Special Circular 2004


April 2004

To Members of Assuranceforeningen Gard-gjensidig
with the following covers:

Comprehensive Charterer’s Liability Insurance
P&I Crew Cover
Deviation Liability Cover
Extended Cargo Cover
Extended Crew Cover
Comprehensive Carriers’ Cover
Tour Operator Passenger Liability Cover


Dear Sirs,

War risks cover and the US Terrorism Risk Insurance Act (“TRIA”) compliance

The above covers include war risks, save for certain risks broadly defined as bio-chem risks. Bio-chem risks are risks which are caused either directly or indirectly by a chemical, biological, bio-chemical, or electro-magnetic weapon. The cover for war risks is subject to the terms contained in the Member’s Certificate of Entry (in respect of the Comprehensive Charterer’s Cover and P&I Crew Cover) or Cover Note (in respect of the “bolt-on covers”, which are the Deviation Liability Cover, Extended Cargo Cover, Extended Crew Cover, Comprehensive Carriers' Cover and Tour Operator Passenger Liability Cover). There is no special sub-limit applicable to war risks. The cover is subject to the limit of insurance contained in the relevant Certificate of Entry or Cover Note. As regards the bolt-on covers, they are not intended to replace the primary war risks cover for P&I risks. The war risk part of the bolt-on covers is intended to provide a seamless complement to the primary war risks cover.

Notice of Termination and Automatic Termination Clause
All covers with war risks included are subject to the attached Institute Notice of Cancellation, Automatic Termination of Cover and War and Nuclear Exclusions Clause – Hulls, which provide that the war risks cover can be terminated upon the Association giving 7 - seven - days’ notice of its intention to do so, and that in certain circumstances the cover may be terminated automatically. This is set out in Part II, paragraph 2, of the Comprehensive Charterer’s Certificate of Entry, Part 4 of the P&I Crew Cover Certificate of Entry and Part 2 of the Cover Notes for the bolt-on covers.

US Terrorism Risk Insurance Act of 2002 (“TRIA”) – compliance
The war risks cover includes claims arising from acts of terrorism as defined in the US Terrorism Risk Insurance Act of 2002 (“TRIA”). In order to ensure that the Association will be entitled to benefit from the program, to the extent TRIA is applicable to the ships involved, under which the United States’ federal government will pay 90 percent of terrorism losses exceeding a statutorily established deductible to be paid by the insurer providing coverage, a special Notice of Terrorism Insurance Coverage, as set out below, is included in this letter in order to comply with the policyholder disclosure requirements in TRIA.

Notice of Terrorism Insurance Coverage,
US Terrorism Risk Insurance Act of 2002, section 103 (b)

Coverage for acts of terrorism is included in your policy for the 2004 policy year commencing at noon GMT on 20 February 2004. You should know that, effective from 26 November 2002, any losses caused by certified acts of terrorism will be partially reimbursed by the United States under a formula established by federal law. Under this formula, the United States pays 90 percent of covered terrorism losses exceeding the statutorily established deductible paid by the insurance company providing the coverage. The proportion of your annual premium that is attributable to coverage for acts of terrorism is0.5 percent.


Exclusion of biological risks from war risks cover
An exclusion for biological risks has been added to the Member’s Certificate of Entry (in respect of Comprehensive Charterer’s Cover and P&I Crew Cover) and to the Cover Note (in respect of the “bolt-on covers”). The exclusion reads as follows:

Biological risks excluded from war risks cover
Liabilities, losses, costs and expenses directly or indirectly caused by or contributed to by or arising from any chemical, biological, bio-chemical or electromagnetic weapon.

This is an industry wide exclusion which we managed to avoid last year, but were forced to include for the 2004 policy year.

Comprehensive Charterer’s Cover: Damage to the Ship caused by War Risks
The Comprehensive Charterer’s Cover is subject to specific requirements if and when the chartered ship is trading to conditional areas. As regards the charterer’s liability for damage to or loss of the chartered ship caused by war risks in a conditional area, as defined in a current standard war risks policy (see the table, below, for the current list of Conditional Areas) the specific requirements contained in Section II, paragraph 1, of the Certificate of Entry apply. Section II, paragraph 1 reads as follows:

”The cover for liability for damage to or loss of the Ship or any part thereof caused by War Risks is conditional upon the Ship being chartered on terms to the effect that:

i         the owners are entitled to refuse to send the Ship to any port or place that is dangerous by reason of war risks (as defined in any current standard war risks insurance policy), and

ii        the owners are in any event entitled to insure their interests against such war risks, and

iii       the charterers are liable to reimburse the owners in respect of any war risks premium incurred as a result of the Ship being ordered to or employed in such port or place;

or alternatively, the Ship is chartered on terms no less favourable to the charterers as regards their liability for loss or damage caused by war risks.”

