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Special Circular to fixed premium P&I Members and Small Craft customers – special extension of cover for communicable disease/coronavirus risks

We refer to Member Circular 10/2021 regarding the amendments to the Rules for 2022.

This circular aims to provide additional information on a special extension of cover for communicable disease/coronavirus risks to fixed premium P&I Members and Small Craft customers.

Fixed premium P&I covers reinsured outside the International Group’s Pooling Agreement – special extension of cover for communicable disease risks

Similar to last year1, the market reinsurance contract covering Gard P. & I. (Bermuda) Ltd. and Assuranceforeningen Gard – gjensidig –’s (hereinafter the “Associations”) fixed premium P&I business2, such as charterers and mobile offshore units and various additional covers arranged as supplement to the standard P&I cover, will contain exclusions for Cyber and Covid risks. However, new for the 2022 policy year commencing on 20 February 2022 is that the Coronavirus Exclusion clause (LMA 5395) has been replaced by the Communicable Disease Exclusion Clause (JL2021- 014), attached as Appendix I to this circular. This is the new standard market wording for all marine and energy liability insurance/reinsurance contracts. There is no change to the Marine Cyber Endorsement (LMA 5403).

To harmonize standard terms of cover for fixed premium P&I entries with the governing reinsurance arrangement for the 2022 policy year, the Communicable Disease Exclusion Clause (JL2021-014) and the Cyber Endorsement (LMA 5403) are included in the P&I Rules for Mobile Offshore Units (MOUs), the Terms and Conditions for Additional Covers and in the individual Certificates of Entry for Charterers’ P&I risks.

Similar to last year, to meet the needs for protection against Communicable Disease risks, incl.

Coronavirus risk, within the fixed P&I segment, the Associations will offer Members and clients in respect of the categories of covers listed below a special extension of cover. The extension of cover (hereinafter referred to as the “Communicable Disease Extension Clause”) shall comprise liabilities, losses, costs and expenses falling within the scope of terms of entry agreed but for the Communicable Disease Exclusion Clause (JL2021-014) and is subject to a sub-limit of USD 10 million per ship or vessel per event3

The Communicable Disease Extension clause shall apply for the following categories of fixed premium covers offered by the Associations:
• Comprehensive Charterers’ liability cover
• P&I for Mobile Offshore Units (MOUs)
• Crew cover
• Comprehensive Carriers cover for Shipowners and Charterers
• Extended Crew Cover
• Comprehensive general liability cover for offshore and specialist vessels (CGL)
• Comprehensive general liability cover for MOUs (CGL)
• Divers’ cover
• Deviation Cargo Cover

Certificates of entry and/or insurance policies issued for the 2022 policy year in respect of the above covers shall therefore include the following clause:

“COMMUNICABLE DISEASE EXTENSION CLAUSE
Notwithstanding anything contained herein or in the applicable Rules/Terms and Conditions to the contrary, including but not limited to the Communicable Disease Exclusion clause (JL2021-014), the contract of insurance evidenced by this Certificate of Entry/Insurance Policy is extended to include liabilities, losses, costs and expenses falling within the scope of cover pursuant to terms of entry agreed as specified in this Certificate of Entry/Insurance Policy but for the Communicable Disease Exclusion clause (JL2021-014). The Association’s/Insurer’s liability under this COMMUNICABLE DISEASE EXTENSION CLAUSE shall be limited to USD 10 million per Ship/Vessel per event or the applicable limit set out in this Certificate of Entry/Insurance Policy, whichever is the lesser. All other terms, conditions and limitations of the insurance remain the same.”

No additional premium will be levied in respect of the Communicable Disease Extension for the 2022 policy year.

If you have any questions about the Communicable Disease Extension clause for fixed premium P&I products, please contact Bjørnar A. Andresen, Group Chief Underwriting Officer.

Small Craft customers insured for H&M and/or P&I in Gard Marine & Energy Limited or Gard Marine & Energy Insurance Europe AS – Coronavirus Exclusion Clause, Cyber Endorsement and special extension of cover for Coronavirus risks

Small Craft H&M and P&I insurances are written by either Gard Marine & Energy Limited, Norway branch or Gard Marine & Energy Insurance Europe AS (hereinafter the “Insurers”) and are part of the reinsurance arrangements for Marine & Energy business. Similar to last year, the reinsurance arrangements for Marine & Energy business will contain exclusions for Cyber and Covid risks. As opposed to the fixed premium P&I business, there will be no change in these exclusions for the 2022 policy year4.

Coronavirus extension
In addition to the categories of covers under fixed premium P&I listed above, there will also be a special extension of cover for liabilities, losses, costs and expenses falling within the scope of terms of entry agreed but for the Coronavirus Exclusion clause (LMA 5395) for all Small Craft P&I risks.5

The Insurers’ liability under the special extension shall be limited to USD 10 million per Ship/Vessel per event. Certificates of entry issued for the 2022 policy year in respect of Small Craft P&I risks shall therefore include the following clause.

“CORONAVIRUS EXTENSION CLAUSE
Notwithstanding anything contained herein or in the applicable Rules/Terms and Conditions to the contrary, including but not limited to the Coronavirus Exclusion clause, the contract of insurance evidenced by this Certificate of Entry/Insurance Policy is extended to include liabilities, losses, costs and expenses falling within the scope of cover pursuant to terms of entry agreed as specified in this Certificate of Entry/Insurance Policy but for the Coronavirus Exclusion clause. The Insurer’s/Association’s liability under this CORONAVIRUS EXTENSION CLAUSE shall be limited to USD 10 million per Ship/Vessel per event or the applicable limit set out in this Certificate of Entry/Insurance Policy, whichever is the lesser. All other terms, conditions and limitations of the insurance remain the same.”
No additional premium will be levied in respect of the Coronavirus Extension for the Small Craft P&I risks for the 2022 policy year
Source: Gard, https://www.gard.no/Content/32987212/cache=20222001142759/MemberCircular_11_2021.pdf

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