Marine Insurance Policies

MARINE INSURANCE A PRIMER CANADIAN MARITIME LAW ASSOCIATION Maritime Law Seminar Vancouver May 12, 2012 P. Jeremy Bolger (Assisted by Gerry Argento) Borden Ladner Gervais LLP Montreal TABLE OF CONTENTS Page INTRODUCTION ............................................................................................................................1 I. GENERAL HULL CLAUSES – RISKS COVERED ...................................................... 1 A. Perils .......................................................................................................................................1 1. Perils of the Seas, Rivers, Lakes and Other Navigable Waters.....................................2 2. Fire, explosion.....................................................................................................................5 3. Violent Theft by Persons Outside the Vessel / Thieves...............................................5 4. Jettison .................................................................................................................................6 5. Piracy ....................................................................................................................................6 6. Breakdown of or Accident to Nuclear Installations or Reactors.................................7 7. Land Conveyance, Dock or Harbour ..............................................................................7 8. Additional Perils (Inchmaree) Clause...............................................................................7 B. Pollution Hazard................................................................................................................10 C. Collision Liability................................................................................................................11 1. Damages.............................................................................................................................12 2. Exclusions..........................................................................................................................12 3. Measure of indemnity – Principle of Cross-Liabilities ................................................13 4. Excess Liabilities...............................................................................................................13 D. General Average And Salvage .........................................................................................13 1. General Average ...............................................................................................................13 2. Salvage................................................................................................................................16 E. Bottom Treatment..............................................................................................................17 F. Wages And Maintenance ..................................................................................................18 II. GENERAL HULL CLAUSES – OTHER ISSUES........................................................ 18 A. Exclusions.............................................................................................................................18 B. Deductibles...........................................................................................................................19 C. Total Loss And Constructive Total Loss......................................................................19 1. Actual Total Losses ..........................................................................................................19 2. Constructive Total Losses ...............................................................................................20 D. Sue And Labour ..................................................................................................................23 E. Change Of Ownership.......................................................................................................26 III. CARGO COVERAGE ...........................................................................................................27 2 IV. PROTECTION AND INDEMNITY COVER .............................................................29 A. Risks Covered By P&I Rules...........................................................................................30 1. Loss of life, personal injury, illness of seamen ............................................................30 2. Personal effects .................................................................................................................30 3. Diversion Expenses..........................................................................................................30 4. Fines ...................................................................................................................................30 5. Oil pollution ......................................................................................................................31 6. Collisions............................................................................................................................31 7. Non-Contact Damage......................................................................................................32 8. Life Salvage........................................................................................................................32 9. Stowaways and refugees...................................................................................................32 10. Quarantine.......................................................................................................................32 11. Damage to fixed/movable property ............................................................................33 12. Cargo ................................................................................................................................33 13. Unrecoverable general average contributions.............................................................33 14. Ship’s proportion of general average ...........................................................................34 15. Towage contracts............................................................................................................34 16. Wreck of the entered vessel ..........................................................................................34 17. Sue and labour expenses................................................................................................34 18. The “Omnibus Rule”.....................................................................................................35 B. Exceptions And Limitations To P&I Cover................................................................35 1. Deductibles........................................................................................................................35 2. Member’s wilful misconduct...........................................................................................35 3. Damage to the entered ship or its equipment ..............................................................36 4. Demurrage or delay to entered ship...............................................................................36 5. Freight or Hire ..................................................................................................................36 6. Cancellation of Charter....................................................................................................36 7. Salvage operations ............................................................................................................36 APPENDIX A: LONDON INSTITUE TIME CLAUSES (HULLS) (January 10, 1983) APPENDIX B : INTERNATIONAL HULL CLAUSES (2003) APPENDIX C : AMERICAN INSTITUE HULL CLAUSES (2003) APPENDIX D: CANADIAN HULLS PACIFIC CLAUSES APPENDIX E: CANADIAN BOARD GREAT LAKES HULLS CLAUSES APPENDIX F: LONDON INSTITUTE CARGO CLAUSES (2009) APPENDIX G: THE RULES OF THE UNITED KINGDOM MUTUAL STEAM SHIP ASSURANCE ASSOCIATION (BERMUDA) LIMITED, 2012 (U.K. P&I CLUB RULES). INTRODUCTION This paper is designed to provide the reader with a general overview of the content of different marine insurance policies. This paper focuses on three important elements of marine insurance: Hulls and machinery clauses, Cargo clauses and P & I rules. This presentation will focus is on clauses predominantly used in the North American market. A selection of the main clauses contained in these policies will be discussed, shedding light on some of the particularities of each specific policy, where applicable. Of course, every distinction between policies cannot be identified in this format, as to do so would necessitate a much lengthier analysis. Nevertheless, it is hoped that this paper will serve as a useful introduction to the principal clauses contained in such policies. I. GENERAL HULL CLAUSES - RISKS COVERED Introduction: Hull and machinery insurance covers physical loss of or damage to the structure of the ship. Voyage and time clauses were developed in the London insurance market for use with the S.G. (Ship and Goods) form. These clauses contained terminology until 1983 when the Institute of London Underwriters’ “plain language” time and voyage clauses for hulls were introduced (London Institute Time Clause (Hulls) – appendix A). These have been revised in 1995 and again in 2003 (International Hull Clauses (2003) – appendix B). North American hull and machinery policies vary from one region to another, given variations in

Load more