PART VI: ENTRY FOR AND CESSER OF INSURANCE

RULE 35: APPLICATION FOR ENTRY

Any applicant who desires to enter a vessel for insurance in the Association shall make application for such entry in such form as may from time to time be required by the Managers.

The particulars given by or on behalf of an applicant for insurance in any application form together with any other particulars or information given in the course of applying for insurance or negotiating changes in the terms of insurance to the Managers of the Association shall, if the entry of the relevant vessel is accepted, be deemed to form the basis of the contract of insurance between the Member and the Association and it shall be a condition precedent of such insurance that all such particulars and information were true so far as the Member knew or could with reasonable diligence have ascertained.

The Managers shall be entitled in their absolute discretion to refuse any application for the entry of a vessel for insurance in the Association, whether or not the applicant is a Member of the Association.

RULE 36: ENTERED TONNAGE: BASIC RATE OF CONTRIBUTION

Before an application is accepted for the entry of a vessel, the applicant and the Managers shall agree the entered tonnage and basic rate of contribution for the vessel concerned. In deciding upon the basic rate of contribution for any vessel the Managers may take into account all matters which they may consider relevant including (without prejudice to the generality of the foregoing) the degree of risk estimated to be involved in the proposed insurance.

RULE 37: CERTIFICATE OF ENTRY AND ENDORSEMENT SLIP

1 As soon as reasonably practical after accepting an application for the entry of a vessel for insurance in the Association the Managers shall issue to the applicant a certificate of entry in such form as may from time to time be prescribed by the Managers but so that such certificate of entry shall state the date of the commencement of the period of insurance and the terms and conditions on which the vessel has been accepted for insurance.

2 If at any time or from time to time the Managers and a Member shall agree to vary the terms relating to an insured vessel, the Managers shall, as soon as reasonably practical thereafter, issue to the Member an endorsement slip stating the terms of such variation and the date from which such variation is to be effective.

3 Every certificate of entry and every endorsement slip issued as aforesaid shall be conclusive evidence and binding for all purposes as to the commencement of the period of insurance, as to the terms and conditions on which the ship has been entered for insurance, and as to the terms of any variation and the date from which such variation is to be effective; provided that in the event that any certificate of entry or any endorsement slip shall have been defaced or lost or in the opinion of the Managers contains any error or omission the Managers may in their discretion issue a new certificate of entry or a new endorsement slip which shall be conclusive evidence and binding as aforesaid.

RULE 38: PERIOD OF INSURANCE

The period of insurance of a vessel entered in the Association shall commence at the time and date specified in the certificate of entry and shall continue until noon on the renewal date next ensuing and thereafter, unless terminated in accordance with these Rules, from policy year to policy year.

RULE 39: INCEPTION OF MEMBERSHIP

1 If the Association accepts an application for the entry of a vessel for insurance in the Association from an applicant who is not already a Member of the Association, then that applicant shall, as from the commencement of the period of insurance of that vessel, be and become a Member of the Association.

2 Whenever the Association agrees to accept the reinsurance of any risks in accordance with Rule 41 the Managers may in their discretion decide that the insurer reinsured by the Association and/or the assured of such insurer is to be a Member or that neither of them is to be a Member and they may accept the application on any such basis.

RULE 40: JOINT ENTRIES

If any entry of an insured vessel is made in the names of or on behalf of more persons than one whether jointly or separately interested (such persons being hereinafter referred to as "joint Member" or "joint Members" as the case may be) the terms upon which each joint Member shall be entitled to rights of recovery from the Association and upon which the Association shall be entitled to calls from the joint Members shall be agreed by the Managers in writing.

1 The Managers shall not be bound to issue more than one certificate of entry in respect of each insured vessel or more than one endorsement slip and delivery of such certificate of entry or endorsement slip, as the case may be, to one of several jointly insured Members shall be sufficient delivery to each and all of such persons.

2 The joint Members and each of them shall be jointly and severally liable to pay all calls and other sums due to the Association in respect of such entry and the receipt of any one of such joint Members for any sums payable by the Association in respect of such entry shall be a sufficient discharge of the Association for the same.

3 Failure by any joint Member to disclose material information within his knowledge shall be deemed to have been the failure of all the joint Members.

4 Conduct of any joint Member which would have entitled the Association to exclude a right of recovery by him shall be deemed the conduct of all the joint Members.

5 Unless otherwise agreed by the Managers in writing, the contents of any communication from or on behalf of the Association to any joint Member shall be deemed to be within the knowledge of all the joint Members, and any communication from any joint Member to the Association, the Managers or their agents shall be deemed to have been made with the full approval and authority of the joint Members.

