At A Glance Guide - International Hull Clauses

International Hull Clauses
Insurance and Reinsurance At A Glance Guide 2
Comparing the International Hull

Clauses (01/11/03)
and the Institute Time Clauses
- Hulls (01/10/83)
Hill Dickinson
2nd Edition, Nov 2003
Contents
Section:
Page No.
Introduction
Part 1 Principal Insuring Conditions
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
General
Perils
Leased equipment
Parts taken off
Pollution hazard
3/4ths collision liability
Sistership
General average and salvage
Duty of the assured (sue and labour)
Navigation provisions
Breach of navigation provisions
Continuation
Classification and ISM
8
8
9
9
9
9
10
10
11
12
12
12
12
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
Management
Deductible(s)
New for old
Bottom treatment
Wages and maintenance
Agency commissions
Unrepaired damage
Constructive total loss
Freight waiver
Assignment
Disbursements warranty
Cancelling returns
Separate insurances
Several liability
Affiliated companies
War and strikes exclusion
13
14
14
14
14
14
15
15
15
15
15
15
15
15
15
15
www.htd-law.com
contd
Contents
Section:
contd
Page No.
30. Terrorist, political motive and malicious acts exclusion

31. Radioactive contamination, chemical, biological, bio-chemical and electromagnetic
weapons exclusion
16
Part 2 Additional Clauses - 01/11/03
16
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
16
16
16
16
17
17
17
17
17
18
Navigating limits
Permission for areas specified in navigating limits
Recommissioning condition
Premium payment
Contracts (Rights of Third Parties) Act 1999
Fixed and floating objects
4/4ths collision liability
Returns for lay-up
General average absorption
Additional perils
16
Part 3 Claims Provisions - 01/11/03
19
42.
43.
44.
45.
46.
47.
48.
49.
50.
19
19
19
20
20
21
21
22
23
Leading Underwriters
Notice of claims
Tender provisions
Duties of the Assured
Duties of the Underwriters in relation to claims
Provision of security
Payment of claims
Recoveries
Dispute resolution
Whilst care has been taken in the preparation of this guide, the matters referred to herein are subject to change and
no liability or responsibility is accepted by anyone for any errors or omissions which may exist in it. The contents of
this booklet are descriptive only and should not be used as a substitute for legal advice.
Introduction
This booklet is intended to serve as a guide to the International Hull Clauses (01/11/03) and to highlight
the principal changes from the Institute Time Clauses Hulls (01/10/83).
It is not an exhaustive analysis of the extent of cover nor does it list all the changes which have been
introduced. Whilst there are comments on certain key changes, these are not intended as legal advice
on the meaning of any Clause.
In order to keep this booklet as simple as possible, no detailed reference is made to the Institute Time
Clauses - Hulls (01/11/95) or to the International Hull Clauses (01/11/02), the forerunner of these clauses.
Separate booklets in this series already deal with those Clauses.
The principal changes from ITC-Hulls (01/10/83) are:
1. General
The Clauses are now in three parts
Part 1 contains the principal insuring conditions;

Part 2 contains commonly used additional clauses, to include optional covers which may
be agreed on placing (FFO, 4/4ths RDC, lay-up returns, general average absorption and
additional perils);
Part 3 contains the claims provisions and sets out the duties of the Assured and Underwriters.
2. Part 1 - Principal insuring conditions

Perils (cl. 2)
Cover for loss and damage caused by burst boilers/broken shafts and any latent defect
under clause 2.2 has been expressed such that the costs of repairing/replacing the burst
boiler/broken shaft and correcting the latent defect are not covered.
However, where loss or damage has been caused, 50% of the common repair costs are
covered under clauses 2.3/2.4.
Leased equipment (cl. 3)
Cover is given as standard for leased equipment.

Parts taken off (cl. 4)
Cover is given as standard for parts taken off.

Pollution hazard (cl. 5)
Pollution hazard cover is extended to governmental action to prevent or mitigate

damage to the environment or threat thereof.
3/4ths RDC (cl. 6)
Legal costs cover is subject to an express limit of 25% of the insured value.
General Average and salvage (cl. 8)
There is no reduction in claims for salvage, salvage charges and GA where the vessel
is underinsured.
Cover is provided for Article 13(1)(b) salvage awards under the International Convention
on Salvage 1989 and General Average expenditure allowable under Rule XI(d) of the
York-Antwerp Rules 1994.
Sue & labour (cl. 9)
There is no reduction in claims for sue and labour expenditure where the vessel
is underinsured.
Navigation provisions (cl. 10)
These are no longer expressed as warranties. There is no cover for loss during the period
of breach.
Continuation (cl. 12)
The vessel must now be in distress/missing (at sea) or in distress (in port), to be held
covered at expiry.
Classification & ISM (cl. 13)
There are major changes to reflect current practice regarding Class and ISM.
Automatic termination for failure to maintain Class, to comply with Class requirements
relating to the vessels seaworthiness and to have in place valid ISM documentation.
Management (cl. 14)
Automatic termination (if no prior agreement) where the vessel sails for break-up.
There is a continuing duty upon the Assured, Owners and Managers to comply with flag
state requirements and Class accident/defect reporting requirements. There is no cover
for loss attributable to breach of this duty.
Deductible(s) (cl. 15)
Additional Machinery deductible may apply if agreed on placing.
Claims under the GA Absorption clause are not subject to the deductible.
Bottom treatment (cl. 17)
Cover extended for anti-fouling coatings to the damaged/disturbed areas.

Constructive total loss (cl. 21)
Constructive total losses are now payable when the costs of repair or recovery exceed
80% of insured value.
Cancelling returns (cl. 25)
CRO, but lay-up returns may be agreed on placing under cl. 39.
Separate insurances, several liability, affiliated companies (cls. 26-28)
All included as standard.

War, strikes, terrorists, political motive and malicious acts (cls. 29-30)
These have been re-ordered.
Malicious acts exclusion now applies to any weapon rather than any weapon of war.
RACE/Chem-Bio (cl. 31)
The new Institute Extended Radioactive Contamination, Chemical, Biological, Biochemical and Electromagnetic Weapons exclusion has been adopted.
The cyber attack wording (cl. 1.2 of CL 365) has not been adopted.
3. Part 2 - Additional clauses

Navigating limits (cl. 32)
The Institute Warranty limits have been re-drawn as per the International Navigating
Conditions (01/11/03) and are no longer expressed as warranties.
Recommissioning (cl. 34)
Applies following lay-up for more than 180 days.

Premium
The Assured undertakes that the premium will be paid within 45 days or as may be
agreed based on LSW 3000.
FFO and 44ths RDC (cls. 37/38)
Optional FFO and 4/4ths RDC cover can now be agreed on placing.
Returns for lay-up (cl. 39)
Optional lay-up returns can now be agreed on placing.

GA Absorption (cl. 40)
Optional GA absorption clause, based on the BIMCO clause, can now be agreed on placing.
Payable without the application of the deductible.

