CHARTER'S CLUB
CHARTERERS' COMPREHENSIVE COVER
A TAILOR-MADE PRODUCT Charterers now operate in an environment of ever-increasing liability exposure.? There has been a growing need to enhance the scope and structure of traditional Charterers' liability cover.? In response to this need, the West of England launched in 1998, a new tailor-made product for Charterers.? The product offers a wider scope of cover for Charterer Members of the Club, whilst at the same time maintaining the high level service capability for which the West of England is well known.
In addition to the P&I (Class I) liabilities and Freight, Demurrage and Defence (Class II) risks traditionally covered by the Club, the scope of cover has been widened considerably to include the following risks :
Damage to hull Charterers' contributions to general average, salvage and special charges Loss or damage to fuel stores and supplies Cargo owner's pollution liability Unlike Charterers' liability cover available elsewhere in the market, these additional risks have been incorporated directly into the Club's Rules so that they are fully integrated with P&I cover.? The risk of there being a gap in the cover is therefore reduced.
Cover placed as a single package with one policy is a key aspect of the product.? It means that decisions on claims matters need not be agreed by several insurers.? There is a unified claims handling strategy so that rapid emergency response, in the case of a major incident, is assured.
WHO CAN BE INSURED?
Charterers' comprehensive cover is suitable for Time Charterers, Voyage Charterers, Charterers under contract of affreightment and Space or Slot Charterers.? The product is suitable for most types of trade, whether it be liner operations, oil or other bulk products trading or conventional tramp market chartering.? Charterers need not purchase all the heads of cover offered, but can choose those heads of cover which best accommodate their needs.
Charterers by demise, or Bareboat Charterers whose risks are more closely aligned with those of Shipowners, would not benefit from Charterers' comprehensive cover since conventional Owners' P&I cover more closely suits their needs.
HEADS OF COVER
The cover is provided to the Member in his capacity as Charterer of the insured vessel and the details of the heads of cover are as follows :
1,P&I Risks
The Charterer Member is insured in his capacity as Charterer in respect of the same P&I risks as a Shipowner and, furthermore, is also insured for his liabilities as Charterer to indemnify Owner or Disponent Owner of the insured vessel in respect of such P&I risks.
2.Damage to Hull
The cover offered essentially reincorporates risks excluded under Rule 16 of the Club Rules so that a Charterer is covered for his liability to pay damages to the Owner or Disponent Owner of the insured vessel in respect of loss of or damage to the vessel and/or loss of use of the vessel arising from such damage.
3.Contribution to General Average, Salvage and Special Charges
This head of cover is not normally available under conventional Charterers' liability policies.? It protects the Charterer against the risk of having to contribute to general average, salvage and special charges in respect of the Charterer's own property at risk in the maritime venture.? That property would include, for example, bunkers, containers and any other material or equipment (other than cargo) which the Charterer has placed on board the insured vessel.
4.Fuel Stores and Supplies
This head of cover is principally designed to cover Charterers against the risk of loss of or damage to their bunkers placed on board the insured vessel.? Unlike many conventional policies which provide bunkers cover on terms which are similar to restricted forms of cargo insurance, the Club cover is essentially an all-risk cover with limited exclusions of: ordinary loss in weight or volume, natural degradation, inherent vice, delay and politically motivated or terrorist acts.
5.Cargo Owner's Pollution Liability
This extension of cover allows the Charterer to be covered for any pollution liability they may incur at a time when an associated company owned all or part of the cargo on the insured vessel.? This head of cover may be of particular interest to Charterers in the oil trade.
6.Freight, Demurrage and Defence
The Club's normal freight, demurrage and defence cover forms part of the package although it is rated and charged separately.? Freight, demurrage and defence cover has traditionally been favoured by the Club's Charterer Members, not least because the number of contractual relationships in which they are engaged when operating a vessel are usually more numerous than those for a Shipowner.? There is a corresponding increase in the risk of disputes and the need for legal advice and assistance.
LIMIT
The limit of cover provided in respect of risks other than freight, demurrage and defence is US$400M in the aggregate in respect of any one incident in respect of any one vessel.
CHARTERER'S RISKS AND LIABILITIES
TYPES OF CHARTERER
Demise or Bareboat Charterers-
are in essence leasing the ship without the crew.? In terms of risk and liability, the Charterer steps into the shoes of the Shipowner by assuming responsibility for maintaining manning and operating the ship.? A Bareboat or Demise Charterer needs the same insurance protection through P&I and H&M and ancillary covers as a Shipowner.
Time Charterers-
while not assuming responsibility for maintenance, repair, manning and navigation of the vessel, do take on much of the risk and responsibility for the commercial operation of the ship.? They make a number of major decisions about trading the ship and thus assume responsibility for matters such as when, where, how and what cargo is loaded, carried and discharged from the vessel.? As a result, they assume a significant range of liabilities for death, injury or damage to property arising from those decisions.? Time Charterers also place their own property such as bunkers, containers and equipment on board the vessel and in so-doing expose them to marine perils.
Voyage Charterers, Space Charterers, or Slot Charterers- assume less risk than Time Charterers because decisions such as when, where and how cargo is loaded are usually a matter of shared responsibility with the Shipowner; but Voyage, Space and Slot Charterers often assume responsibility for all or part of loading and discharge operations and for risks associated with the inherent qualities and condition of the cargo.
In respect of liabilities for loss or damage to cargo, all types of Charterer may, depending on the contract terms and the applicable laws, be considered as a carrier of cargo and are exposed to risks and liabilities for cargo loss or damage even though they may have rights of recourse against the Shipowner or another third party.? But full recovery in respect of these rights of recourse cannot be guaranteed.
It is sometimes thought that Charterers can shelter themselves from these risks and liabilities by agreeing with Shipowners to take the benefit of the Shipowner's own insurance cover.?? Clauses to the effect that the Charterers shall have the benefit of the Shipowner's insurance cover are still sometimes seen in Time, Voyage, Space or Slot Charters.? In the first place, agreements of this type are either wholly ineffective as between the Charterer and the Owner's insurer and hence provide the Charterer with no cover or are only effective to provide Charterers with cover for liabilities which would fall on the Owner and would not provide cover for the Charterer's own liabilities.
SPECIFIC RISKS AND LIABILITIES FOR
TIME, VOYAGE, SLOT AND SPACE CHARTERERS
HOW DO CHARTERERS' RISKS AND LIABILITIES ARISE?
By Contract – Charterers' principal contractual risks arise under the Charterparty, Charterers' Bills of Lading, Cargo Booking Notes and contracts with Stevedores.? All these contracts expose Charterers to liability for loss of or damage to property (such as cargo or the vessel) and/or personal injury (such as to Stevedores or ship's crew).
In Tort or Delict– typically liability for death or personal injury to third parties such as Crewmen or Stevedores caused by the negligence of the Charterers or their employees.
Statutory Liability– typically fines, customs penalties, failure to provide safe working systems and oil pollution (in the USA and elsewhere).