RULE 41: REINSURANCE

1 The Managers may enter into contracts of reinsurance on behalf of the Association whereby the Association agrees to reinsure the risks arising in connection with any one or more vessels insured by another association or insurer or else agrees to reinsure the whole or any part or proportion of the insurance business of any other association or insurer. The consideration payable to the Association and the terms and conditions on which the reinsurance is accepted by the Association shall be such as are agreed between the Managers and such other association or insurer. Save where otherwise agreed in writing the other association or insurer shall be in every respect subject to and bound by the provisions of these Rules and his contract with the Association shall for all purposes take effect as though he were the owner of any vessel or vessels in connection with which the relevant risks may arise and had as owner entered the vessel or vessels in the Association for insurance.

2 The Managers shall have the right in their discretion to effect on behalf of the Association the reinsurance or ceding of any risks insured by the Association (including any risk which may fall on the Association by reason of a reinsurance agreement referred to in paragraph 1 of this Rule) with such reinsurers and on such terms as the Managers shall consider appropriate.

RULE 42: ASSIGNMENT

1 No insurance given by the Association and no interest under these Rules or under any contract between the Association and any Member may be assigned without the agreement of the Managers in writing. Any purported assignment made without such agreement shall be void and of no effect unless the Managers in their discretion otherwise determine.

2 Whether or not the Managers shall expressly so stipulate as a condition for giving their consent to any assignment, the Association shall be entitled in settling any claim presented by the assignee to deduct or retain such amount as the Managers may then estimate to be sufficient to discharge any liabilities of the assignor to the Association, whether existing at the time of the assignment or having accrued or being likely to accrue thereafter.

RULE 43: VARIATION OR RENEWAL OF TERMS

1 If the Managers desire to vary or renew the terms of entry for any insured vessel they may give notice in writing to the Member concerned of the proposed variation or renewal of the terms of entry not later than 30 days prior to the renewal date next ensuing. The Committee shall also have power to give a general notice of variation.

2 Unless acceptance of the proposed variation or renewal of the terms of entry has been received by the Managers prior to the renewal date next ensuing, or there has been another agreement by the Managers in writing as to the terms of entry, cover in respect of the insured vessel shall cease on the renewal date next ensuing pursuant to Rule 45.2.G.

RULE 44: TERMINATION BY NOTICE

1 The period of insurance of an insured vessel may be terminated at noon on the renewal date of any year by not less than 30 days prior written notice of termination being given by the Member concerned to the Managers, or by the Managers to the Member.

2 The Committee or the Managers may, at any time and without giving reasons, terminate the entry of an insured vessel by not less than 30 days written notice of termination, effective from the expiry thereof.

3 Unless otherwise agreed by the Managers in writing, an insured vessel shall not be withdrawn by a Member at any time or in any manner otherwise than pursuant to paragraph 1 of this Rule.

4 A Member whose period of insurance in respect of an insured vessel has been terminated by notice shall still be liable for calls assessed and levied under either Rule 51, 52 or 54 in relation to the period of his membership, and shall remain entitled to a return of calls on the closing of a policy year under Rule 57.3.C until the liability of such Member for further calls has been assessed under Rule 54.1.

RULE 45: CESSER OF INSURANCE

1 A Member shall forthwith cease to be insured by the Association in respect of any and all vessels entered by him or on his behalf upon the happening of any of the following events:

A WHERE THE MEMBER IS AN INDIVIDUAL:
i upon his death;
ii if a receiving order is made against him;
iii if he becomes bankrupt;
iv if he makes any composition or arrangement with his creditors generally;
v if he becomes incapable by reason of his mental disorder of managing or administering his property and affairs.

B WHERE THE MEMBER IS A CORPORATION:
i upon the passing of any resolution for its voluntary winding up (other than voluntary winding up for the purpose of company or group reorganisation);
ii upon an order being made for its compulsory winding up;
iii upon its dissolution;
iv upon a receiver or manager being appointed of all or part of its business or undertaking;
v upon its commencing proceedings under any bankruptcy or insolvency laws to seek protection from its creditors or to reorganise its affairs.

2 Unless otherwise agreed by the Managers in writing, a Member shall forthwith cease to be insured by the Association in respect of any vessel entered by him or on his behalf upon the happening of any of the following events in relation to such a vessel:

A Upon the Member parting with or assigning the whole or part of his interest in the vessel whether by bill of sale or other formal document or agreement or in any other way whatsoever.

B Upon the mortgaging or hypothecation of the vessel or of any part of the Member's interest in that vessel.

C Upon the managers of the vessel being changed by the appointment of new managers.

D Upon undisputed possession being taken by or on behalf of a secured party.

E Upon the vessel ceasing to be or not being classed with a classification society approved by the Managers.