Additional perils (cl. 41)
Optional additional perils clause can now be agreed on placing.
Provision for costs not covered under clauses 2.2.1 and 2.2.2 (burst boilers/broken shafts
and latent defect).
4. Part 3 - Claims provisions

Leading Underwriters (cl. 42)
Leaders designated on the slip given authority to bind followers in respect of claims matters.
Notice of claims (cl. 43)
A failure to give notice within 180 days of Assured, Owners or Managers becoming aware of
loss, damage, liability or expense which may result in a claim means claim not recoverable.
Duties of the Assured (cl. 45)
The duties of the Assured to co-operate in claims investigation are now set out.
Underwriters shall not be liable if an Assured misleads them or conceals material facts at
any stage of the claims process, prior to the commencement of legal proceedings.
(However, the Assured cannot be required under this clause to disclose documents or
matters which are subject to legal privilege.)
Duties of the Underwriters (cl. 46)
The duties of Underwriters in relation to surveyors, appointment of average adjusters,

payment of their fees and release of reports are now set out.
Underwriters will make a decision on claims within 28 days of a fully documented

claims presentation.
Provision of security (cl. 47)
Underwriters will give due consideration to the provision of security or countersecurity.

Recoveries (cl. 49)
There is an express duty on the Assured to co-operate with Underwriters to protect

recoveries from third parties before claim paid or agreed.
Recoveries are now to be shared pro rata rather than "top down".
Dispute resolution (cl. 50)
Alternative dispute resolution procedures options are acknowledged.
International Hull Clauses (01/11/03)

(Clauses not set out in full)
ITC - Hulls (01/10/83)

(minor changes not shown)
Part 1 Principal Insuring Conditions

1. General
2. Perils
Introductory wording relating to application of

Parts 1, 2 and 3 and the optional cover in Clauses
37-41.
New Parts 2 & 3 may be altered in the future, without

alteration to Part 1.
This insurance is subject to English law and practice.
No change
This insurance is subject to the exclusive

jurisdiction of the English High Court of Justice,
except as may be expressly provided herein to
the contrary.
New Previously applied where risks written on the MAR 91

form. May be deleted.
Severability clause.
New
Covers loss of or damage to the subject-matter

insured caused by
No change (cl. 6.1)
1.1 perils of the seas, rivers, lakes or other

navigable waters
No change (cl. 6.1.1)
1.2 fire, explosion
1.3 violent theft by persons from outside the vessel
1.4 jettison
1.5 piracy

Changed (cl. 6.1.6 breakdown to nuclear installations)
Deleted. See Clause 31.
(contd)
1.6 contact with land conveyance, dock or

harbour equipment or installation
Changed (cl. 6.1.7) Aircraft or objects falling therefrom now

addressed in Clause 2.1.9.
1.7 earthquake, volcanic eruption or lightning
1.8 accidents in loading, discharging or shifting

cargo, fuel, stores or parts
Changed (cl. 6.2.1) No longer subject to the due diligence

proviso in Clause 2.2 and extended to include stores and
parts.
1.9 contact with satellites, aircraft, helicopters or

similar objects, or objects falling therefrom.
Changed (cl. 6.1.7) Now includes damage caused by

helicopters, satellites and objects falling therefrom. This
was subject to the due diligence proviso in Clause 6.2 of the
1995 clauses.
Covers loss of or damage to the subject-matter

insured caused by
No change (cl. 6.2)
2.1 bursting of boilers or breakage of shafts but

does not cover any of the costs of repairing or
replacing the boiler which bursts or the shaft
which breaks
Changed (cl. 6.2.2) Cover applies when damage is caused by

bursting boilers or breaking shafts, but not in respect of the
costs of replacing the boiler or shaft. Common costs are
referred to in Clause 2.3 below. (Additional Perils cover can
be agreed - see Clause 41 below.)
2.2 any latent defect in the machinery or hull,

but does not cover any of the costs of
correcting the latent defect
Changed (cl. 6.2.2) Cover applies to damage caused by the

latent defect, but not in respect of the costs of correcting
the latent defect. Common costs are referred to in Clause
2.4 below. This Clause seeks to reinstate a distinction
between the defect and consequential damage as
understood prior to the Court of Appeal decision in the
Nukila, without referring to part. Part defies easy
definition.
2.3 negligence of Master, Officers, Crew or Pilots
2.4 negligence of repairers or charterers provided

such repairers or charterers are not an
Assured under this insurance

(contd)
3. Leased Equipment
4. Parts taken off
ITC - Hulls (01/10/83)

2.5 barratry of Master, Officers or Crew
provided that such loss or damage has not resulted

from want of due diligence by the Assured, Owners
or Managers.
No change The additional words or Superintendents

or any of their onshore management introduced in
the 1995 clauses have not been included.
Where there is a claim recoverable under Clause

2.2.1, cover is also given for one half of the costs
common to the repair of the burst boiler or the
broken shaft and the loss or damage caused thereby.
New Costs common to the repair of the burst boiler/broken

shaft and the damage caused are not covered under Clause
2.2.1. This Clause gives cover for half of such costs.
(Additional Perils cover can be agreed - see Clause 41 below)
Where there is a claim recoverable under Clause

2.2.2, cover is also given for one half of the costs
common to the correction of the latent defect and
to the repair of the loss or damage caused thereby.
New Costs common to the correction of the latent defect

and the repair of the damage caused are not covered under
Clause 2.2.2. This Clause gives cover for half of such costs.
(Again, Additional Perils cover can be agreed - see Clause 41
below)
Master, Officers, Crew or Pilots shall not be

considered Owners within the meaning of this
Clause 2 should they hold shares in the vessel.
Covers loss of or damage to equipment not owned

by the Assured but installed on the vessel for which
the Assured has assumed contractual liability.
Damage must be caused by an insured peril.
New Cover applies to leased equipment, lost or damaged by

the Clause 2 perils (or Additional Perils, if agreed). The
Clause does not provide all risks cover for leased equipment
as appears under some market wordings.
The measure of indemnity is the lesser of the cost

of repair, replacement or the contractual liability.
Cover for leased equipment is included in the
insured value of the vessel.
The Clause is based on CL362.
Covers loss of or damage to parts taken off the

vessel. Damage must be caused by an insured peril.
New Cover applies to parts taken off the vessel lost or

damaged by the Clause 2 perils (or Additional Perils, if
agreed). Cover is limited to 60 days and subject to a limit of
5% of the insured value of the vessel.
The measure of indemnity for leased parts taken

off is the same as for leased equipment under
Clause 3.
This Clause is based on CL364, but includes leased parts

taken off and is extended to 60 days.
Parts taken off are covered excess of any other

responsive insurance.
Cover is limited to 60 days whilst the parts are not

on board the vessel. Excess periods can be held
covered where notice is given to Underwriters
prior to expiry and any amended terms of cover
and additional premium agreed.
The Underwriters liability for parts taken off does

not exceed 5% of the insured value of the vessel.
No change (cl. 6.3)
5. Pollution Hazard
Covers loss of or damage to the vessel caused by any

governmental authority under its powers to prevent or
mitigate a pollution hazard or damage to the
environment or threat thereof, where these result from
damage to the vessel for which the Underwriters are
liable. Proviso as to exercise of due diligence to
prevent/mitigate the hazard or threat.
Changed (cl. 7) Extended to include governmental action to

prevent or mitigate damage to the environment/threat
thereof as well as a pollution hazard/threat.
6. 3/4ths collision liability
Cover for 3/4ths of any sum(s) paid by the Assured

due to its legal liability in damages following a
collision for
No change (cl. 8.1)
1.1 loss of or damage to any other vessel or

property thereon
(contd)

(contd)
ITC - Hulls (01/10/83)

