b) East of a line between Viipuri (Vyborg) (28 deg 47'E Long) and Narva  (28 deg 12'E Long) between 15th  December and 15th May both dates inclusive.
 (c) North of a line between Stockholm (59 deg 20'N Lat) and Tallinn (59 deg 24'N Lat) between 8th January and 5th May both dates inclusive.
(d) East of 22 deg E Long, and south of 59 deg N Lat. between 28th
December and 5th May both dates inclusive.

7.3 Warranted not North of 70 deg N Lat. other than voyages direct to or from any port or place in Norway or Kola Bay.

7.4 Warranted no Bering Sea, no East Asian waters north of 46 deg N Lat. and not to enter or sail from any port or place in Siberia except Nakhodka andlor Vladivostock.

7.5         Warranted not to proceed to Kerguelen andlor Croset Islands or south of
50 deg S Lat., except to ports andlor places in Patagonia and 1 or Chile
andlor Falkland Islands, but liberty is given to enter waters south of 50 deg S
Lat., if en route to or from ports andlor places not excluded by this warranty.
.7.6 Warranted not to sail with Indian Coal as cargo:¬

(a)         between l st March and 30th June, both dates inclusive

  (b)         between l st July and 30th September, both dates inclusive except to
ports in Asia, not West of Aden or East of or beyond Singapore.

In the event of a vessel breaching these warranties, prior arrangements will be made with Underwriters by the office, but the office must be notified, of the time, date and position of the vessel as she leaves the warranty zone and enters the restricted zone and re enters the warranty zone.

Protection and Indemnity Insurance

Protection and indemnity insurance covers shipowners against their legal liabilities to third parties. These liabilities are covered by Protection and Indemnity clubs.

Most of our managed vessels are entered with The London Steam ship Owners' Mutual Insurance Association Limited. Some of the vessels are entered with The North of England P&I Association Limited. Both P& clubs are members of the International pool of P&I clubs.

Amongst the various covers provided by the P&I club, these are the some of the risks provided:

(a) Compensation for loss of life and or injury to crew members for hospitalisation, medical expenses etc.
(b) Death or injury to stevedores and other third parties
(c) Loss of seaman's personal effect
(d) Deviation expenses, port charges etc. for the purpose of saving life or for landing an injured or sick crew member from the ship for medical treatment.
(e) Fines   for breach of immigration regulations, for short or over delivery of cargo and or failure to comply with regulations as to declarations of goods or documentation as to cargo carried.
(f) Oil pollution subject to a limit of USD500 million each occurrence.
(g) Loss or damage to fixed or floating objects; piers, jetties, buoys etc.
(h) One fourth collision liability for loss or damage caused to another vessel due to collision
(i) Loss or damage caused to cargo carried on board
0) Life salvage
(k) Wreck removal   costs and expenses reasonably incurred for the raising, removal, destruction, lighting or marking of the wreck of an entered vessel to the extent that such measures are compulsory by law.

It is important to note that every vessel should have 'a copy of the P& club Rule Book and the Club's Entry Certificate. Master and Senior officers are required to familiarise themselves with the contents of Rule book.

Pollution Insurance Certificates
Every vessel which trades to the United States of America or her dependent
territories must carry on board a valid United States Coast Guard Certificate
of Financial Responsibility (Water Pollution). It is, therefore, a policy of the
company that every managed vessel will carry such a Certificate. It is the
responsibility of the Master to check that at all times there is a valid certificate
on board.
In addition, all vessels must carry an International Convention on Civil
Liability for Oil Pollution Damage 1969192, Certificate of Insurance (CLC
Certificate). It is the responsibility of the Master to check that at all times
there is a valid Certificate on board.
4. Damage to Piers, Fixed and Floating objects, etc.
In the event of a vessel damaging a pier or berth or some other fixed or
floating object, the office must be notified immediately.
Written reports are then to follow in the normal manner. The Office shall
arrange for the Underwriter's Surveyor andlor P & 1 Club where appropriate.
5. References
List of P & 1 Correspondents
P & 1 Club Rule Book


Reporting Procedures

1. Accidents

In the event of an accident occurring which involves the vessel or any other vessel or property andlor personnel on or connected with the vessel, full details of the facts must immediately be recorded in the Deck Log Book.

2. Reports

All accidents, however insignificant they may at first appear, must be reported, in writing, as soon as practical after their occurrence. All such reports to consist of Master's report andlor reports from other personnel, together with the appropriate completed report form and extract(s) of log.

All Accident Reports and supporting documentation shall be addressed to:

"THE SOLICITORS OF THE COMPANY"

and marked:

"PRIVATE AND CONFIDENTIAL"

They are then to be placed in a separate envelope, similarly addressed and forwarded to the office.

It is essential that this instruction be carefully followed for all accidents to ensure that all reports are classified as "privileged" documents. As "privileged" documents they are confidential to Owners and their lawyers and, in the event of Court proceedings, need only be produced, as evidence, at the descretion of the Owners.

All reports must be clear, concise and detailed but must not include irrelevant information or personal opinions. Any personal opinions or recommendations as a result of an incident are to be passed to the office by other means, for example, in a separate confidential letter to "Solicitors of the company, as detailed above.

3. Pollution

In the event of pollution, whether of the sea or the air, all international, national and local regulations must be complied with and office notified accordingly. A written report is then to be submitted.



1. Meaning of General Average

An act of general average is defined in the York Antwerp Rules as:

"There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure."

Examples of events leading to a general average situation.

(a)Damage caused to vessel or cargo as a result of extinguishing

a fire. For instance, cutting holes in bulk heads to access a fire or water damage to cargo when water has been used to extinguish the fire.

(b) Jettison of cargo to save the vessel, either when the cargo is jettisoned to control the fire or because the cargo has\ shifted so as to jeopardise the stability of the vessel.
(c) Cost of tugs used in the refloating operation.
(d) Cost of lightening and reloading cargo to re float a vessel after the grounding incident.
(e) Damage caused to vessel and machinery through efforts to re float the vessel.
(f)  Expenses incurred at a port of refuge, etc.

2. Meaning of Particular Average

A partial loss of the subject matter insured proximately caused by an insured peril.

It is of utmost importance that in the event of an accident giving rise to a claim either under the Hull and Machinery policy or the Protection and Indemnity Club, all evidence should be preserved and collated. In this regard, please refer to "The Masters Role in Collecting Evidence" for guidance.

3. Company Money On Board

Where Company money is carried on board a vessel the company does not insure it, so it must be kept to bare minimum required and safely placed in the Master's locked safe the keys for which should be kept in the personal custody of the Master. In the event of a loss, the Master must notify the Office immediately and further act in accordance with instructions from the Office.

Master's shall comply with the instructions in the confidential letter to all Masters LTAM/SFTY/1 6 97.

The Company will accept no responsibility whatsoever for money or other valuables temporarily stored in the ship's safe on behalf of individuals. The Master must obtain a signature acknowledging this prior to accepting any such temporary custody.

4. References

The Master's Role In Collecting Evidence LTAM/SFTY/16 97