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PART II: P&I RISKS COVERED

Rule 2: Standard Cover

Unless otherwise agreed by the Managers in writing a Member is covered against the risks set out in Sections 1 to 22 below in respect of any insured vessel.

Rule 3: Special cover
Rule 4: Special cover for salvors, charterers and specialist operations
Rule 5: Omnibus rule

RULE 2: STANDARD COVER

Unless otherwise agreed by the Managers in writing a Member is covered against the risks set out in Sections 1 to 22 below in respect of any insured vessel.

Section 1: Liabilities in respect of seamen

A ILLNESS, INJURY, DEATH, MEDICAL EXAMINATION
i Liability to pay damages or compensation for personal injury, illness or death of any seaman of the insured vessel whether or not on board that vessel and hospital, medical, funeral or other expenses incurred in relation to such injury, illness or death.
ii Liability to pay expenses incurred in medical examination of seamen prior to engagement.

B REPATRIATION AND SUBSTITUTES' EXPENSES
i The expense of repatriating a seaman of the insured vessel who has been ill or injured or has died or whose repatriation has been necessitated by a casualty to the insured vessel.
ii The expense of repatriating a seaman who has been left ashore when there is a statutory obligation to do so.
iii The expense of substituting a seaman who has been ill, injured or has died.
iv The expense of substituting a seaman who has been left ashore or been repatriated as a result of illness, injury or statutory obligation.

PROVIDED THAT
Paragraph B of this Section does not cover expenses which arise out of or are the consequence of

a the expiry of the seaman's period of service on the insured vessel either in accordance with the terms of a crew agreement or by mutual consent of the parties to it, or
b breach by a Member of any crew agreement, or
c sale of the vessel.

C WAGES AND SHIPWRECK UNEMPLOYMENT INDEMNITY
i Liability to pay wages to any seaman of the insured vessel during medical or hospital treatment, or during repatriation consequent upon injury or illness, or, in the case of a seaman engaged as a substitute, while awaiting and during repatriation.
ii Liability to compensate any seaman for the loss of his employment caused in consequence of the actual or constructive total loss of an insured vessel.

D LOSS OF OR DAMAGE TO THE EFFECTS OF SEAMEN
Liability to pay damages or compensation for loss of or damage to the effects of any seaman.

PROVIDED THAT
There shall be no right of recovery in respect of claims relating to cash, negotiable instruments, precious or rare metals or stones, or objects of a rare or precious nature.

Unless otherwise agreed by the Managers in writing the maximum recovery per seaman under this Section 1D will be limited to US$5,000.

E PROVISO
If any of the liabilities or expenses identified in paragraphs A-D of this Section are incurred under the terms of a crew agreement, and would not have arisen but for those terms, there shall be no right of recovery of such liabilities or expenses unless the terms of the crew agreement have been agreed by the Managers in writing.


Section 2: Liabilities in respect of passengers

A ILLNESS, INJURY OR DEATH
Liability arising under a contract of carriage for reward to pay damages or compensation for personal injury, illness or death of any passenger and hospital, medical, funeral or other expenses incurred in relation to such injury, illness or death.

B CASUALTY TO THE INSURED VESSEL
Liability arising under a contract of carriage for reward to pay damages or compensation to passengers on board an insured vessel arising as a consequence of a casualty to the insured vessel, including the cost of forwarding passengers to destination or return to port of embarkation and of maintenance of passengers ashore.

C LOSS OF OR DAMAGE TO EFFECTS
Liability arising under a contract of carriage for reward to pay damages or compensation for loss of or damage to the effects of any passenger including vehicles carried under the contract.

PROVIDED THAT
There shall be no right of recovery in respect of claims relating to cash, negotiable instruments, precious or rare metals or stones, valuables or objects of a rare or precious nature.