1.2 delay to or loss of use of any such other vessel

or property thereon
1.3 general average of, salvage of, or salvage

under contract of, any such other vessel or
property thereon.
Cover under Clause 6 is in addition to the indemnity

provided by the other terms and conditions of this
insurance, subject to the following provisions
No change (cl. 8.2)
2.1 where the vessels are both to blame, subject

to limitation of liability, the indemnity under
Clause 6 is to be calculated on the principle
of cross-liabilities.
2.2 Underwriters liability under Clauses 6.1

and 6.2 is limited to three fourths of the
insured value of the vessel in respect of any
one collision.
Underwriters to pay three fourths of the legal costs

in contesting/limiting liability where Underwriters
have given their prior written consent and subject
to a limit of 25% of the insured value of the insured
vessel (unless specific written agreement obtained
from Underwriters).
Changed (cl. 8.3) The costs cover is now subject to a limit of

25% of the insured value of the vessel, unless otherwise
agreed.
EXCLUSIONS
4
No change (cl. 8.4)
4.1 removal or disposal of obstructions, wrecks,

cargoes or any other thing whatsoever
4.2 any real or personal property or thing

whatsoever except other vessels or property
on other vessels
4.3 the cargo or other property on, or the

engagements of, the insured vessel
4.4 loss of life, personal injury or illness
4.5 pollution or contamination, damage to the

environment or threats thereof, except from
other vessels with which the insured vessel is
in collision. However, the clause does not
apply to an enhanced salvage award under
Article 13(1)(b) of the International
Convention on Salvage, 1989.
Changed (cl. 8.4.5) Extends exclusion to threats of

pollution/contamination and to damage to the
environment or threat thereof. However, the exclusion will
not apply to an enhanced salvage award under Article
13(1)(b).
7. Sistership
Cover for collision with/salvage services rendered by

sisterships. The sum payable, if any, is fixed by an
arbitrator agreed between Underwriters and the Assured.
No change (cl. 9)
8. General average
and salvage
Change (cl. 11.1) There is now no reduction in claims for

salvage, salvage charges and GA where the vessel
is underinsured.
(contd)
10
Clause 6 does not cover payments by the Assured

in respect of
Covers the vessel's proportion of salvage, salvage

charges and/or general average. Underwriters
liability is not reduced in the event of under
insurance. Specific cover for general average sacrifice.
2 Adjustment to be according to the law and practice

obtaining at the place where the adventure ends,
but where the contract of affreightment so
provides the adjustment shall be according to the
York-Antwerp Rules.
No change (cl. 11.2)
(contd)

ITC - Hulls (01/10/83)

When the vessel sails in ballast and not under

charter, the provisions of the York-Antwerp Rules,
1994 (excluding Rules XX and XXI) apply. Defines
the general average voyage in such circumstances.
Changed (cl. 11.3) York-Antwerp Rules 1994 are substituted

for the York-Antwerp Rules 1974. As before, the provisions
relating to commission on general average disbursements
and interest on losses made good in general average are
excluded. Unlike the 1995 clauses, expenses under Rule
XI(d) (see Clause 8.6.2 below) are not excluded under this
clause.
No claim under Clause 8 where the loss was not

incurred to avoid a peril insured.
Underwriters shall not be liable under this

Clause 8 for
New
5.1 special compensation payable to a salvor

under Article 14 of the International
Convention on Salvage, 1989 or under any
other similar provision
No cover for or in respect of special compensation payable

to a salvor under Article 14.
5.2 expenses or liabilities incurred in respect of

damage (actual or threatened) to the
environment or due to the escape (actual or
threatened) of pollutants from the vessel.
No cover for or in respect of expenses or liabilities incurred

in respect of damage (actual or threatened) to the
environment or due to escape (actual or threatened) of
pollution from the vessel.
Clause 8.5 does not exclude any sum which the

Assured shall pay
New
6.1 as an enhanced salvage award under Article

13(1)(b) of the International Convention on
Salvage, 1989
An enhanced salvage award under Article 13(1)(b) is not

excluded by Clause 8.5.
6.2 as general average expenditure allowable

under Rule XI(d) of the York-Antwerp Rules
1994, but only where the contract of
affreightment provides for adjustment
according to the York-Antwerp Rules 1994.
Where the contract of affreightment provides for

adjustment under the York-Antwerp Rules 1994, certain
expenses to prevent or minimise damage to the
environment allowable under Rule XI(d) are not excluded
by Clause 8.5. Under the 1995 clauses, additional cover
had to be purchased under the General Average Pollution
Expenditure Clause (CL 360).
In case of any loss or misfortune it is the duty of

the Assured and their servants and agents to take
such measures as may be reasonable for the
purpose of averting or minimising a loss which
would be recoverable under this insurance.
Changed (cl. 13) There is now no reduction in claims

for sue and labour expenditure where the vessel is
underinsured (cl. 13.4 has been deleted).
Underwriters will contribute to charges properly

and reasonably incurred by the Assured under
Clause 9.1. General average, salvage charges
(except as provided for in Clause 9.5), special
compensation and expenses referred to in Clause
8.5 and collision defence or attack costs are not
recoverable under Clause 9.
Changed (cl. 13.2) To make it clear that Article 14 special

compensation and expenses excluded by Clause 8.5 are also
irrecoverable as sue and labour.
Measures taken by the Assured or Underwriters to

save, protect or recover the subject-matter insured
will not prejudice the rights of either party.
Provides that where Underwriters have agreed a

total loss of the vessel and expenses have been
reasonably incurred in saving or attempting to
save the vessel and there are no salved proceeds,
or the expenses exceed the salved proceeds, then
Underwriters pay pro rata.
Changed (cl. 13.5) Deletion of the underinsurance

provisions and in the same way as Clause 9.2 (see above).
9. Duty of the Assured

(sue and labour)
The sum recoverable under this Clause 9 shall be

in addition to the loss otherwise recoverable under
this insurance but shall in no circumstances exceed
the insured value of the vessel.
11

10. Navigation provisions
11. Breach of navigation

provisions
12. Continuation
13. Classification and ISM
Unless Underwriters agree otherwise in accordance with

Clause 11
Changed (cl. 1) Breach of these clauses is no longer a

breach of warranty in the strict sense (if ever it was) under the
Marine Insurance Act 1906. Rather, Underwriters are not
liable for loss and damage arising whilst the vessel or the
Assured are in breach (see Clause 11 below).
the vessel shall not breach any provisions as to

cargo, trade or locality such as the Institute limits
(see Clause 32 below).
New To address any separate provisions in the slip

and the new International Navigating Conditions set out
in Clause 32.
the vessel may navigate with or without pilots,

go on trial trips and assist and tow vessels or craft
in distress, but may not be towed except as is
customary to the first safe port or place when in
need of assistance, or undertake towage or salvage
services under a previously arranged contract.
Changed (cl. 1.1) In that Clause 10.2 is no longer expressed

as a warranty and breach is now addressed
in Clause 11.
the Assured shall not enter into any contract with

pilots or for customary towage which limits or
exempts the liability of the pilots and/or tugs and
so on unless compelled to do so in accordance
with established local law or practice.
New This Clause follows Clause 1.2 of the 1995 Clauses.
the vessel shall not be employed in trading

operations which entail cargo loading or
discharging at sea from or into another vessel
(not being a harbour or inshore craft).
Changed (cl. 1.2) In that Clause 10.4 is no longer expressed

as a warranty and breach of this provision is now
addressed in Clause 11.
In the event of breach of Clause 10, the Underwriters are

not liable for any loss, damage, liability or expense
arising out of or resulting from an accident or occurrence
during the period of breach, unless immediate notice is
given to Underwriters after receipt of advices of such
breach and any amended terms of cover and any
additional premium required are agreed.
If at expiry, the vessel is at sea and in distress or missing,

or in port and in distress, she is held covered until arrival
at the next port in good safety, or if in port and in
distress until the vessel is made safe, at a pro rata
monthly premium, provided that notice is given to
Underwriters as soon as possible.
At the inception of and throughout the period of

this insurance
1.1 the vessel shall be classed with a Classification
Society agreed by Underwriters
1.2 there shall be no change, suspension,
discontinuance, withdrawal or expiry of the
vessels class with the Classification Society
(contd)
12
ITC - Hulls (01/10/83)

