RAETSMARINE S COMPREHENSIVE CHARTERERS LIABILITY COVER

Transcription

1 RAETSMARINE S COMPREHENSIVE CHARTERERS LIABILITY COVER Charterers Liability Page 1

2 INTRODUCTION The RaetsMarine Comprehensive Charterers Liability Cover has been designed to specially meet the needs of charterers, traders and cargo owners. As one of the leaders in the field of Charterers Liability RaetsMarine is able to provide tailor-made insurance cover by offering flexible terms and a network of service providers on a worldwide basis. In addition RaetsMarine have a very experienced team of claim handlers able to handle all type of Charterers Liability claims in a efficient and professional manner. CHARTERERS LIABILITY INSURANCE At RaetsMarine we welcome any type of Charterers business. Be it tramp chartering, both voyage and time charters, conducted by operators or by commodity traders, who are chartering vessels to carry their own cargoes. All can be covered under the RaetsMarine Comprehensive Charterers Liability Cover. Why do Charterers need cover? To avoid discontinuity in their business caused by a liability, which was never expected, but occurred notwithstanding. The marine adventure is subject to unforeseen risks. As a consequence Charterers are exposed to liabilities, which may reach or even exceed the value of the chartered vessel or the goods shipped. As shipping practice prevails a Charterer will not be able to charter a vessel on such terms that he can resist or exonerate all liabilities. Furthermore it comes as no surprise that we are living in a litigious Unforeseen risks and environment. The Shipowner has insured his ship with a liabilities may disrupt a Charterer s business P. & I. insurer and a cargo owner has insured his goods with a cargo insurer. Both these insurers will seek recoveries on claims brought against their policies. The Charterer is inevitably a party in the contractual chain and can therefore be simply found. This is evidenced by our day-to-day practice in handling Charterers liability claims. Charterers Liability Page 2

3 In most cases the Charterer even appears twice in the contractual chain. He is the Charterer in the contract with the Shipowner (Time- or Voyage C/P) and he becomes the disponent-owner in the contract with the cargo owners (Voyage C/P, Booking Note, Contract of Affreightment or direct Bill of Lading booking). Sometimes the contractual chain is longer with back-to-back and sub-charters, which means there are more parties involved. Even if a Charterer may feel he can resist liabilities it is We cover liabilities, but still appropriate to have insurance cover, as all costs for also all costs for defending liabilities defending liability claims are covered under our Charterers Liability policy. You do not necessarily have to BE LIABLE to be HELD LIABLE. A charterer may think he is exonerated from liabilities, if in the Charter Party he is protected by a clause that the Charterer can benefit from the Owners P. & I. cover, as far as the P. & I. rules permit. Such a clause has no validity at all, as all P. & I. insurers will not permit to cover the Charterer under the Owners P. & I. policy. At RaetsMarine we have a professional staff of qualified and experienced persons to provide a tailor-made service. We are able to give in depth advice on pro-forma Charter Parties and Bills of Lading, including an appropriate risk analysis. Such approach will lead to active prevention, which may reduce certain liabilities. All our Charterers and prospective Charterers are cordially invited to contact us on this matter. What liabilities may Charterers have? The Charterer takes on board various risks. He often appoints his own agents, his own stevedores and hires superintendents to Except for the navigation monitor the loading- and unloading of cargoes. The the Charterer may be in same position as the Charterer may appear on the Bills of Lading or may Shipowner Charterers Liability Page 3

4 even have signed the Bills of Lading in his own name. Under any Charter Party the Charterer is ultimately liable for damages to the chartered vessel. These damages may be caused by stevedores, by an unsafe port or berth, by the cargo, or by the wrong fuel supplied to the vessel. Apart from the major risks, being liability to cargo and liability to damages to the vessel, the Charterer may also be held liable for other claims, such as collision, personal injury, pollution, salvage, fines, stowaways, etc. Let s have a look at the shipping practice and explain the contractual chain in a string of contracts between the various parties, which is also showing the types of Charterers. THE CONTRACTUAL CHAIN (CIF SELLER) Charterers Liability Page 4