D PROVISOS
i There shall be no right of recovery in respect of the liabilities identified in paragraphs A to C of this Section unless the terms of the contract of carriage for reward have been agreed by the Managers in writing.
ii There shall be no right of recovery in respect of the liabilities identified in paragraphs A to C of this Section which result from the carriage of any passenger by air, except when such liability occurs during repatriation by air of injured or ill passengers, or of passengers following a casualty to the insured vessel.
iii There shall be no right of recovery in respect of the liabilities identified in paragraphs A to C of this Section when the passenger is on an excursion from the insured vessel in circumstances where either:
a a separate contract has been entered into by the passenger for the excursion, whether or not with the Member; or
b the Member has waived any rights of recourse against any sub-contractor or other third party in respect of the excursion.


Section 3: Liabilities in respect of persons other than seamen or passengers

A ILLNESS, INJURY OR DEATH
Liability to pay damages or compensation for personal injury, illness or death of any person and hospital, medical or funeral or other expenses incurred in relation to such injury, illness or death.

B LOSS OF OR DAMAGE TO EFFECTS
Liability to pay damages or compensation for loss of or damage to the effects of any person on board an insured vessel.

PROVIDED THAT
There shall be no right of recovery in respect of claims relating to cash, negotiable instruments, precious or rare metals or stones, valuables or objects of a rare or precious nature.

C PROVISOS
i Cover under this section shall not extend to liabilities to seamen or passengers carried under a contract of carriage for reward which may be covered under Sections 1 or 2 of this Rule.
ii If any of the liabilities identified in paragraphs A and B of this Section are incurred under the terms of a contract and would not have arisen but for those terms, there shall be no right of recovery in respect of such liabilities unless the terms of the contract have been agreed by the Managers in writing.
iii Cover under paragraphs A and B of this Section is limited to liabilities arising out of a negligent act or omission on board or in relation to an insured vessel or in relation to the handling of her cargo from the time of receipt of that cargo at the port


Section 4: Diversion expenses

Expenses incurred as a result of diversion or delay of an insured vessel (over and above the expenses that would have been incurred but for the diversion or delay) which was made necessary for the following reasons:

A Securing necessary treatment ashore of sick or injured persons or arranging the repatriation of dead bodies aboard the insured vessel.

B Awaiting a substitute for a sick or injured seaman who has been landed ashore for treatment.

C Landing stowaways, refugees or persons saved at sea.

D For the purpose of saving or attempting to save life at sea.


Section 5: Liabilities and expenses in relation to deserters, stowaways and refugees

Liabilities and expenses, other than those covered under Section 4 of this Rule, incurred by the Member in discharging his obligations towards or making necessary arrangements for deserters, stowaways and refugees or persons saved at sea, including rescue expenses, but only if and to the extent that the Member is legally liable for the expenses or they are incurred with the agreement of the Managers.


Section 6: Liabilities for life salvage

Sums legally due to third parties by reason of the fact that they have saved or attempted to save the life of any person on or from the insured vessel but only if and to the extent that such payments are not recoverable under the hull policies of the insured vessel .


Section 7: Collision with other vessels

The liabilities, set out in paragraphs A, B and C below, to pay damages to any other person as a consequence of a collision between the insured vessel and any other vessel, but only if and to the extent that such liabilities are not recoverable under the hull policies of the insured vessel.

A CONTACT WITH OTHER VESSELS OR CARGO OR PROPERTY ON OTHER VESSELS
One fourth, or such other proportion as may have been agreed by the Managers in writing, of the liabilities arising out of the collision other than the liabilities identified in paragraph B of this Section.

B OTHER LIABILITIES
Liability arising out of the collision for or relating to:
i the raising, removal, disposal, destruction, lighting or marking of obstructions, wrecks, cargoes, or any other thing;
ii any real or personal property or thing whatsoever (except other vessels or property on other vessels);
iii pollution or contamination of any real or personal property except other vessels with which the insured vessel is in collision and property on such other vessels;
iv the cargo or other property on the insured vessel, or general average contributions, special charges or salvage paid by the owners of that cargo or property;
v loss of life, personal injury or illness.

C EXCESS COLLISION LIABILITIES
That part of the Member's liability, arising out of the collision, which exceeds the sum recoverable under the hull policies of the insured vessel solely by reason of the fact that the liability exceeds the valuation of the vessel in those policies.