1.3 any recommendations, requirements or

restrictions imposed by the vessel's
Classification Society which relate to the
vessel's seaworthiness or to her maintenance
in a seaworthy condition shall be complied
with by the dates required by that Society
New (cl. 3) Since the Clause 10 matters are no longer

expressed as warranties under which Underwriters might be
discharged from liability from the date of breach, this
Clause provides instead that Underwriters are not liable as
a result of anything happening during the period of
breach, unless notice is given to Underwriters immediately
after the breach is advised. Thus, for example, charterers
taking the vessel within the navigating limits may not
prejudice the owners cover, provided that immediately
after the owner becomes aware, he notifies Underwriters
and agrees
any amended terms of cover and additional premium.
Changed (cl. 2) The vessel must now be in distress/missing
(at sea) or in distress (in port) for Clause 12 to apply. Simply
being at sea or at a port of call is no longer sufficient.
Whilst the vessel must now be in distress if in port, there is
no longer a requirement that the port be one of refuge or
call. Cover is no longer provided until the vessel arrives at
her port of destination. Cover continues only until the next
port
in good safety or, if the vessel is in port at expiry, until the
vessel is made safe. The requirement under the 1995
clauses that notice be given prior to expiry has been
changed to as soon as possible.
Changed (cl. 4) This clause broadly follows ITC-Hulls
1/10/83, but also applies to ISM and recommendations by
Class as to seaworthiness. The remedy remains as
automatic termination, subject to clause 13.2.
Change (cl. 4.1) Clause 13 now envisages that the
Underwriters must agree the vessels Class at the outset.
No change (cl. 4.1)
New This is taken from the JH131 wording. The Assured

must ensure that any Class recommendations etc. relating
to seaworthiness are complied with by the due dates. This
was clause 4.1.2 in the 1995 Clauses.

(contd)
ITC - Hulls (01/10/83)

1.4 the Owners or the party assuming responsibility

for operation of the vessel from the Owners
shall hold a valid Document of Compliance in
respect of the vessel as required by Chapter IX
of the International Convention for the Safety
of Life at Sea (SOLAS) 1974 as amended and
any modification thereof
New This tracks Chapter IX in relation to the DOC.
1.5 the vessel shall have in force a valid Safety

Management Certificate as required by
Chapter IX of the International Convention for
the Safety of Life at Sea (SOLAS) 1974 as
amended and any modification thereof.
New This tracks Chapter IX in relation to the SMC.
Unless Underwriters agree otherwise, the insurance

terminates automatically at the time of breach of
Clause 13.1
New The insurance will terminate automatically, subject to

contrary agreement by Underwriters and the original
exceptions.
2.1 unless the vessel is at sea, in which case the

termination operates on arrival at her next port
No change (cl. 4.1)
2.2 unless the change, suspension, discontinuance

or withdrawal of her class under Clause 13.1.2
has resulted from loss or damage covered
under the insurance or which would be
covered by the Institute War and Strikes
Clauses Hulls-Time, in which case the
termination only operates if the vessel sails
from her next port without the prior approval
of the Classification Society.
No change (cl. 4.1)
A pro rata daily net return of premium shall be Changed In the event of termination, premium is still
made provided that a total loss of the vessel,
returnable, provided that there has not been a total loss of
whether by perils insured under this insurance
the vessel.
or otherwise, has not occurred during the period
of this insurance or any extension thereof.
1 Unless Underwriters otherwise agree, the insurance
terminates automatically at the time of
14. Management
1.1 any change, voluntary or otherwise, in the

ownership or flag of the vessel
1.2 transfer of the vessel to new management
1.3 charter of the vessel on a bareboat basis
1.4 requisition of the vessel for title or use.
Proviso that if the vessel has cargo on board and
has already sailed from her loading port or is at
sea in ballast, automatic termination can be
deferred until arrival at final port of discharge if
with cargo or at port of destination if in ballast.
Provision as to requisition for title or use.
2
Unless Underwriters agree otherwise, the

insurance terminates automatically when the
vessel sails (with or without cargo) with an
intention of being broken up, or being sold for
breaking up.
New This clause broadly follows Clause 4.2 of ITC-Hulls

1/10/83, but also now applies to break-up voyages. Clause
14.4 is new and again adopts provisions from JH131.
No change (cl. 4.2)
No change (cl. 4.2)
No change (cl. 4.2)
No change (cl. 4.2)
No change (cl. 4.2)
Changed (cl. 1.3) The insurance now terminates

automatically whereas under ITC-Hulls 01/10/83 the
insured value was reduced to the market value of the vessel
as scrap (albeit without limiting claims for GA and sue &
labour). However, as previously, an extension of cover may
be negotiated.
(contd)
13
(contd)

ITC - Hulls (01/10/83)

In the event of termination under Clause 14.1 or

Clause 14.2 above, a pro rata daily net return of
premium shall be made provided that a total loss
of the vessel, whether by perils insured under this
insurance or otherwise, has not occurred during the
period of this insurance or any extension thereof.
Changed In the event of termination, premium is still

returnable, provided that there has not been a total loss of
the vessel. A return is also now available where the
insurance terminates under Clause 14.2.
It is the duty of the Assured, Owners and Managers to
New
4.1 comply with all statutory requirements of the

vessel's flag state relating to construction,
adaptation, condition, fitment, equipment,
operation and manning of the vessel
New This additional requirement relates to certain flag

state requirements and includes ISM and STCW obligations.
4.2 comply with all requirements of the vessel's

Classification Society regarding the reporting
to the Classification Society of accidents to
and defects in the vessel.
In the event of any breach of Clause 14.4,

Underwriters are not liable for any loss, damage,
liability or expense attributable to such breach.
15. Deductible(s)
14
New This Clause is based on JH131. However is not a

warranty, but rather a duty. It is a variation of clause 4.3
in the 1995 clauses, although the duty to report now
applies where the Assured is required to do so under Class
rules, rather than where the incident condition or
damage are matters in respect of which Class might
make recommendations.
New Breach of the duties means that Underwriters are not
liable, where the breach is causative of loss.
Application of deductible. Deductible will not

apply to the expense of sighting the bottom after
stranding, in certain circumstances.
Changed (cl 12.1) The changes reflect the additional cover

in Clause 3 (Leased Equipment), Clause 4 (Parts Taken Off),
the optional extensions in Clauses 37 and 38 (FFO and
4/4ths RDC) and Clause 41 (Additional Perils). These
optional extensions are subject to the Clause 15.1
deductible. The size of the deductible is no longer stated in
the body of the Clause.
Machinery Damage Additional deductible may

apply. If it does, then it must be applied before
the deductible in Clause 15.1.
New This Machinery Damage deductible (taken from CL