5 An owner of goods needs a ship to perform his Sale Contract (S/C). He may either be a CIF-seller or a FOB-buyer, the consequence of which will be that he must charter a ship and thereby becomes a Charterer. An owner of a ship needs goods to carry and will enter in to a Time charter (T/C) or a Voyage charter (V/C) to get employment for his ship. If owners of goods and owners of ships would be making shipping contracts directly between themselves the Bill of Lading (B/L) could be the single contract in the chain, however, reality in today's shipping is totally different. Each movement of ship and cargo is involving various parties in different indentities, which is creating a complex chain of contracts Our Charterers Liability Insurance provides cover for these liabilities. Types of Charterers and their apparent liabilities The companies, which become involved with the chartering of a vessel can be divided in the following groups: 1. Companies, which are operating a liner service, but do not own ships (SHIPCO - FREIGHTCO). 2. Companies, which are trading various commodities and charter ships to transport their own goods (CIF SELLER - FOB BUYER). 3. Companies, which operate in the tramp market by fixing ships and cargoes as a freight contractor (SHIPCO - FREIGHTCO). 4. Companies, which combine logistics and charter ships as a part of their integrated services (FREIGHTCO). Charterers Liability Page 5

6 1. Companies operating a liner service A company operating a liner service is obliged to offer to their customers regular sailings, which are scheduled on a fixed time table in advance. In most cases vessels will be chartered on time charter basis for longer periods. Local agents, who are appointed by the company operating the liner service, generally book the cargoes. Usually the bookings are concluded on the shipping line's Bills of Lading conditions and on a Liner Booking Note (B/N), which is resulting in a contractual relationship between the liner company and the cargo owner (shipper or consignee, depending on CIF/FOB conditions). AND THEIR LIABILITIES: Due to the fact that the liner company is issuing it's own Bills of Lading, the liner company is becoming the Carrier and thus assuming The Time Charterer is certain liabilities for the safe carriage of the goods. controlling cargo handlings, directing the The cargo claims will be sent to the liner company, vessel to ports and ordering vessel s fuel oil even if the claims are resulting from navigation errors or seaworthiness of the ship. As time charterer the liner company will be directing the ship to ports. If a port or berth appeared not to be safe the time charterer will be liable for the damages to the vessel. The liner company is also appointing stevedores for loading and discharging. Even if the stevedores would be liable for damages to the vessel, it is the time charterer s direct liability under the charter party with the Ship owner. Under a time charter party the Charterer has to buy the fuel for the vessel s engines. If the fuel supplied to the vessel is causing damages to the engines the time charterer will not be able to escape from liability. Charterers Liability Page 6

7 EXAMPLE OF A MAJOR CLAIM: A container ship fully laden, including containers on deck encountered stability problems once at sea, but still within the port limits. The vessel capsized and grounded. A multi millions salvage operation was necessary to rescue ship and cargo, or what was left of it. Ship owner and cargo interests are claiming against the time charterer for loss of the vessel, salvage expenses and cargo claims. Since the stability problems may have been caused by bad stowage and/or misdescription of the weight of the goods loaded, especially inside the containers, the time charterers have a potential liability to this claim. 2. Companies transporting their own goods These companies are commodity traders or manufacturers, who have to deliver their own goods to various customers, or companies who are buying goods overseas, which need to be transported. It is common that companies in this category are primarily concerned about covering their risks for loss of or damage to their goods under a marine cargo insurance, however, as they also become the Charterer of a ship, they are taking on board various liabilities, which can be covered under our Charterers' Liability Insurance. AND THEIR LIABILITIES: The main area of liability exposure is damage to the chartered vessel caused by stevedores during loading and discharging, or by the cargo carried, or by unsafe port or berth. In many Charter Parties the Charterer is also liable for a variety of loss of or damage to the cargo. This means the Charterer may Charterers shipping their be liable for loss of or damage to his OWN cargo, but own cargoes must match cargo and charterers this risk he had already covered under his cargo liability insurance insurance. How is this possible? Charterers Liability Page 7