Cover may be available for Members using charter party terms which do not meet the requirements in Section II, paragraph 1, on terms and/or additional premium to be agreed.

For the time being the ports and places listed in the table below have been identified as dangerous by reason of war risks. Members are advised that this information is subject to change. The Association will inform the Members of changes in the list of conditional areas by publishing circulars reflecting changes if and when changes occur.

Conditional Areas:

A) Arabian Gulf and adjacent waters including the Gulf of Oman North of 24° N. ~
B) Angola (including Cabinda
)
C) Israel
D) Lebanon
E) Libya (including Gulf of Sidre/Sirte)
F) Eritrea
G) Somalia
H) Congo, Democratic Republic of (formerly Zaire)
I) Liberia
J) Sri Lanka
K) Sierra Leone
L) Gulf of Aqaba and the Red Sea
M) Republic of Yemen
N) Pakistan
O) Oman
P) Syria
Q) Algeria
R) Egypt
S) Indonesia excluding transiting vessels
T) Ivory Coast
U) Nigeria and the Bakassi

Further, please see below list of charter parties which indicates when notice to the Association is required:


Charter Party – Unamended version

Owners entitled to refuse to send Ship

Owners entitled to insure

Charterers to reimburse additional premium

Acceptable without notice to Gard

 

Baltime 1939

Yes

Yes

Yes

Yes

Conwartime 1993

Yes

No

Yes

Yes

NYPE 93

Yes

No

Yes

Yes

GENCON (Voywar 93)

Yes

No

No

Yes*

Chamber of Shipping War Risk Clause

Yes

No

No

No

Asbatankvoy

Yes

No

No

Yes*

*   Although not all conditions are met, reinstated without additional premium because of owners’ broad discretion to refuse to call at port and nominate alternate safe port if charterers fail to do so.

If the charterers are not trading to conditional areas there are no requirements with respect to war risks cover. However, if a Member is trading in a conditional area, the Association may charge additional premium and/or amend the conditions of cover.

Tour Operator Passenger Liability Cover: Athens Olympic Games Coverage
In respect of vessels entering the port of Piraeus during the currency of the Olympic Games in Athens 2004, or in the period from 1 August 2004 up to 15 September 2004, please be advised that the Association reserves the right to charge an additional premium and/or add special terms/conditions to the Cover. Such additional premium and/or special terms and conditions to be mutually agreed prior to vessel’s arrival within Piraeus port limits. The Member is required to notify the Association of the vessel’s scheduled call at Piraeus no later than 7 days prior to the scheduled call.

Members with any questions are invited to contact the P&I Underwriting Department of Gard AS.

Yours faithfully

GARD AS

As agent only for Assuranceforeningen Gard -gjensidig-
Claes Isacson
Chief Executive Officer


Appendix to Special Circular 2004


Institute Notice of Cancellation, automatic termination of cover and war and nuclear exclusions clause - Hulls

This clause shall be paramount and shall override anything contained in this insurance inconsistent therewith

1          Cancellation

Cover hereunder in respect of the risks of war, etc. may be cancelled by either the Underwriters or the Assured giving 7 days notice (such cancellation becoming effective on the expiry of 7 days from midnight of the day on which notice of cancellation is issued by or to the Underwriters).  The Underwriters agree however to reinstate cover subject to agreement between the Underwriters and the Assured prior to the expiry of such notice of cancellation as to new rate of premium and/or conditions and/warranties.

2          Automatic Termination of Cover

Whether or not such notice of cancellation has been given cover hereunder in respect of the risks of war, etc, shall TERMINATE AUTOMATICALLY

2.1       upon the outbreak of war (whether there be a declaration of war or not) between any of the following:
             United Kingdom, United States of America, France, the Russian Federation, the People’s Republic of China;

2.2       in respect of any vessel, in connection with which cover is granted hereunder, in the event of such vessel being requisitioned either for title or use.

3          Five Powers War and Nuclear Exclusions

This insurance excludes

3.1       loss damage liability or expense arising from

3.1.1    the outbreak of war, whether there be a declaration of war or not

            between any of the following:
            United Kingdom, United States of America, France, the Russian Federation, the People’s Republic of China;

3.1.2    requisition either for title or use

3.2.      loss damage liability or expense directly or indirectly caused by or

            arising from

3.2.1    ionising radiations from or contamination by radioactivity from any nuclear fuel or from any nuclear waste or from the combustion of nuclear fuel

3.2.2    the radioactive, toxic, explosive or other hazardous or contaminating properties of any nuclear installation, reactor or other nuclear assembly or nuclear component thereof

3.2.3    any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.

4.         Law and Practice

This clause is subject to English law and practice.