F Upon the period of insurance of an insured vessel being terminated by either the Member or the Managers giving notice in accordance with Rule 44.

G Upon failure to accept a proposed variation or renewal of the terms of entry as provided in Rule 43.2.

3 Unless otherwise agreed by the Managers in writing, a Member shall forthwith cease to be insured by the Association in respect of any vessel entered by him or on his behalf upon the happening of whichever shall be the earliest of the following events:

A Upon the vessel being missing for ten days from the date when she was last heard of.

B Upon the vessel being posted at Lloyd's as missing.

C Upon the vessel becoming an actual total loss.

D Upon acceptance by hull underwriters (whether of marine or war risks) that the vessel is a constructive total loss.

E Upon agreement by hull underwriters (whether of marine or war risks) to pay to the Member in relation to the vessel an unrepaired damage claim which exceeds the market value of the vessel without commitment immediately prior to the casualty which gave rise to such claim.

F Upon a compromise or settlement with hull underwriters (whether of marine or war risks) on the basis of which the vessel is considered or deemed to be an actual or constructive total loss.

G Upon a decision by the Managers that the ship is to be considered or deemed to be an actual or constructive total loss or otherwise abandoned.

RULE 46: EFFECTS OF CESSER OF INSURANCE

When a Member ceases to be insured by virtue of an event as described in paragraph 1 of Rule 45 or when a Member ceases to be insured in respect of any vessel by virtue of any event as described in paragraph 2 or 3 of Rule 45 (all of which dates are hereinafter in this Rule 46 collectively referred to as the "date of cessation")

1 Subject to paragraph 2A of this Rule 46, the Member shall be liable to pay calls in respect of such vessels for the relevant policy year on a pro rata basis, namely the proportion of such calls applicable to the period beginning at the commencement of that policy year (or, in the case of a vessel entered during that policy year, the date of entry) and ending at noon on the date of the happening of such event.

2 The Member shall be and remain liable

A for all overspill calls in respect of such vessels for the relevant policy year, and

B for all calls and other sums payable in respect of previous policy years.

3 The Association shall remain liable in respect of any vessel insured by such Member or in respect of such insured vessel for all claims under these Rules arising by reason of any event which had occurred prior to the date of cessation but shall not otherwise be under any liability whatsoever by reason of anything occurring after the date of cessation, save that, in relation to liabilities flowing from any one of the events listed in paragraph 3 of Rule 45, the Association shall remain liable.

RULE 47: CANCELLATION OF INSURANCE

When a Member has failed to pay, either in whole or in part, any amount due from him to the Association, the Managers may give him notice in writing requiring him to pay such amount by any date specified in such notice, not being less than seven days from the date on which such notice is given. If the Member fails to make such payment in full on or before the date so specified, the insurance of the Member (whether the insurance is current on such date or has ceased by virtue of any other provisions of these Rules) in respect of any and all vessels entered in the Association by him or on his behalf shall be cancelled forthwith without further notice or other formality.

RULE 48: EFFECTS OF CANCELLATION OF INSURANCE

When the insurance of a Member is cancelled in accordance with Rule 47 (which time is hereinafter in this Rule 48 referred to as "the date of cancellation") then:

1 Subject to paragraph 2A of this Rule 48, such Member shall be and remain liable for all calls and other sums payable in respect of the policy year in which the date of cancellation occurs on a pro rata basis for the period up to the date of cancellation or such earlier date as the Managers in their discretion agree in writing;

2 The Member shall be and remain liable

A for all overspill calls payable in respect of the policy year in which the date of cancellation occurs, and

B for all calls and other sums payable in respect of previous policy years.

3 The Association shall with effect from the date of cancellation cease to be liable for any claims of whatsoever kind under these Rules in respect of any and all vessels entered in the Association by or on behalf of such Member and as from the date of cancellation any liability of the Association for such claims shall terminate retrospectively and the Association shall be under no liability to such Member for any such claims or on any account whatsoever

A irrespective of whether such claims have occurred or arisen or may arise by reason of any event which has occurred at any time prior to the date of cancellation, including during previous policy years;

B irrespective of whether such claims arise by reason of any event occurring after the date of cancellation;

C irrespective of whether the Association may have admitted liability for or appointed lawyers, surveyors or any other person to deal with such claims;

D irrespective of whether the Association at the date of or prior to the date of cancellation knew that such claims might or would arise;

E irrespective of whether the Member has ceased to be insured by reason of Rule 45.

4 The Committee may in its discretion and upon such terms as it thinks fit, including but not restricted to terms as to payment of calls or other sums, admit either in whole or in part any claim in respect of any vessel entered by a Member for which the Association is under no liability by virtue of this Rule.