8 The answer is simple: At the time the loss or damage becomes apparent the Consignee is taking delivery against presentation of the Bill of Lading. If there is a loss of or damage to cargo the insurance company covering the cargo will be notified. If they pay for a loss or damage they will be subrogated in the rights of the Consignee and will subsequently try to recover their loss from the Ship owner under the Bill of Lading. If they succeed the Ship owner (or rather his P. & I. Club) will take recourse under the terms of the Charter Party. It may thus happen that a loss or damage, which has been recovered by the marine cargo insurer in the first place must be paid back to the Ship owner in the second place, which means that the marine cargo insurance company has received a premium and will say: "Thank you very much". The solution is also simple: Upon agreeing the marine cargo insurance policy it is necessary to demand a waiver of recourse clause, which means that the marine cargo insurance company will stop their recovery, if it appears that the Assured can be held liable in the scenario as explained above. With such a waiver of recourse clause it will be possible to exclude liabilities to cargo under our Charterers Liability Insurance, which will reduce the premium substantially. Under a CIF sale or a FOB purchase the seller (shipper) resp. the buyer (consignee) is the Charterer of the vessel. In both cases there will be a marine cargo insurance in their own name and for their own account, which means that the required waiver of recourse clause can be agreed Is the sale contract CIF, FOB or C+F? upon. There is however one situation where the cargo owner has no control over the marine cargo insurance and that is in respect of a C+F sale. Under such conditions the buyer (consignee) will take out the marine cargo insurance, whereas the seller (shipper) is still chartering the vessel. In such cases it will be necessary to include in our Charterers Liability Insurance a so-called contingent coverage for cargo liabilities, which we can provide. Charterers Liability Page 8

9 EXAMPLE OF A MAJOR CLAIM: A tanker with coated cargo tanks was loaded with a contaminated cargo of crude oil, which caused a major damage to the vessel s tank coating. After discharge the vessel had to go to a shipyard for immediate repairs. The Ship owners claimed against the Sellers of the cargo, in their capacity as Shippers under the B/L contract and in their capacity as Charterer of the vessel under the voyage c/p, for the repair costs and the loss of time. 3. Companies operating as freight contractor or ship operator This type of contractor/operator sells transport or logistics expertise. He neither owns the vessel nor the cargo, but he knows how to bring the two together. Forwarding agents may also come under this category. In most cases there are two shipping contracts, in which this type of contractor/operator appears as a principal. With the CIF-seller or FOB-buyer he has contracted on a Booking Note (B/N) or Charter Party (C/P). The operator (FREIGHTCO) will appear in this contract as Disponent-Owner. Ships will be chartered on a Time charter (T/C) or on a Voyage Charter (V/C). In these Charter Parties the operator (FREIGHTCO) will appear as the Charterer. AND THEIR LIABILITIES: It goes without saying that this type of The operator is disponent contractor/operator is exposed to a variety of owner in C/P with cargo interest and Charterers in liabilities, which can be covered under our Charterers C/P with the shipowner Liability Insurance. The operator not only has liabilities towards the Ship owner in the head Charter Party, but also as Disponent-Owner towards the sub-charterer. In most cases these liabilities are not back-to-back. Charterers Liability Page 9

10 EXAMPLE OF MAJOR CLAIM: A general cargo vessel loaded with an iron concentrate, which requires the highest care for safe carriage, exploded on the high seas and sank. Evidence is available that the cargo caused the explosion. The Ship owner is claiming loss of his vessel and has brought a claim against the voyage charterer of USD 20m. 4. Companies offering integrated services For this category it is difficult to comment in general terms. It will be necessary to make a profile and analysis of all the activities. Our We also cover Charterers Liability Insurance will be tailored to NVOCC-operators comprehensively cover the liabilities of this type of Charterer, who may even be an NVOCC-operator. EXAMPLE OF A MAJOR CLAIM: A container ship fully laden sank on the high seas after a heavy explosion and fire. The Ship owner takes the view that the explosion occurred in one of the containers and is therefore claiming for the total value of the ship (USD 10 millions). The cargo owners are claiming for the total value of all cargo on board (USD 6 millions). The claims are also brought against the NVOCC-operators. Charterers Liability Page 10

11 Types of Charter Parties 1. Time Charter Party (T/C) 2. Voyage Charter Party (V/C) 3. Booking Note (B/N) 1. TIME CHARTER PARTY For the carriage of dry cargoes the BALTIME and the NYPE (New York Produce Exchange) form of Charter Party are commonly used. Generally speaking the Baltime is more in favor of the Ship owner, whereas the NYPE is more advantageous to the Charterer. In the Baltime c/p the Ship owner is highly protected by clauses 9 and 13. These clauses do not exist in the NYPE c/p. In short the main characteristics of a Time Charter Party are as follows: the Ship owner takes care for a seaworthy ship with valid classification and employs the Captain and the Crew, enabling the ship to safely sail between the ports as ordered by the Charterer the Charterer takes care for the loading, stowage, lashing/securing and discharge of the cargoes and gives the Captain orders and instructions as to the cargoes to be shipped to and from various ports the Charterer orders and pays for the vessel's bunkers In the tanker business other types of Time Charter Parties are used in which the main characteristics are similar as above. 2. VOYAGE CHARTER PARTY The form commonly used for dry cargo is the Gencon Charter Party, but there are many other forms. In the tanker trade the Asbatankvoy Charter Party is the most popular form. The principle in all such forms is that the type of cargoes and Charterers Liability Page 11