D PROVISOS
i For the purposes of assessing any sum recoverable under paragraph C of this Section the Board may determine the value at which the insured vessel should have been insured if it had been "fully insured" in accordance with Rule 24. There shall be a right of recovery only in respect of the excess, if any, of the amount which would have been recoverable under such policies if the insured vessel had been insured thereunder at such value.
ii Unless the Board otherwise determines, there shall be no right of recovery of any franchise or deductible borne by the Member under the hull policies of the insured vessel.
iii If the insured vessel shall come into collision with another vessel belonging wholly or in part to the Member, he shall have the same right of recovery from the Association, and the Association shall have the same rights, as if such other vessel belonged wholly to different owners.
iv If both vessels are to blame, then where the liability of either or both of the vessels in collision becomes limited by law, claims under this section shall be settled upon the principle of single liability, but in all other cases claims under this section shall be settled upon the principle of cross liabilities, as if the owner of each vessel had been compelled to pay the owner of the other vessel such proportion of the latter's damages as may have been properly allowed in ascertaining the balance or sum payable by or to the Member in consequence of the collision.


Section 8: Loss of or damage to property

Liability to pay damages or compensation for any loss of or damage to any property, or for infringement of rights, whether on land or water and whether fixed or moveable.

PROVIDED THAT
A There shall be no right of recovery under this Section in respect of:
i liabilities which arise under the terms of any contract or indemnity to the extent that they would not have arisen but for those terms;
ii liabilities against which cover is available under the following Sections of this Rule:
Section 1D, 2C, 3B: Liabilities in respect of effects
Section 7: Collision with other vessels
Section 9: Pollution
Section 10: Towage
Section 12: Wreck liabilities
Section 14: Cargo liabilities
Section 17: Property on board the insured vessel;
iii liabilities excluded from any of the Sections listed in paragraph ii above by reason only of some proviso, warranty, condition, exception, limitation or other like term applying to claims under such Section;
iv any franchise or deductible borne by the Member under the hull policies of the insured vessel.

B If the insured vessel causes loss or damage to property or infringes rights belonging wholly or in part to the Member, he shall have the same rights of recovery from the Association and the Association shall have the same rights as if such property or rights belonged wholly to different owners.


Section 9: Pollution

Subject to Rule 21A, the liabilities, losses, damages, costs and expenses set out in paragraphs A to E below when and to the extent that they are caused or incurred in consequence of the discharge or escape from the insured vessel of oil or any other substance, or the threat of such discharge or escape.

A Liability for loss, damage or contamination.

B Any loss, damage or expense which the Member incurs, or for which he is liable, as a party to any agreement approved by the Board, including the costs and expenses incurred by the Member in performing his obligations under such agreements.

C The costs of any measures reasonably taken for the purpose of avoiding or minimising pollution or any resulting loss or damage together with any liability for loss or damage to property caused by measures so taken.

D The costs of any measures reasonably taken to prevent an imminent danger of the discharge or escape from the insured vessel of oil or any other substance.

E The costs or liabilities incurred as a result of compliance with any order or direction given by any government or authority for the purpose of preventing or reducing pollution or the risk of pollution, provided always that such costs or liabilities are not recoverable under the hull policies of the insured vessel.

F A Member insured in respect of a vessel which is a ‘relevant ship’ as defined in the Small Tanker Owners Pollution Indemnification Agreement (STOPIA) shall, unless the Managers otherwise agree in writing, be a party to STOPIA for the period of entry of the vessel in the Club.

Unless the Managers have agreed in writing or unless the Directors otherwise determine there shall be no cover under Rule 2 Section 9 in respect of such a vessel so long as the Member is not a party to STOPIA.

G PROVISOS
i If the discharge or escape from the insured vessel causes loss, damage or contamination to property belonging wholly or in part to the Member, he shall have the same rights of recovery from the Association and the Association shall have the same rights as if such property belonged wholly to different owners.
ii The value of any vessel or wreck of any stores and material, or cargo or other property, removed and saved as a result of any measures taken as outlined in this Section shall either be credited to the Association or deducted from any recovery due from the Association.
iii Unless the Board in its discretion otherwise decides there shall be no right of recovery of any liabilities, losses, damages, costs or expenses arising as a consequence of the discharge or escape of any hazardous waste, previously carried on the insured vessel, from any land based dump, storage or disposal facility.