289) only applies where agreed. If AMD is 0,
the Clause has no effect. This Clause includes the
Additional Deductible Adaptation Clauses (CL 306) (when
Clause 41 applies).
Neither deductible applies to a claim for total loss

or sue and labour associated therewith.
Heavy weather between two successive ports is

treated as being due to one accident.
Lightening/cargo loading or discharging damage is

treated as being due to one accident.
New This Clause is based upon the market Lightening

Clause and will apply where Underwriters have agreed
cover for trading operations entailing cargo loading or
discharging at sea under Clause 10.4/Clause 11.
16. New for old
Claims recoverable under this insurance shall be payable

without deduction on the basis of new for old.
No change (cl. 14)
17. Bottom treatment
Underwriters not liable in respect of bottom treatment,

except in specified circumstances.
Changed (cl. 15) Cover now extended to anti-fouling

coatings for the damaged/disturbed areas
18. Wages and

maintenance
Underwriters not liable for wages/maintenance of Master No change (cl. 16)

or Crew except in specified circumstances.
19. Agency commission
The costs of the Assured obtaining and supplying

information/documents or associated agency charges
cannot be recovered.
No change (cl. 17) However, the Assured is now under a

contractual obligation to provide certain information to
Underwriters under Part 3. Underwriters will pay certain
reasonable costs in respect of recoveries under Clause 49.

20. Unrepaired damage
The measure of indemnity in respect of claims for

unrepaired damage shall be the reasonable
depreciation in the market value of the vessel at
the time this insurance terminates arising from
such unrepaired damage, but not exceeding the
reasonable cost of repairs.
ITC - Hulls (01/10/83)

In no case shall the Underwriters be liable for

unrepaired damage in the event of a subsequent
total loss of the vessel (whether by perils insured
under this insurance or otherwise) sustained
during the period of this insurance or any
extension thereof.
The Underwriters shall not be liable in respect of

unrepaired damage for more than the insured value
of the vessel at the time this insurance terminates.
21. Constructive total loss
1 In ascertaining whether the vessel is a constructive

total loss, the figure to be taken into account as
the repaired value shall be 80% of the insured
value. The value of the vessel or wreck is excluded
from the calculation.
Changed (cl. 19.1) The figure to be taken into account in

assessing whether the vessel is a CTL is now 80% of the
insured value, rather than 100%.
Changed (cl. 19.2) As above
No claim for constructive total loss of the vessel

based upon the cost of recovery and/or repair of
the vessel shall be recoverable unless such costs
exceed 80% of the insured value of the vessel.
22. Freight waiver
In the event of a total loss Underwriters cannot

claim freight.
No change (cl. 20)
23. Assignment
No assignment will be recognised by Underwriters unless No change (cl. 5)

a dated notice of such assignment signed by the Assured
is endorsed on the policy.
24. Disbursements
warranty
Sets out the additional insurances permitted including

increased value, freight, hire, insurance premiums, war
and strikes and now chemical, biological,
electromagnetic weapons.
25. Cancelling returns
If the insurance is cancelled by agreement, the

Changed (cl. 22) Cancelling returns only available,
Underwriters will pay a pro rata monthly net return of
although lay-up returns are optional under Clause 39.
premium, provided there has not been a total loss of the
vessel.
26. Seperate insurances
If more than one vessel is insured, each vessel insured is

deemed to be separately insured.
27. Several liability
Underwriters obligations are several and not joint and

New This is a standard provision. It was very frequently
limited to their individual subscriptions. Underwriters are incorporated by the terms of the slip.
not liable for a defaulting Underwriter.
28. Affiliated companies
If the vessel is chartered by an associated, subsidiary or

affiliated company of the Assured, Underwriters waive
their rights of subrogation against such charterers, where
there is an insured loss, save where charterers have
responsive liability cover.
New This is based on a standard provision previously

frequently incorporated. Unlike some market wordings,
however, cover is not extended to the associated, subsidiary
and affiliated companies of the Assured.
29. War and strikes

exclusion
Loss, damage, liability or expense due to specified war

and strikes risks are excluded.
Changed (Cl 23-24) The first part of the Strikes exclusion has
been included in this clause. The wording of the exclusions
remains unaltered.
Changed (cl. 21) To permit insurance against the new

RACE/Chem-Bio clause (Clause 31)
New This is a standard provision. It was very frequently

incorporated by the terms of the slip.
15

ITC - Hulls (01/10/83)

30. Terrorist, political

motive and malicious
acts exclusion
Loss, damage, liability or expense caused by terrorists

or any person acting maliciously or from a political
motive are excluded. Loss, damage, liability or expense
caused by any weapon or the detonation of an
explosive by any person acting maliciously are
excluded.
Changed (cl. 24-25) The second part of the Strikes exclusion

has been included in this clause. The wording of the
exclusions remains unaltered, save that the malicious acts
exclusion now applies to any weapon, rather than a
weapon of war.
31. Radioactive
contamination,
chem-bio exclusion
Loss, damage, liability or expense due to radiation or

contact with radioactive material or any weapon or
device employing atomic or nuclear fission and loss,
damage, liability or expense caused by any chemical,
biological or electromagnetic weapon are excluded.
Changed (cl 26) This is the new Institute Extended

Radioactive Contamination, Chemical, Biological,
Bio-chemical and Electromagnetic Weapons exclusion. The
extension applies to any weapon or device rather than
weapon of war and radioactive matter not used for
peaceful purposes. This Clause also incorporates the first
part of the Chem/Bio clause (CL 365), but does not extend
to cyber attack.
Part 2 Additional Clauses (01/11/03)

32. Navigating limits
The vessel shall not enter areas described by the

International Navigating Limits.
New This follows the new standard International

Navigating Conditions. A comparison between the old and
the new limits is beyond the scope of this booklet. The new
areas can be seen at www.the-lma.com. Bering Sea transit
cover is now standard
33. Permission for

navigating limits
Where Underwriters prior permission has been obtained

and any AP and amended terms of cover have been
agreed, the vessel may enter the areas described in
Clause 32 and Clause 11 shall not apply.
New This enables the vessel to enter the prohibited areas

and where the Assured has obtained prior permission and
any amended terms of cover and AP have been agreed.
Underwriters remain liable during the period of breach
contrary to Clause 11Bering
34. Recommissioning
condition
As a condition precedent to the liability of Underwriters,

New If laid up for 6 months, Underwriters will not be
the vessel shall not navigate from lay-up berth following liable if the vessel navigates without survey and without
a lay-up period of more than 180 consecutive days unless any required repairs having been undertaken.
the Classification Society or a surveyor agreed by the
Underwriters has examined the vessel and the Assured
has carried out any repairs or requirements
recommended by the Classification Society or such
surveyor.
35. Premium payment
The Assured undertakes that the premium shall

be paid within 45 days (or other agreed period)
of inception or where payment by instalment has
been agreed, the first instalment must be paid
within the same period from inception and
subsequent instalment premiums must be paid
when due.
If the premium is not paid in accordance with

Clause 35.1, Underwriters have the right to cancel
the insurance by notifying the Assured via the
broker in writing.
Not less than 15 days notice of cancellation must

be given by Underwriters. Notice is automatically
revoked if the premium is paid. If it is not paid,
the insurance terminates automatically.
Premium remains due to the Underwriters in

respect of the period prior to, but not after
cancellation unless there is a recoverable claim
prior to termination, in which case the full
premium is due.
The Leaders may give notice on behalf of the

followers in accordance with the Leaders clause
(contd)
16
New This is based upon LSW 3000 and provides that the
premium must be paid within a specified period, either 45
days or such other period as may be agreed and on a
similar basis for payment by instalment.