12 the ports between which the cargoes are being carried are known beforehand. On Liner Terms the Ship owner takes care for loading, stowage and discharge, whereas on FIOS terms (Free In Out Stowed) the Charter Parties and Booking Charterer takes care for it. In both cases it is not Notes are negotiated between the parties and are only valid the Charterer who gives instructions to the between these parties Captain, but always the Ship owner. Consequently the liabilities for a Voyage Charterer are slightly less than for a Time Charterer. 3. BOOKING NOTE A Booking Note (B/N) is a contract between the CIF-seller or FOB-buyer (Merchant) and a shipping company (Carrier) for the carriage by sea of certain goods. The form used in most cases is the "CONLINEBOOKING" Liner Booking Note. The special nature of this contract is that the terms and conditions of the Booking Note are superseded by the Bills of Lading conditions at the time of actual shipment of the goods. We constantly give advice about Charter Parties, Bills of Lading and other contracts of carriage. We draft and recommend specific clauses and make proforma Charter Parties, as and when required. This additional service plays an important role in our active loss prevention programs. Charterers Liability Page 12

13 Bills of Lading Whereas the Charter Party is a contract negotiated between the parties on the basis of freedom of contract, the Bill of Lading is a document, which springs in to existence upon completion of loading and is binding Bills of Lading spring in to between various parties, who have not contracted existence between various parties with each other, on the basis of the clauses of the Bill of Lading and compulsory law, such as the Hague-Visby Rules. Types of Bills of Lading 1. Congen B/L used in combination with Charter Parties 2. Conline B/L used in liner trade 3. Through B/L used in trades with on-carriage to final destination 4. Combined Transport B/L used in trades with different means of transport (ship another ship rail road) Many liner companies use their own Bills of Lading. Although they may be differ in layout and content these Bills of Lading are mostly based on the standard Conline B/L. The Bill of Lading has three important functions: 1) It is evidence for receipt of the goods on board at a certain date / place and in a certain condition; 2) It is evidence of the contract of carriage between the carrier and the Bill of Lading holder. 3) It is a document of title to the goods shipped. The holder of the B/L is entitled to the delivery of the cargo. The B/L is a negotiable document. It can be transferred to other parties during the voyage. Charterers Liability Page 13

14 Various parties to the bill of lading As explained above the Bill of Lading springs in to existence, is binding between various parties, has three functions and is subject to compulsory law. When goods are sold there is a seller and a buyer, who become the shipper and the consignee in the B/L. When the goods are traded on a letter of credit, the banks will also come in to play as parties. It is also possible that the goods are sold one or more times during the voyage, which means that the Bill of Lading is changing hands. On the other side of the string is the carrier. Primarily this is the shipowner, but if other names appear on the face of the Bill of Lading or if the Bill of Lading is signed on behalf of the Charterer, those other parties will be the carrier. The problem about Bill of Lading law is that every case will be considered on the prevailing circumstances and many countries have different laws about the interpretation of the Bill of Lading. Precautionary measures at RaetsMarine We have a warranty in our standard terms and conditions that the Bills of Lading need to be issued and signed by or by authority on behalf of the Master. The reason for this warranty is simply to unravel the complexity of the Bill of Lading, and more importantly the liabilities resulting from it. Our rates are a reflection of the risk. It must therefore be clear from the beginning which liabilities we must insure, hence our practical solution with the Bill of Lading warranty. The Charterer of a vessel may control the loading, The Charterer should stowage and discharging of the cargo, make stowage never exclude the Shipowner from his Bill plans, instruct the Master, appoint superintendents and of Lading obligations agents, etc etc, however, the responsibility for navigation, safety, compliance Charterers Liability Page 14

15 with ISM and ISPS and seaworthiness will remain with the Master and the Shipowner. Those responsibilities cannot even be delegated to the Charterer. Just for this reason the Charterer should never voluntarily choose to become the carrier under the Bill of Lading. Charterers Liability Page 15