Section 10: Towage

A CUSTOMARY TOWAGE OF AN INSURED VESSEL
Liability under the terms of a contract for the customary towage of an insured vessel, that is to say:
i towage for the purpose of entering or leaving port or manoeuvring within the port during the ordinary course of trading; or
ii towage of such insured vessels as are habitually towed in the ordinary course of trading from port to port or from place to place.

B TOWAGE OF AN INSURED VESSEL OTHER THAN CUSTOMARY TOWAGE
Liability under the terms of a contract for towage of an insured vessel other than the customary towage covered under paragraph A of this Section but only if and to the extent that cover has been agreed by the Managers in writing.

C TOWAGE BY AN INSURED VESSEL
Liability arising out of towage of another vessel or object by an insured vessel

PROVIDED THAT
Liability for loss of or damage to or wreck removal of the towed vessel or object or any cargo or property thereon is excluded unless:
i such towage was necessary for the purpose of saving life or property at sea, or
ii the insured vessel is towing under an approved contract, or
iii cover has otherwise been agreed by the Managers in writing.

NOTE TO SECTION 10C ii
The following contracts are approved provided that they are not amended so as to increase the liability of the insured vessel:

A WHERE THERE IS A CONTRACT WITH THE OWNER OF THE TOW

i the United Kingdom, Netherlands, Scandinavian or German standard towage conditions;
ii the International Ocean Towage Agreement’s “Towhire” or “Towcon” conditions;
iii Lloyd’s Standard Form of Salvage Agreement 1980 (LOF 1980), or Lloyd’s Standard Form of Salvage Agreement 1990 (LOF 1990), or Lloyd’s Standard Form of Salvage Agreement 1995 (LOF 1995), or Lloyd’s Standard Form of Salvage Agreement 2000 (LOF 2000);
iv terms as between the owner of the insured vessel on the one part, and the owner of the tow and the owners of any cargo or other property on board the tow on the other part, that each shall be responsible for any loss or damage to his own vessel, cargo or other property on his own vessel and for loss of life or personal injury of his own employees or contractors, without any recourse whatsoever against the other, that is “knock for knock” terms. If the contract is likely to be subject to the jurisdiction of the Courts of the United States of America, the contract should also require the Member to be named as an additional insured on the tow’s hull insurance and that hull insurance should contain a waiver of subrogation against the Member.

B WHERE THERE IS NO DIRECT CONTRACTUAL RELATIONSHIP WITH THE OWNER OF THE TOW

A charter which contains:
i “knock for knock” terms, as in the Note to Section 10C ii paragraph iv above, covering the property of co-venturers or other contractors of the charterers as well as the property of the charterers themselves; or
ii a separate clause within the charter requiring that all towage be carried out on terms no less favourable than “knock for knock” terms.


Section 11: Liability arising under certain indemnities and contracts

Liability for loss of life, personal injury or illness, or for loss of or damage to property, arising under the terms of an indemnity or contract given or made by or on behalf of the Member relating to facilities or services provided or to be provided to or in connection with the insured vessel, but only if and to the extent that:

A cover has been agreed by the Managers in writing upon such terms as the Managers may require; or

B the Board in its discretion decides that the Member should be reimbursed.

