Yatch Insurance entails providing coverage for losses incurred on pleasure craft and also includes liability coverage. Cargo Insurance has a broader scope, which I intend to weigh into more, as far as insurance coverage is concerned. It is a contract under written on the Institute Cargo Clauses offering coverage on an A, B or C basis. Whereas on the on hand A offers a wide cover, C on the other offers a relatively circumscribed one.
Institute Cargo Clause A stipulates that the insurer will, upon the incurrence of the loss insured against, cover for all the damage to the subject matter insured. It is however important to note that all damage in this particular case is used to refer only to accidental loss and not that which would eventuate from intentional acts or that are inevitable. Some of the losses that would be excluded from the coverage of this cargo clause include: The above mentioned exclusions are substituted by two other clauses: The War and Strikes Exclusion Clause and The Unseaworthiness and Unfitness Exclusion Clause.
Given the nature of structure of the Institute Cargo Clauses B and C, it is important, in the interest of an exhaustive analysis, to look into the content of C before that of B. This is attributable to the fact that to a large extent the content of clause B subsumes that of C and has additional provisions. Institute Cargo Clauses C cover damage to the insured that is attributable to: The insurance also provides coverage for damage or loss to the insured caused by jettison.
This covers scenarios where, for instance, a ship caught in a tempestuous sea has to throw into the water certain cargo in the interest of keeping it afloat and protect the remaining. (Donald, O’May. & Julian, H. 2003) The B clauses provide coverage for all that is available in the C clauses but stretches farther to include coverage for loss or damage to the subject matter insured that may come about as a consequence of volcanicity, lightening or earthquakes and other tectonic disturbances. It also covers loss caused by
• Total loss of any package lost overboard or while loading onto or unloading out of the vessel. • Washing overboard. • Entry of sea, lake or river water into the vessel or storage place. The clauses entailed in B provide for enormous additional coverage that include, among many others, river or sea water and accidents in loading and unloading. It is discernible, however, that there is a vaccum left as far as coverage for theft, delivery failure and shortages are concerned. The contract that would be most ideal for the ship operator in question is the Cargo Insurance, clauses C.
These clauses offer a provision that distinctly caters for loss or damage incurred by the subject matter insured due to collision or destructive contact with other vessels while on voyage. The greatest concern being the damage it may cause to other ships and third party property, the ship owner would have to bear in the mind the work framework of the contract as influenced by the Hulls and Machinery( H&M) and the Protection and Indemnity Clubs( P&I) stipulations. (Donaldson, E. 2000), Marine insurance can be divided into two broad categories: Vessel and Cargo.
The insurance of vessels is known as Hull and Machinery (H&M). Cover is provided either on voyage or time basis such that under the time basis, a vessel or cargo is covered for a given duration whereas under the voyage basis, the vessel or cargo is covered for voyage between ports set out in the insurance policy. Protection and Indemnity Clubs came into existence much later as compared to the Hull and Machinery. Up until the 19th century, a marine policy covered only seventy-five percent (75%) of the insured’s liability towards the third party.
In this respect typical liabilities arose a lot often from “running down” which refers to collision with another ship in transit, “allision” which refers to collision with a fixed object and wreck removal. In the 19th century ship owners came together forming mutual under writing clubs and hence the inception of the Protection and Indemnity Clubs (P&I). Their strategic intent in that inception was to insure the remaining twenty-five percent (25%) that up until that moment was yet to be catered for by the insurers.
The clubs work on the basis of registering ship owners as members who remit a premium which goes towards accumulating a fund with which reinsurance is subsequently purchased. With this in mind it would be a word of sound advice to the ship owner in question to register membership, if he/she is yet to, with a credible Protection and Indemnity Club so as to ensure one hundred percent (100%) coverage of liability to third parties should the hazard occur. (Donaldson, E. 2000),
Membership to these clubs, whichever place in the world, is highly advisable as their coverage comes handy in aiding to offset liability that occurred without the ship owners notice. A good case in point is the case, Thatcher vs. Schell, 2005 BCSC 1121. It involved the accident between a 19’ motorboat and a 26’ sailboat operating under power at dusk on Okanagan Lake. Both vessels were destroyed and the occupants sustained injuries. The owner of the motorboat argued that the failure of the sailboat to have appropriate running lights and in its failure to turn to starboard before the collision as stipulated by the regulations.
On the other hand the owner of the sailboat argued that the collision was a consequence of the motorboat’s over speeding and failure to maintain a proper view of its environs. It emerged to be undeniable that the driver of the motorboat had not seen the sailboat until immediately before the accident and failed to take the necessary steps to prevent it. All evidence having been reviewed, it was found as a fact that the lighting of the sailboat had not been proper as required and that had caused the collision.
In a case such as this one where many would have easily found themselves heaping blame on the owner of the motorboat the scales of justice found the reverse to be the case. In such scenarios as in many others the coverage of Protection and Indemnity Clubs play a very significant role in the complementing of the seventy-five percent coverage provided by the Institute Cargo Clauses C. (Rose,F. 2004) The case, De Merchant Estate vs. Price, 2001 NBQB 98,  N. B. J No. 328 will perhaps bring to the fore what many would think to be an impossibility.
The case involved collision between a sailboat under power and a small runboat in a narrow channel. The core of the case was the question of liability and apportionment. The ruling judge found both parties at fault, a matter that posed very awkward an implication. Whereas the operator of the sailboat was faulted for not having the proper lights, failing to operate on the required side of the channel and failing to take evasive action, the owner of the runboat was at fault for operating his vessel under the influence of alcoholic liquor.
In a case where either of the two parties would have hoped to leave unscathed by the rod of justice hence evade the charge of liability, both fell victim of it. In both cases mentioned above, the necessity of insurance coverage that caters for liability to third persons on sea cannot be underplayed. Losses can be of unanticipated magnitude and hence very costly to the liable party. Of equal significance is the role played by the Protection and Indemnity Clubs (P&I).
It is an inception that has relievingly bailed out many from the twenty-five percent cost of liability which would be, in many cases, quite laden. The ship owner in question, seeking insurance cover for liabilities it may incur for the damage that it may cause to ship and other third party property, would best be advised to opt for cargo insurance clauses C and to further it by being part of a Protection and Indemnity club. (Brown, R. H. 2004).
Courtney from Study Moose
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