16 INSURANCES FOR CHARTERERS 1. Charterers' Liability Insurance 2. Marine Defence Insurance 3. Cargo Owners Legal Liability Insurance 4. Bunker Insurance 5. Freight Insurance 6. Charterers War P&I Insurance 7. Ancillary covers Below please find a summary of these insurances: 1. CHARTERERS' LIABILITY INSURANCE Charterers' liabilities are the contractual and legal liabilities of the Charterer of a ship. Ship and cargo are together during the voyage, but the parties to be identified in the string of contracts are not. Certain liabilities are inherent to chartering and cannot be avoided. It is a matter of active prevention to secure the financial exposures through a Charterers Liability Insurance, but that is not enough. It is also necessary to understand the nature of the cover and even more so, it's restrictions and exclusions. Charterers Liability Page 16

17 Cover is being provided in the following sections: damage to the vessel death and personal injury damage to property of third parties damage to cargo collision wreck removal quarantaine costs pollution general average costs of formal investigations sue and labour costs fines The main risks are liability to loss of or damage to cargo, liability to damage to the vessel and costs, which are explained as follows: 1.1 LIABILITY TO CARGO Depending on the type of Charter Party and it's amendments the Charterer may be held liable for loss of or damage to cargo arising from: bad stowage handling damages (stevedores) shortages (pilferage, tally, etc) non-delivery (non arrival, wrong port, etc) Charterers Liability Page 17

18 1.2. LIABILITY TO DAMAGES TO THE VESSEL The principle rule is that the Charterer of a ship can be liable for damages to the vessel caused during the contracted voyage or period. Also when in certain Charter Parties it is stipulated that stevedore damages have to be settled between the Owners and the Stevedores the Charterers are ultimately liable. The type of liabilities for which the Charterers can be held liable are: stevedore damages damage to the ship by the cargo carried damage to the ship by defective fuel oil unsafe port/berth If the chartered ship must be repaired and the Charterer is liable for the damages to the ship the time lost by the repairs are also covered COSTS All costs, which have to be made to defend a legal liability claim are covered under the Charterers' Liability insurance. The costs that The costs play an are regularly incurred are survey expenses and lawyer important part in the coverage fees. Even if the Charterer is not liable, but a party is pursuing a claim, the costs for such unwarranted liability claim are also covered. Charterers Liability Page 18

19 RESTRICTIONS AND EXCLUSIONS The most important restrictions and exclusions of a Charterers' Liability Insurance are as follows: 1. It is not allowed to waive any rights of legal limitation sums, which will apply in any legislation or convention. 2. Cover for loss or damage to cargo is subject to Hague / Hague-Visby Rules. Any rights or immunities may not be waived. In countries where the Hamburg Rules apply compulsory cover will be extended accordingly. 3. P. & I. insurance will give subsidiary cover, which means that any other policy, which will cover certain liabilities, will prevail. 4. Loss or damage to own or leased containers or other own or leased equipment is not covered. 5. Loss of freight, hire or bunkers is not covered. 6. Loss of time as a result of cancellation of a vessel is not covered. 7. Financial losses resulting from bad debtors are not covered. 8. Insolvency or fraudulent acts of agents are not covered. 9. On carriage of goods the following occurrences are excluded from cover: a) issuance of "ad valorem" bills of lading b) carriage of jewelries and banknotes, unless agreed in writing with the insurer c) deviation of the contracted voyage d) delivery of goods without original bill of lading Charterers Liability Page 19

20 e) issuance of ante- or post-dated bills of lading f) issuance of bills of lading with intentionally wrong description g) carriage of goods on deck For the items under a, b, c and g additional insurance can be obtained. LETTERS OF INDEMNITY (L.O.I.) We are aware of the fact that L.O.I.'s are negotiated to find solutions for irregularities (clean Bs/L, change of destination, If a Letter of Indemnity delivery of cargo without original B/L). It should leads to a fraudulent act there is no cover and no however be noted that the above restrictions and legal enforcement exclusions remain fully in force, even if a letter of available indemnity is negotiated through our recommended wording. 2. MARINE DEFENCE INSURANCE This type of insurance covers the legal costs and expenses, which a Charterer is bound to make due to a dispute under the Charter Party or as a result of a dispute with any party related to the carriage of the goods for which a vessel was chartered. The reasonable legal costs and expenses are covered in respect of claims and disputes in connection with: hire or off-hire, freight, deadfreight, detention, laytime, demurrage, despatch or any other claim or dispute under the Charter Party, Bill of Lading or another contract of carriage in respect of the Insured Vessel; supplies to the Insured Vessel; Charterers Liability Page 20