(contd)
36. Contracts (Rights of

Third Parties) Act 1999
ITC - Hulls (01/10/83)

(Clause 42), but, if they do not, this does prevent a

follower giving notice in its own right.
6
Where the premium is to be paid through a Market

Bureau, payment to the Underwriters will be
deemed to occur on the day of delivery of a
premium advice note to the Bureau.
No benefit of this insurance is intended to be

conferred on or enforceable by any party other
than the Assured, save as may be expressly
provided herein to the contrary.
New This Act applies automatically to all contracts subject

to English law and concluded post 11th May 2000.
This insurance may by agreement between the

Assured and the Underwriters be rescinded or
varied without the consent of any third party to
whom the enforcement of any terms has been
expressly provided for.
This clause makes clear that only parties to the insurance

contract can enforce benefits under it, save where there
is contrary provision.
37. Fixed and

floating objects
If the Underwriters have agreed, then Clauses 6 and 7 are New FFO cover can now be agreed on placing and is
amended to give FFO cover.
provided by amendment to Clause 6 and necessary
amendments to Clause 7 (sistership). The costs cover
under Clause 6.3 is still subject to a limit of 25% of the
insured value.
38. 4/4ths collision

liability
If the Underwriters have agreed, Clause 6 is amended by

deletion of three fourths of.
New 4/4ths collision liability cover can now be agreed on

placing and is provided by amendment to Clause 6. The
costs cover under Clause 6.3 is also amended to 4/4ths,
although is still subject to a limit of 25% of the insured
value.
39. Returns for lay-up
If the Underwriters have agreed, the agreed

percentage of the net premium shall be returned
for each period of 30 consecutive days the vessel is
laid up not under repair in a port or in a lay-up
area provided such port or lay-up area is approved
by Underwriters.
Changed (cl. 23) Lay-up returns are now only given if

agreed on placing and are limited to Not Under Repair.
The percentage return must also be agreed on placing.
The vessel is not considered as under repair when

work is undertaken in respect of ordinary wear
and tear or following recommendations from the
Classification Society.
Provided always that:
40. General average

absorption
(contd)
3.1 a total loss has not occurred during the

period of this insurance
3.2 no return is allowed when the vessel is lying

in exposed or unprotected waters or in a port
or lay-up area not approved by Underwriters
Changed (cl. 22.2.2) The proviso has been deleted
3.3 no return is allowed when the vessel is

being used for the storage of cargo or for
lightering purposes
3.4 pro rata return of premium if the 30

consecutive days (see Clause 39.1) fall on
successive insurances.
If Underwriters have agreed and subject to

Clause 8, the following shall apply in the event
of a general average act under the York-Antwerp
Rules or under the provisions of the GA clause
in the contract of affreightment.
New The GA Absorption Clause may now be agreed

on placing. The Clause is based on that issued by BIMCO in
October 2002.
17

(contd)
The Assured shall have the option of not claiming

the total general average, salvage, special charges
up to the amount agreed by Underwriters, without
claiming from the other contributing interests
Underwriters will also pay the reasonable fees of

the average adjuster.
If the Assured claims from Underwriters, no claim

shall be made against the contributing interests.
Claims to be adjusted under the York-Antwerp

Rules 1994, excluding commission and interest.
Claims payable without application of the Clause

15 deductible.
Underwriters waive any defences to payment of

the GA amount which would have been available
to the contributing interests.
Underwriters waive rights of subrogation against

the contributory interests save where the accident
or occurrence is attributable to fault on their part.
Claims payable without reduction

for underinsurance.
ITC - Hulls (01/10/83)

10 Special charges defined.

41. Additional perils
If the Underwriters have agreed, this

insurance covers
New Additional Perils cover, based upon the Institute

Additional Perils Clause (CL294), may be agreed on placing.
1.1 the costs of repairing or replacing any boiler

which bursts or shaft which breaks, where such
bursting or breakage has caused loss of or
damage to the subject-matter insured covered
by Clause 2.2.1 and that half of the costs
common to the repair of burst boiler or the
broken shaft and repairing the loss or damage
caused thereby, not covered by Clause 2.3.
Changed This is amended to cover the costs of repairing or

replacing the burst boiler/broken shaft (not covered under
Clause 2.2.1) and the one half of the common costs not
covered under Clause 2.3.
1.2 the cost that would have been incurred to

correct the latent defect where such latent
defect has caused loss of or damage to the
subject-matter insured covered by Clause 2.2.2
and that half of the costs common to the
correction of the latent defect and repairing
the loss or damage caused thereby not covered
by Clause 2.4.
Changed This is amended to cover the costs of correcting the

latent defect itself, (not covered under Clause 2.2.2) and the
one half of the common costs not covered under Clause 2.4.
1.3 loss of or damage to the vessel caused by any

accident or by negligence, incompetence or
error of judgement of any person whatsoever.
provided that such loss or damage has not resulted
from want of due diligence by the Assured, Owners
or Managers
18
Master, Officers, Crew or Pilots shall not be

considered Owners within the meaning of Clause
41.1 should they hold shares in the vessel.
No change
No change The due diligence proviso applies in respect of

the loss or damage under Clause 2.2.1 and 2.2.2 by the
burst boiler, broken shaft or latent defect and to loss and
damage caused by any accident or negligence under Clause
41.1.3.
No change

ITC - Hulls (01/10/83)

Part 3 Claims Provisions - 01/11/02

42. Leading Underwriters
Where there is co-insurance, the followers agree

that the Leaders designated in the slip or policy
may bind them for their proportions in respect of
the following matters in addition to Clause 35
(premium payment)
New The status of the Leaders is now formally set out in

relation to claims matters and the giving of notice under
the premium payment clause (Clause 35).
1.1 the appointment of surveyors, experts,

average adjusters and lawyers, in relation to
matters which may give rise to a claim
1.2 the duties and obligations to be undertaken
by the Underwriters including security
1.3 claims procedures, the handling of any claim
and the pursuit of recoveries
1.4 all payments or settlements to the Assured or
to third parties other than ex-gratia payments.
However, the Leaders may require matters to be
referred to the followers.
43. Notice of claims
44. Tender provisions
(contd)
The followers shall, to the extent of their respective

several proportions, indemnify and hold harmless
the Leaders in respect of all liabilities, costs or
expenses incurred by the Leaders in respect of
the above.
If the Leaders require expenses to be collected for

a party instructed by them, the collecting party may
charge 5% of the amount collected for this service
or such other amount as may be agreed in advance.
The agreement in this Clause between the Leaders

and the followers is subject to the exclusive
jurisdiction of the English High Court of Justice
and to English law and practice.
In the event of an accident or occurrence whereby

loss, damage, liability or expense may result in a
claim under the insurance, notice must be given to
the Leaders as soon as possible after the Assured,
Owners or Managers become aware of such loss,
damage, liability or expense. A surveyor may be
appointed if the Leaders so desire.
Changed (Cl. 13.1) An Assured must now give notice to the

