War Risks P&I Excess cover and Bio-Chem cover for the 2021/22 policy year – International Group arrangements
Although war risks are excluded from standard P&I cover (Rule 30.4.1), Assuranceforeningen Skuld (Gjensidig) (“the Association”), in conjunction with other P&I Clubs in the International Group, continues to provide War Risks P&I Excess Cover on the same basis as in the 2020/21 policy year for Members entered on a full mutual basis.
The limit of cover remains at USD 500 million. The cover is subject to an excess of the proper value of the entered vessel, or whatever sums are recoverable from other war risks covers. We remind of the change introduced in the 2020 policy year in respect of the minimum excess of the policy which has increased from the proper value of the entered ship (as agreed by the relevant Association) or USD 100 million whichever is the less, to the proper value of the entered ship (as agreed by the relevant Association) or USD 500 million whichever is the less.
The full wording reads as follows:
“This policy to pay claims excess of amounts recoverable under vessels’ war or crew war risks Protection and Indemnity policies subject to a minimum excess of the proper value of the entered ship (as agreed by the relevant Association) or USD 500 million whichever is the less (applicable to owners’ entries and not to Charterers’ entries), and further subject to a minimum excess of USD 50,000 any one event.”
Members should note that they are deemed to have underlying cover with conditions equivalent to the cover above (“P&I – War Risks”) equal to at least the proper value of the ship. Furthermore, this cover is excess of any cover which the Member has actually taken out which covers the risk, unless the cover is a corporate general liability umbrella cover.
Members who have ships valued individually at more than USD 100 million and who do not purchase primary war risks insurance will have a larger gap in their cover (to fund for their own account). Members are therefore recommended to review their war risks arrangements to ensure they are aware of their exposures in respect of any ship valued at more than USD 100 million.
The cover is subject to a deductible of USD 50,000 any one event each vessel.
The cover is for P&I risks as set out in Part II of Skuld’s Rules and which are excluded from standard cover by virtue of the war risks exclusion in Rule 30.4.1. The cover is subject to the Statutes and Rules (save for the exclusion in Rule 30.4.1) and to any terms and conditions separately agreed with members.
MEMBERS SHOULD NOTE THE FOLLOWING:
• Since this is an excess cover only, Members must maintain their primary war risks P&I cover with a minimum limit of the value of the entered vessel or USD 500 million, whichever is the less. Members should ensure that this cover is maintained at a level which accurately reflects the proper value of their vessels in the prevailing market.
• If Members choose to insure for amounts in excess of the value of the vessel, the cover provided by the Association will apply in excess of the total amounts recoverable under all other P&I war risks policies.
• The limit of USD 500 million is subject to aggregation (see Appendix 1).
• The cover is subject to cancellation, automatic termination and nuclear and bio-chem exclusions, full details of which appear in Appendix 1. Liabilities which Members may incur under TOPIA 2006 (as amended in 2017) are excluded.
• Members are reminded that where payment by the Club under a guarantee or a certificate is in respect of war risks, Members shall indemnify the Club to the extent such payment is recovered or would have been recoverable under a standard P&I war risk policy.
The War Risks P&I Excess Cover is subject to the bio-chem exclusion contained in Appendix 1.
In order to provide a degree of cover to Members, the P&I Clubs in the International Group agreed in 2004 to cover bio-chem risks relating to crew claims and for legal costs relating to other P&I liabilities. This arrangement will continue in the 2022/23 policy year. Cover is provided through a special pooling arrangement and is subject to a limit of USD 30 million in the aggregate.
Details of the cover are set out in Appendix 2.