21 charges, disbursements and accounts received from agents, stevedores, customs, brokers, harbour authorities or other servants of the Assured; loading, stowing, trimming, discharging, lighterage of cargo on, or from the Insured Vessel; loss of, damage to or detention of the Marine defence (FD&D) is covering costs for disputes Insured Vessel; related to the operation of the chartered vessel general or particular average contributions or charges; salvage or towage services rendered to the Insured Vessel; representation of the Assured at official investigations or other inquiries in relation to the Insured Vessel; actions by, or against passengers intended to be or being or having been carried on the Insured Vessel, provided the carriage of passengers was approved by the Company; actions by, or against crew members, or their personal representatives or dependants and stowaways; actions by, or on behalf of a State or any public body against the Assured or the Insured Vessel; amounts due from, or to insurers, other than the Company. The cover includes - free of charge - all the work being carried out by our claim handling staff, who are all have shipping and chartering experience and will do their utmost to bring defence claims to a quickest possible solution. It should however be noted that an insurance policy cannot be treated as an extension of your operations department. Each dispute will require the full attention and support of your chartering and/or operations staff, especially in providing full background information, collecting of evidence and copies of all correspondence and contracts. Charterers Liability Page 21

22 3. CARGO OWNERS LEGAL LIABILITY INSURANCE In addition to the Charterers Liability cover we can offer cargo owners legal liability insurance ( COLL ). This COLL will mainly be of interest to traders of cargo which may cause pollution. Examples of such cargoes are persistent oils, chemicals and gas. COLL insurance will provide cover to the charterer in his capacity as owner of the cargo (as opposed to or in addition to his capacity as charterer of the vessel) for pollution claims. 4. BUNKER INSURANCE This is an insurance for Charterers when they have their own bunkers on board the vessel they have chartered. This insurance covers the loss of bunkers as well as the contribution of bunkers to General Average. The sum insured is the value of bunkers declared by the client. This insurance can be taken by Charterers who have a Charterers Liability insurance and who have an insurable interest in the bunkers. 5. FREIGHT INSURANCE When the freight to be earned for the voyage becomes only payable on or after delivery of the goods in the discharging port, the freight value is at risk during the voyage. If the cargo is lost during the voyage the Charterer will not receive the freight. This risk can be covered with a freight insurance. The sum insured is the freight or profit that the client declares. 6. CHARTERERS WAR P & I INSURANCE This insurance is to cover the legal liability and expenses as Charterers in respect of War Risks. Charterers Liability Page 22

23 Cover is worldwide excluding war risk areas (such as Iraq and Somalia). Maximum amount insured is Combined Single Limit USD 50m. 7. ANCILLARY INSURANCES In addition to our Charterers Liability, Marine Defence Insurance, Cargo Owners Legal Liability insurance, Bunker Insurance, Freight Insurance and Charterers War P&I Insurance, which are our own products, we facilitate some additional insurances for our Charterers client base. S.O.L. INSURANCE Our Charterers Liability Insurance is covering a regular sequence of events all in conformity with underlying contracts. The standard rule is that cargo must be shipped as stated on the Bills of Lading. If the Charterer commits a breach of contract, which is subject to an exclusion as stated above under Restrictions and Exclusions of the Charterers Liability Insurance we might be able to arrange coverage through a S.O.L. Insurance. Any breach or deviation must be reported prior to commencement of the voyage, so cover can be arranged. The maximum sum insured is agreed in advance. S.O.L. is the standard name of this insurance and it stands for Shipowners Liability Insurance. Notwithstanding this name Charterers can use it as well. Examples of a deviation or breach of contract are as follows: - Transhipment without being mentioned in the B/L ; - Cargo being carried on vessels other than named in the B/L; - Cargo shipped on deck whereas under deck B/L is issued ; - The B/L is ante-dated or post-dated ; Charterers Liability Page 23