Leaders of potential claims as soon as possible.
The obligation arises when the Assured, Owners or
Managers become aware of the loss or damage giving rise
to the potential claim. There is no longer a requirement to
give notice to Lloyds Agents.
If notice is not given to the Leaders within 180

days of the Assured, Owners or Managers
becoming aware of any such loss, damage, liability
or expense, no claim shall be recoverable under
this insurance in respect of such loss, damage,
liability or expense, unless the Leaders agree to
the contrary in writing.
New If notice is not given to the Leaders within 180 days of

the Assured, Owners or Managers becoming aware of the
loss or damage giving rise to the potential claim,
Underwriters are discharged from liability for any resulting
claim. The Leaders can waive a breach of the notice
provision and such waiver will be binding on the followers.
The Leaders can decide where the vessel is to be

repaired and can veto a place or repair/repairing firm.
No change (Cl. 10.2) Reference to Underwriters is replaced

by the Leaders.
The Leaders may take tenders or require further

tenders to be taken for the repair of the vessel.
The Assured may be entitled to specified
compensation in this event.
No change (Cl. 10.3) Reference to Underwriters is replaced

by the Leaders.
Credit to be given against the allowance in Clause

44.2 for specified amounts recovered in general
average or from third parties by way of damages
for detention and so on.
No change (Cl. 10.3)
This enables fees of surveyors, experts and so on to be

collected by a third party agency and for the costs of that
collection to be borne by Underwriters. This is relevant in
circumstances where the brokers are unwilling or unable to
collect fees.
19

(contd)
45. Duties of the Assured
ITC - Hulls (01/10/83)

Where a part of the cost of repair (other than

by reason of deductible) is not recoverable,
the allowance is reduced.
Deduction of 15% from the net claim in the event

the Assured fails to comply with Clause 44
The Assured shall, upon request and at their own

expense, provide the Leaders with all relevant
documents and information that they might
reasonably require to consider any claim.
New Clause 45 sets out the responsibilities of the Assured in

relation to claims and the consequences of any attempts to
mislead Underwriters.
Upon reasonable request, the Assured shall also

assist the Leading Underwriter(s) or their
authorised agents in the investigation of any
claim, including, but not limited to
This Clause sets out those matters in which the Assured

would normally be expected to assist in relation to a claim.
These are new contractual obligations.
2.1 interview(s) of any employee, ex-employee or

agent of the Assured
2.2 interview(s) of any third party whom the
Leading Underwriter(s) consider may have
knowledge of matters relevant to the claim
2.3 survey(s) of the subject-matter insured
2.4 inspection(s) of the classification records of
the vessel.
3
It shall be a condition precedent to the liability

of Underwriters that the Assured shall not at any
stage prior to the commencement of legal
proceedings knowingly or recklessly
This follows Clause 4.4 of the 1995 Clauses, although

is limited to class records, rather than information
and documents.
On the present state of the law, claims involving pure
fraud (scuttling, arson and so on) may result in the
Assured forfeiting all benefit under the insurance. However,
on the recent authorities, the position in relation to
fraudulent devices, such as fabricated evidence or an
exaggeration of the loss, is unclear. This Clause provides for
a remedy, namely that Underwriters are, in effect,
discharged from liability in respect of the claim. The entire
contract is not forfeited.
3.1 mislead or attempt to mislead Underwriters

in the proper consideration of a claim or the
settlement thereof by relying on any evidence
which is false
3.2 conceal any circumstance or matter from
Underwriters material to the proper
consideration of a claim or a defence to
such a claim.
46. Duties of the

Underwriters in
relation to claims
4 Clause 45.3 does not require the Assured to

disclose any document or matter which under
English law is protected from disclosure by legal
advice privilege or litigation privilege.
The Assured cannot be required under Clause 45.3 to

disclose documents or matters which are subject to
legal privilege.
1 The Leaders may, at their sole discretion, upon the

notification of an accident or occurrence which
may result in a claim
New This Clause sets out the duties of Underwriters in

relation to claims and embodies in contractual terms
common practice. The appointment of surveyors or
confirmation of appointment of an adjuster is
discretionary on the part of Underwriters.
1.1 instruct a surveyor who shall report to them

concerning cause and extent of damage,
necessary repairs, fair and reasonable costs
thereof and any other matter which the
Leaders or the surveyor consider relevant
(contd)
20
1.2 confirm the appointment of an independent

average adjuster to assist the Assured in the
preparation of the claim. If not already agreed,
The Adjuster may be agreed at the outset, alternatively may

be a fellow of the Association of Average Adjusters or an
adjuster mutually acceptable to the Assured and
Underwriters.

(contd)
ITC - Hulls (01/10/83)

the Assured shall propose the average adjuster

to be appointed who may be a Fellow of the
Association of Average Adjusters of the United
Kingdom or any other average adjuster mutually
acceptable to the Assured and the Leaders.
2
Where such appointments are made, the

Underwriters shall pay the reasonable fees directly
to the surveyor and the average adjuster, whether
a claim ultimately arises or not. However, the
Underwriters' liability for such fees shall cease no
later than when Underwriters pay, settle or deny
the claim or it becomes apparent that any claim is
unlikely to exceed the deductible.
The making of such appointments is not an

admission by Underwriters that the accident,
occurrence or resulting claim is covered or a
waiver of any rights or defences that Underwriters
may have under the insurance or at law.
The reports of the surveyor shall, subject to no

conflict of interest being identified by the Leaders,
be released without delay to the Assured and the
appointed average adjuster.
The Leaders are entitled to request the appointed

average adjuster to provide status reports at
any stage.
The Leaders shall give prompt consideration to

the making of a payment on account upon the
recommendation of the appointed average
adjuster or, if no adjuster is appointed, upon
the request of the Assured supported by
appropriate documentation.
What is appropriate documentation?. In the absence of a

payment on account, recommendation from an adjuster
will be a question of fact in all the circumstances.
The Leaders agreement to a payment on account will be
binding on the followers.
The Leaders shall make a decision in respect of

any claim within 28 days of receipt of the final
adjustment or, if no adjuster is appointed, a fully
documented claim presentation sufficient to
enable the Underwriters to determine their
liability in relation to coverage and quantum.
If the Leaders request additional documentation or
information to make a decision, they shall make
a decision within a reasonable time after receipt of
the additional documents/information requested
or a satisfactory explanation why such
documents/information are not available.
The 28-day period for Underwriters to make a decision

runs from the receipt of the adjusters final adjustment.
Again, what is a sufficient fully documented claim will
be a question of fact in all the circumstances. Claim
decisions by the Leaders will be binding on the followers.
The decision may be that further information is required
to consider the claim.
47. Provision of security
If the Assured is obliged to provide security to a third

party in order to prevent arrest, or obtain release, of the
vessel, as a result of a claim alleged to be covered,
Underwriters will give due consideration to assisting the
Assured by providing security on behalf of the Assured or
countersecurity in a form to be determined by the
Leaders.
48. Payment of claims
Claims payable under this insurance shall, subject to the New

terms of any assignment, be paid to the loss payee or, if
no loss payee has been agreed, to the Assured or as they
may direct in writing. Such payment, whether in account
or otherwise, when made shall be a complete discharge
of the Underwriters' obligations under this insurance in
respect of the amount so paid.
49. Recoveries
(contd)
The Assured shall, whether or not the Underwriters

have paid a claim or agreed a claim, take
reasonable steps to
New The provision of security, in common with marine

liability policies, is discretionary. It is likely that security
will be given by way of counter-security where the risk is
written on a subscription basis. Again, decisions by the
Leaders are binding on the followers.
New Again, the Clause sets out general common practice,

although it imposes a somewhat higher burden upon the
Assured than exists at strict law. However, Underwriters
are now obliged to share in the costs.
21

