Part III: FREIGHT, DEMURRAGE AND DEFENCE RISKS COVER

RULE 6

1 The Managers may accept the entry of a vessel for freight, demurrage and defence cover in accordance with this Rule, but no such cover shall be afforded to a Member without the agreement of the Managers in writing.

2 Save as otherwise provided cover in accordance with this Rule is subject to the claims procedures, limitations and exclusions set out in Parts IV and V and in the remainder of these Rules.

3 Subject to the agreement of the Managers in writing and to paragraphs 4, 7, 8 and 9 of this Rule a Member is entitled:

A to a right of recovery from the Association of the costs and expenses incurred in obtaining advice in connection with any of the claims, disputes or proceedings described in paragraph 5 of this Rule;

B to a right of recovery from the Association of the costs and expenses of or incidental to such claims, disputes or proceedings including costs which the Member may become liable to pay to any other party to such claims, disputes or proceedings.

4 There shall be no right of recovery from the Association in accordance with paragraph 3 of this Rule unless the Committee, in its discretion, has decided that the Member is entitled to such a right of recovery and it may impose such conditions on such right of recovery as it thinks fit.

5 The cover afforded by the Association shall apply to claims, disputes or proceedings:

A under any charterparty, bill of lading, contract of affreightment or other contract, including, but not limited to claims and disputes concerning hire, off-hire, set-off, freight, deadfreight, laytime, demurrage and/or damages for detention, despatch, speed, performance and description of a vessel, port safety and orders to an insured vessel;

B under any charterparty, bill of lading, contract of affreightment or other contract, the exercise or assertion of any rights arising thereunder or generally, including but not limited to the right of withdrawal, exercise of lien, and claims arising therefrom;

C in respect of the cancellation of a charterparty or other contract;

D in respect of the loss of, damage to or detention of an insured vessel;

E in respect of the supply of inferior, unsatisfactory or unsuitable fuel, materials or equipment, or other necessaries;

F for negligent or improper repair of or alteration to an insured vessel;

G in respect of general and/or particular average contributions or charges;

H in respect of improper loading, lightering, stowage, trimming or discharge of cargo;

I in respect of and in connection with charges, disbursements, accounts received from agents, stevedores, chandlers, brokers, customs, harbour or other authorities, or others connected with the running, management and operation of an insured vessel;

J in respect of amounts due from or to underwriters and any other persons and/or companies conducting the business of marine insurance, other than amounts due to or from the Association;

K in respect of salvage or towage services rendered by an insured vessel except where the insured vessel is a salvage tug or other vessel used or intended to be used for salvage operations and the claim arises as a result of or during any salvage operations or attempted salvage operations;

L by or against passengers intended to be, being or having been carried on an insured vessel or their personal representatives or dependants;

M by or against officers, crews, stowaways and other persons on or about an insured vessel;

N in connection with the building, purchase or sale of an insured vessel;

PROVIDED THAT
Claims arising in connection with the building or purchase of a vessel shall fall within the cover provided by the Association only if an entry has been made with effect from the date of the relevant contract or such date as may be agreed by the Managers in writing.

O in connection with the mortgage of an insured vessel;

P in connection with the representation of a Member at official investigations, inquests, or other enquiries whatsoever in relation to an insured vessel.

6 The Committee in its discretion shall have power to admit a right of recovery by a Member in respect of any claims, disputes or proceedings not covered under paragraph 5 of this Rule which in the opinion of the Committee fall within the scope of the freight, demurrage and defence risks covered and it may impose such conditions on such right of recovery as it thinks fit.

7 Unless the Committee in its discretion otherwise decides, there shall be no right of recovery under paragraph 3 of this Rule if the principal amount involved in the claim, dispute or proceedings is less than US$2,000.

8 With reference to Rule 24 paragraph 2, any right of recovery under this Rule shall be assessed on the basis that any franchise, deductible or deduction in the hull policies shall be deemed not to exceed 25% of the vessel's insured value.

9 Deductibles

A Each Member shall bear:
i the first US$750 of such costs and expenses as total up to US$3,000 incurred in connection with any claim, dispute or proceedings;
ii one fourth of such costs and expenses as exceed US$3,000 in total, subject to a maximum deductible of US$30,000.

B In assessing the Member's rights of recovery from the Association account shall be taken of any costs paid or set off by the other party to the claim, dispute or proceedings and the Member's right of recovery shall be limited to the net costs payable by the Member.

C In the case of a settlement of a claim, dispute or proceedings in which the other party does not make any contribution to the Member's costs, the Committee in its discretion shall decide the sum to which the Member's right of recovery from the Association shall be restricted.