24 - Actual port or ports is not in conformity with the port or ports in B/L ; - Intermediate storage cargo before delivery as per B/L ; - Geographical deviations, which are not mentioned in the B/L ; - Cargo being transferred to and/or from and/or being carried on board feeder vessels ; FREIGHT INSURANCE When the freight to be earned for the voyage becomes only payable on or after delivery of the goods in the discharging port, the freight value is at risk during the voyage. If the cargo is lost during the voyage the Charterer will not receive the freight. This risk can be covered with a freight insurance. The sum insured is the freight or profit that the client declares. DETENTION INSURANCE This insurance is to cover the net loss of the Charterer if he is unable to use the vessel following damage to the vessel for which the Charterer is legally liable under the Charter party. This insurance will indemnify the Charterer for loss of earnings and/or additional expenses and/or damage and/or loss of vessel(s) resulting from detainment and/or confiscation and/or arrest and/or restraint and/or seizure and/or expropriation or any other form of detention or loss of free use and disposal of vessel(s) by any government or port or customs authority and/or any authorized bodies and/or claimants on the vessel in which the assured has no interest, including but not limited to the discovery of or the suspicion of the presence on board of illegal narcotics or drugs or by reason of any other infringement of customs or other regulations. Loss or earnings as declared at time of attachment, and additional expenses (to be proved at time of loss) to include but not to be limited to costs of Charterers Liability Page 24

25 transshipment, crewing (including repatriation and substitution expenses), bunkers, demurrage, warehousing, substitute chartering, depreciation, cargo liabilities, legal expenses and cost of providing security to obtain the release of a vessel but excluding any fines or penalties absolutely. APPLICATION FOR INSURANCE We do not have standard tariffs and conditions. Every Charterer is different. We make an appropriate analysis of risks and activities. Our terms and conditions are tailor-made. We have flexible rating schemes to avoid unnecessary administration and calculation. Our rates and conditions Every Charterer will be judged and rated in reflect the risk to meet sound underwriting standards and accordance with risks last but not least: Our knowledge of the Charterers and past performance business puts us in a position to be competitive. Before quoting we require information from the Charterer as per attached Enquiry Form. CONCLUSION You could consider RaetsMarine as a mere underwriter of marine liability insurance. We literally go the distance in rendering this service. We manage marine liability insurance capacity with first class and transparent financial security at fixed premiums. You can call us into action First class from anywhere in the world. We have a correspondent in financial security every port where merchant ships go. The underwriting and claims teams at our headquarters in Rotterdam, and the teams in our branch offices in Paris, London and Singapore, are run by people who have a firm grasp of their business. They guarantee that your insurance cover exactly meets your requirements. So far so good. These are the facts, the firm aspects of our business. If this is what you expect from a marine underwriter, you are hereby sufficiently informed. Charterers Liability Page 25

26 There is, however, one fact that we believe is so important that it will dominate the rest of our story: "we are responsible for the performance under an insurance policy" We believe that our main concern at RaetsMarine is not only the fact that your financial security is warranted, but also how it is performed. It is of the utmost importance that we are able to give immediate response, that we create solutions where needed and that we make firm agreements. Our organization plays a very decisive role in this somewhat unseen process. The quality of insurance cover In reality it costs much more to run a genuine insurance cover than just a cosmetic facility. RaetsMarine works exclusively with first class security at fixed premiums. With all the infrastructure of claims servicing. Amlin Corporate We do this because we fully understand that the liabilities Insurance of Charterers are more complex and need to be closely monitored. We are therefore delighted to work together with Amlin Corporate Insurance N.V. as risk carrier. Amlin Corporate Insurance N.V.are A- rated by Standard & Poor s. The quality of fixed premiums and comprehensive insurance package Unlike the P. & I. mutual Clubs, who may impose general increases and supplementary calls, we at RaetsMarine offer our clients fixed premiums and each and every account is judged on its own record and performance. The rate reflects the risk, that s it. Unlike some other Charterers Liability facilities, such as at Lloyds, we at RaetsMarine offer our clients a comprehensive insurance package, which is tailored to Fixed premium advantages against P. & I. mutuals disadvantages Charterers Liability Page 26

27 the clients needs. Besides liability coverage, we can offer marine defence (F.D. & D.) coverage and other insurances, such as bunker-, freight-, war- and S.O.L. insurance. If Charterers are entered in a so-called I.G.A. (International Group) P. & I. Club, they should consider the following consequences: 1. A P. & I. Club is primarily for shipowners. By statute a P. & I. Club can only accept a limited amount of fixed premium business. It seems logical to say that Charterers will always come in second place. 2. There is an apparent conflict of interest if the Charterer and the chartered vessel are insured by the same P. & I. Club 3. The policy wording of a P. & I. Club is based on the Club Rules and is totally focused on the Shipowner and mutuality. Due to the mutual structure of a P. & I. Club the rules are both complex and subject to uncertainties, especially for Charterers, because in many places the cover is discretionary and subject to approval by the management of the P. & I. Club and its Board of (Shipowners)Directors. 4. The Board of Directors of any P. & I. Club consists of Shipowners, not Charterers 5. The rules of a P. & I. Club do not cover the Charterers liability for damages to the vessel. A. P. & I. Club must therefore offer a separate insurance market policy to complete the risks to be covered for Charterers. On this damage to hull cover the P. & I. Club acts as a mere agent and obviously it makes the total cover required more expensive and more complex. All the P. & I. Clubs have made ISM and ISPS compliance a condition of cover, which means that all Charterers entries are also subject to this obligation, which is unfair to a Charterer, simply because the Charterer has no actual control over ISM/ISPS compliance by the Shipowner. Charterers Liability Page 27

