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Table of contents

Deviation Liability Cover (Section 17.C) 

Chapter 2 Risks covered and special exclusions
Section 17 Risks covered and special exclusions 

C Deviation Liability Cover

1 Special definitions
In this Section 17 C, the following words or expressions shall have the following meanings: 

Bill of Lading:
bill of lading or similar document of title. 

2 Capacity of the Assured
The cover afforded to the Assured shall extend only to liabilities, losses, costs or expenses that have arisen out of the activities and/or operations customarily carried on by or at the risk and responsibility of the Assured in his capacity as an owner, operator or charterer of the Ship; 

3 Special conditions
The Assured is only covered in respect of liabilities, losses, costs and expenses incurred by him which arise in direct connection with the operation of, the Ship and in respect of the Assured’s interest in the Ship. 

4 Risks covered
The Insurer shall cover liabilities incurred by the Assured to cargo interests in respect of cargo accepted for carriage by the Assured as a result of a deviation or departure from the contractually agreed voyage or adventure, as specified in the Insurance Policy. 

5 Special exclusions

Cargo on deck
The Insurer shall not cover liabilities, losses, costs and expenses arising out of cargo being carried on deck against under deck Bill(s) of Lading, save insofar as the Assured has notified the Insurer of the cargo being carried on deck against under deck Bill(s) of Lading once the Bill(s) of Lading has been issued and the Insurer has agreed to reinstate the cover on such terms and conditions as may be deemed appropriate and the Assured has agreed to such terms (including but not limited to the payment of additional premium). 

Delivery of cargo without production of Bill of Lading
The Insurer shall not cover liabilities, losses, costs and expenses arising out of delivery of cargo under a Bill of Lading without production of that Bill of Lading by the person to whom delivery is made.

c Delivery of cargo at a port other than stated in the Bill of Lading
The Insurer shall not cover liabilities, losses, costs and expenses arising out of delivery of cargo carried under a Bill of Lading issued in a set of two or more originals at a port other than that stated in the Bill of Lading without production of all originals of that Bill of Lading. 

d Environmental damage
Liabilities, losses, costs and expenses in respect of environmental damage and clean up obligations and any consequential loss or damage relating thereto. 

e Personal injury, illness and death
The Insurer shall not cover liabilities, losses, costs and expenses in respect of personal injury, illness or death of any person.

 

Guidance

(A) Risks covered The Insurer shall cover liabilities incurred by the Assured to cargo interests in respect of cargo accepted for carriage by the Assured as a result of a deviation or departure from the contractually agreed voyage or adventure, as specified in the Insurance Policy (Section 17.C.4)
The meaning, scope and effect of deviation is explained in (U) of the Guidance to Rule 34.1 proviso xi and the question of whether or not there has been a deviation is important since, traditionally, the effect of a deviation has been to deprive the carrier of the benefit of any contractual defences and also, possibly, any rights to limit liability that he might otherwise have in relation to the carriage of cargo. However, deviation is a complex issue that is treated differently depending on the applicable law. Therefore, since deviation can give rise to substantial liabilities against which the carrier has no protection, enquiry needs to be made in each case to determine whether the Member has been deprived of defences or limitation rights that would otherwise have been available to him had there been no deviation. If such rights have not been prejudiced then cover continues to be available pursuant to Rule 34 of the Standard P&I Cover. However, if such rights have been prejudiced, then cover is excluded for such liabilities, losses etc., pursuant to proviso xi of Rule 34.1 unless the Association exercises its discretion to make cover available. 

The Deviation Liability Cover is intended to provide the Assured with protection in the circumstances that are described in proviso xi of Rule 34.1. In specified cases, cover is made subject to specific terms, conditions, restrictions and limitations (see below). However, in all cases, cover is available subject to the specific provisions of the Assured’s Insurance Policy and Part 1 General Provisions of the Additional Covers Terms and Conditions including section 2.3 which provides that: 

“The Assured is only covered in respect of liabilities, losses, costs and expenses incurred by him which arise out of events occurring during the Period of Insurance for that relevant risk.” 

Furthermore, the Deviation Liability Cover is not intended to protect the Assured against liability to cargo interests that is the inevitable consequence of a deviation but for liability to cargo interests that arises as a result of fortuitous events that occur after a deviation and for which the Member’s right to rely on defences and/or limitation rights has been prejudiced by the earlier deviation. Therefore, cover is not available if the event that gives rise to liability to cargo interests after the deviation is the result of the Assured’s deliberate, i.e. unfortuitous, operational decision regardless of whether this has been prompted by a request from the cargo interests or some other party.
 

(B) Special exclusions (Section 17.C.5) 

a Cargo on deck

The Insurer shall not cover liabilities, losses, costs and expenses arising out of cargo being carried on deck against under deck Bill(s) of Lading, save insofar as the Assured has notified the Insurer of the cargo being carried on deck against under deck Bill(s) of Lading once the Bill(s) of Lading has been issued and the Insurer has agreed to reinstate the cover on such terms and conditions as may be deemed appropriate and the Assured has agreed to such terms (including but not limited to the payment of additional premium) (Section 17.C.5.a)

The most common example of a deviation, other than that relating to the geographical voyage, is the carriage of cargo on deck. The carrier is normally under an implied obligation to stow the goods under deck unless otherwise authorised by custom, convention or agreement, e.g. it is generally accepted that containers may be carried on the deck of purpose-built container ships and lumber on the deck of purpose-built log and forest product carriers. However, unauthorised deck carriage may amount to deviation. 

However, there may be operational reasons why a carrier wishes to carry on deck cargo that would normally be carried under deck. Almost all bills of lading contain a ‘liberty clause’, that allows the carrier to carry cargo on or under deck. However, such clauses are strictly interpreted. Therefore, if the cargo has been carried on deck without the shipper’s consent, the cargo interests may claim that the carrier is in breach of contract and has, furthermore, committed a deviation that has deprived him of his right to rely on any contractual and defences and limits of liability that would otherwise have been available to him. Consequently, cover is excluded under proviso xi of Rule 34.1 of the Standard P&I Cover. 

Cover may be available under the Deviation Liability Cover in such circumstances provided that the Assured has notified the Insurer that cargo is being carried under Bills of Lading that provide for under-deck carriage once such Bills of Lading have been issued. On receipt of such notice, the Insurer will notify the Assured whether it is prepared to reinstate cover and the terms upon which it is prepared to do so, including, but not limited to the payment of additional premium. If the Assured agrees to such terms, cover will be reinstated on such terms. 

Please note cover is not available under the Deviation Liability Cover for the liabilities, losses etc., itemised below under b-e. However, cover is available under the CCC – See the guidance to the CCC.

 

b Delivery of cargo without production of Bill of Lading
The Insurer shall not cover liabilities, losses, costs and expenses arising out of delivery of cargo under a Bill of Lading without production of that Bill of Lading by the person to whom delivery is made (Section 17.C.5.b) 

c Delivery of cargo at a port other than stated in the Bill of Lading
The Insurer shall not cover liabilities, losses, costs and expenses arising out of delivery of cargo carried under a Bill of Lading issued in a set of two or more originals at a port other than that stated in the Bill of Lading without production of all originals of that Bill of Lading (Section 17.C.5.c) 

d Environmental damage
Liabilities, losses, costs and expenses in respect of environmental damage and clean up obligations and any consequential loss or damage relating thereto (Section 17.C.5.d) 

e Personal injury, illness and death
The Insurer shall not cover liabilities, losses, costs and expenses in respect of personal injury, illness or death of any person (Section 17.C.5.e)