(contd)
ITC - Hulls (01/10/83)

1.1 assess as soon as possible whether there are

any prospects of a recovery from third parties
1.2 protect any claims against such third parties if
necessary by the commencement of proceedings
and the taking of appropriate steps to obtain
security for the claim from third parties
1.3 keep the Leaders and the appointed average
adjuster (if any) advised of the recovery
prospects and any action taken against
third parties
1.4 co-operate with the Leaders in the taking of
such steps as may be reasonably required to
pursue any claims against third parties.
2
Underwriters shall pay the reasonable costs

incurred by the Assured pursuant to this Clause 49
in the same proportion as the insured losses bear
to the total of the insured and uninsured losses (as
defined in Clause 49.4.2).
Where the Assured have incurred reasonable costs

under Clause 49.1.2 and where there is no
recoverable claim under the insurance, provided
always that their prior written agreement to the
reimbursement of such costs shall have been
obtained, Underwriters will reimburse such costs
to the extent agreed, notwithstanding that no
claim is recoverable under the insurance.
In the event of recoveries from third parties in

respect of claims which have been paid in whole
or in part under this insurance, such recoveries
shall be distributed between the Underwriters and
the Assured as follows
Change (Cl. 12.3/12.4) Any recoveries are now on a pro rata

basis rather than first being credited to Underwriters.
4.1 the reasonable costs and expenses incurred in

making such recoveries from the third party
shall be deducted first and returned to the
paying party
4.2 the balance shall be apportioned between
the Underwriters and the Assured in the
same proportion that the insured losses and
uninsured losses bear to the total of the
insured and uninsured losses. Uninsured
losses means loss of or damage to the
subject-matter insured and any liability or
expense which would have been recoverable
under the insurance, but for the application
of deductible(s) under Clause 15 and the
limits of this insurance.
5
In the event that under this insurance coverage is

not provided in accordance with Clause 6, the
following shall apply
5.1 Where the insured vessel is in collision with
another vessel and both vessels are to blame
then, unless the liability of one or both
vessels becomes limited by law, any recovery
due to Underwriters shall be calculated on the
`principle of cross-liabilities as if the respective
Owners had been compelled to pay to each
other such proportion of each other's damages
as may have been properly allowed in
ascertaining the balance or sum payable by or
to the Assured in consequence of the collision.
22
New This Clause preserves Underwriters interests in any

recovery for damage to the vessel sustained on a collision
where Underwriters do not give RDC cover.

50. Dispute resolution
Subject to the English jurisdiction clause, Underwriters

and the Assured may refer any disputes to
mediation/alternative form of ADR, with the CEDR Solve
procedures to apply in default of agreement as to the
procedure to be adopted.
ITC - Hulls (01/10/83)

New A reference to mediation or other form of ADR is not
mandatory. For further information on ADR, see the AAG to
mediation in this series.
23
About Hill Dickinson

Hill Dickinson LLP offers a comprehensive range of legal
services from offices in Liverpool, Manchester, London,
Chester and Greece. The firm has 143 partners and a
complement of more than 900 staff.
Hill Dickinson is a major force in insurance and is well
respected in the company and commercial arena. The
firms marine expertise is internationally renowned and
is one of the largest marine practices in the UK following
a merger with Hill Taylor Dickinson on 1 November 2006.
The firm has a highly reputable commercial litigation
practice and is widely regarded as a leader in the fields
of employment, intellectual property, NHS clinical/health
related litigation and private client.
Liverpool Office
Manchester Office
Pearl Assurance House
50 Fountain Street
2 Derby Sq. Liverpool L2 9XL Manchester M2 2AS
Tel : +44 (0)151 236 5400
Fax: +44 (0)151 236 2175
DX 14129 Liverpool
London Office
Chester Office
Irongate House
34 Cuppin Street
Dukes Place, London EC3A 7HX Chester CH1 2BN
Tel : +44 (0)161 817 7200 Tel : +44 (0)20 7283 9033
Fax: +44 (0)161 817 7201 Fax: +44 (0)20 7283 1144
DX 14487 Manchester 2
DX 550 City of London
Greek Office
2 Defteras Merarchias Street
Piraeus, 185 35, Greece
Tel : +44 (0)1244 896600 Tel : +30 210 428 4770

Fax: +44 (0)1244 896601 Fax: +30 210 428 4777
DX 19991 Chester
www.hilldickinson.com
As Official Lawyers and first Official Partner to Liverpool 2008: European

Capital of Culture, the firm is providing sponsorship and backing for
the programme of events including the provision of legal services on
issues such as corporate, contracts, sponsorship, broadcast, events and
intellectual property rights.

At A Glance Guide - International Hull Clauses

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International Hull Clauses

Insurance and Reinsurance At A Glance Guide 2

Comparing the International Hull

International Hull Clauses

Part 1 Principal Insuring Conditions

30. Terrorist, political motive and malicious acts exclusion

Part 2 Additional Clauses - 01/11/03

Part 3 Claims Provisions - 01/11/03

International Hull Clauses

Part 1 contains the principal insuring conditions;

2. Part 1 - Principal insuring conditions

Leased equipment (cl. 3)

Cover is given as standard for leased equipment.

Cover is given as standard for parts taken off.

Pollution hazard cover is extended to governmental action to prevent or mitigate

International Hull Clauses

Management (cl. 14)

Additional Machinery deductible may apply if agreed on placing.

Cover extended for anti-fouling coatings to the damaged/disturbed areas.

All included as standard.

These have been re-ordered.

3. Part 2 - Additional clauses

Applies following lay-up for more than 180 days.

Optional lay-up returns can now be agreed on placing.

Payable without the application of the deductible.

Optional additional perils clause can now be agreed on placing.

4. Part 3 - Claims provisions

International Hull Clauses

Notice of claims (cl. 43)

The duties of Underwriters in relation to surveyors, appointment of average adjusters,

Underwriters will make a decision on claims within 28 days of a fully documented

Underwriters will give due consideration to the provision of security or countersecurity.

There is an express duty on the Assured to co-operate with Underwriters to protect

Alternative dispute resolution procedures options are acknowledged.

International Hull Clauses (01/11/03)

ITC - Hulls (01/10/83)

Part 1 Principal Insuring Conditions

Introductory wording relating to application of

New Parts 2 & 3 may be altered in the future, without

This insurance is subject to English law and practice.

This insurance is subject to the exclusive

New Previously applied where risks written on the MAR 91

Covers loss of or damage to the subject-matter

No change (cl. 6.1)

1.1 perils of the seas, rivers, lakes or other

No change (cl. 6.1.1)

1.2 fire, explosion

No change (cl. 6.1.2)

1.3 violent theft by persons from outside the vessel

No change (cl. 6.1.3)

No change (cl. 6.1.4)

No change (cl. 6.1.5)

1.6 contact with land conveyance, dock or

Changed (cl. 6.1.7) Aircraft or objects falling therefrom now

1.7 earthquake, volcanic eruption or lightning

No change (cl. 6.1.8)

1.8 accidents in loading, discharging or shifting

Changed (cl. 6.2.1) No longer subject to the due diligence

1.9 contact with satellites, aircraft, helicopters or

Changed (cl. 6.1.7) Now includes damage caused by

Covers loss of or damage to the subject-matter

No change (cl. 6.2)

2.1 bursting of boilers or breakage of shafts but