28 The quality of claims service We work under conditions in which circumstances can change in a flash, in which decisions must be made very quickly. Our claims team - In house claim handling most of them enjoy an excellent track record in shipping expertise with Sherlock Holmes approach and insurance - follow every movement of your claim or dispute and give support when and where necessary. We call it "hands-on steering". Many costly claims and disputes arise out of inadvertently imprecise drafting of clauses in Charter Parties, Bills of Lading and other shipping contracts. We encourage you to contact us about the drafting and checking of proforma Charter Parties or other contracts. It may also happen that you wish our advice about a contract or a clause, whilst you are still negotiating a contract. We act as consulting detectives. As such we are mirroring the magnificent talents of Sherlock Holmes. We take nothing for granted, we will never stop investigating, we will leave nothing to chance to unravel our clients cases. The quality of communication According to RaetsMarine, investing in people and materials also means investing in communications - in human as well as in technical terms. Because the entire world is our workplace, we must always attempt to bridge the gaps in language, time and cultures. To begin with, there's the We are only one telephone call away contact with you - our client. Communication between from you you and us occurs directly, by phone, or fax or passes through our network of brokers and correspondents. Automation and computerization is a never-ending process in which we invest much time and money in order to maintain our advantage. Through our data Charterers Liability Page 28

29 systems we have immediate access to all underwriting and claims information. The quality of our knowledge about your business From reading the previous paragraphs, we hope that you have gained faith in our knowledge of your business. But you need more than that to be successful in marine insurance. Let us state this once again "our responsibility is the performance under an insurance policy" That means that we, as specialist marine underwriters, must know all about the Charterers' business. Every aspect has its own conditions, which we must always take into consideration. And, of course, it is also in our Shipping knowledge interest to avoid and minimize claims. Our people are prevails available and ready to adapt to changing conditions and demands. Our service is always tailored to your requirements. You can see how well such a partnership works when you decide to use RaetsMarine. LIMITS OF LIABILITY PROVIDED The maximum amount insured we can offer at RaetsMarine is (any one accident or occurrence): Charterers Liability Insurance USD 500 million Cargo Owners Legal Liability Insurance USD 500 million Charterers War P&I Insurance USD 50 million Charterers Defence Insurance (F.D.&D. Insurance) USD 2 million Bunker Insurance USD 2 million Freight Insurance USD 2 million Charterers Liability Page 29

30 For a quick and effective handling of your enquiry, we kindly request you to provide us with the following information: Name of charterer and place of business Type of vessels Trading areas Type of cargoes Type of trade Liner trade Tramping Percentage of total volume % % Cargoes to be shipped Own cargo Third party cargo Percentage of total volume % % Contract with owners: Time- or voyage chartering Percentage of total volume Time charters % Voyage charters % Which charter party forms are commonly used Contract with shippers / cargo interests: Charter Parties, COA s, Booking Notes, Direct B/L bookings Type of Bills of Lading to be used Blank Owners Bs/L Own Bs/L (with Charterers logo/address on its face) Percentage of total volume Are Bs/L always signed by or by authority on behalf of the Master Expected date of entry % % Charterers Liability Page 30

31 How many tons of cargo is expected to be shipped in 1 year Expected number of vessels to be chartered per annum Average size (GT) of vessels Average duration of charter periods and/or voyage Which policy limit is required in US Dollars 5 million 10 million 20 million 25 million 50 million Deductibles Hull US$ Cargo Others US$ US$ Quotation for defence cover (legal costs)? YES NO Deductible US$ Name of insurance broker Name of present P. & I. Club/Insurer Loss record of the last 5 years Present insurer s loss record to be provided on request Please complete this form and send it back to us. We will give your enquiry immediate attention and will respond the same day or latest the first working day after having received the requested information. Thank you. Charterers Liability Page 31