NOTE
Provided that the terms of any indemnity or contract have been submitted to the Managers in advance so that cover may be agreed in writing and endorsed on the certificate of entry the Association may be able to cover such liabilities arising out of such indemnities or contracts as follows:

i Statutory or common law liabilities or contractual liabilities assumed under an indemnity or contract when it provides that each party to the indemnity or contract will be responsible for loss of or damage to his own equipment, fuel or other property and the equipment, fuel or other property of any of his co-venturers or other contractors, and for death or injury to his own employees and the employees of any of his co-venturers or other contractors, irrespective of each other's fault or neglect.
ii Liability under the terms of such indemnity or contract to pay damages or compensation for loss of life, personal injury or illness of any seaman on an insured vessel arising during the course of his contract of employment.
iii LiabiIity under the terms of such indemnity or contract to pay damages or compensation for loss of life, personal injury or illness of any person, other than a seaman, on or near an insured vessel.
iv Liability under the terms of such indemnity or contract for loss of, damage to, interference with or infringement of rights relating to any ship, harbour, dock, pier, jetty, land or any fixed or moveable thing whatsoever.
v Liability under the terms of such indemnity or contract for loss of or damage to cargo or other property.

The Association does not, however, cover claims arising out of the operation of submarines or mini-submarines or claims arising out of the use of divers while engaged in diving operations.


Section 12: Wreck liabilities

A Liabilities and expenses relating to the raising, removal, destruction, lighting or marking of the wreck of the insured vessel and of any cargo or other property which is or was carried on board such wreck, when such raising, removal, destruction, lighting or marking is compulsory by law or the costs thereof are legally recoverable from the Member.

B Liabilities and expenses incurred by the Member as the result of any such raising, removal, destruction, lighting or marking of the wreck of the insured vessel or of such cargo or other property or any attempt thereat.

C Liabilities and expenses incurred by the Member as the result of the presence or involuntary shifting of the wreck of the insured vessel or any cargo or other property which is or was carried on board such wreck or as a result of his failure to raise, remove, destroy, light or mark such wreck or such cargo or other property.

D PROVISOS
i There shall be no right of recovery from the Association unless the insured vessel became a wreck as the result of a casualty or event occurring during the vessel's period of insurance; but in this case the Association shall continue to be liable for the claim notwithstanding that in other respects the liability of the Association shall have terminated pursuant to Rule 45.
ii In respect of a claim under paragraph A of this Section, the value of all vessel's stores and materials saved, as well as the value of the wreck itself, the value of all cargo or other property saved to which the Member is entitled, salvage remuneration received by the Member and any sum recovered by the Member from third parties shall first be deducted from or set off against such liabilities or expenses and only the balance thereof, if any, shall be recoverable from the Association.
iii There shall be no right of recovery from the Association under this Section if the Member, without the agreement of the Managers in writing, shall have transferred his interest in the wreck (otherwise than by abandonment to his hull and machinery underwriters) prior to the raising, removal, destruction, lighting or marking of the wreck or prior to the incident giving rise to liability.
iv Where the liabilities arise, or the expenses are incurred, under the terms of any contract or indemnity and would not have arisen but for those terms, those liabilities or expenses are only covered if and to the extent that

a those terms have been agreed by the Managers in writing, or
b the Board in its discretion decides that the Member should be reimbursed.


Section 13: Quarantine expenses

Additional expenses incurred by the Member as a direct consequence of an outbreak of infectious disease, including quarantine and disinfection expenses and the net loss to the Member (over and above such expenses as would have been incurred but for the outbreak) in respect of fuel, insurance, wages, stores, provisions and port charges.


Section 14: Cargo liabilities

The liabilities and expenses set out in paragraphs A to D below when and to the extent that they relate to cargo intended to be or being or having been carried in the insured vessel.

A LOSS, SHORTAGE, DAMAGE OR OTHER RESPONSIBILITY
Liability for loss, shortage, damage or other responsibility arising out of any breach by the Member or by any person for whose acts, neglect or default he may be legally liable, of his obligation properly to load, handle, stow, carry, keep, care for, discharge or deliver the cargo or out of unseaworthiness or unfitness of the insured vessel.

B DISPOSING OF DAMAGED CARGO
The additional costs and expenses, over and above those which would have been incurred by him in any event under the contract of carriage, incurred by the Member in discharging or disposing of damaged or worthless cargo, but only if and to the extent that the Member is unable to recover those costs from any other party.

C FAILURE OF CONSIGNEE TO REMOVE CARGO
The liabilities and additional costs incurred by a Member, over and above the costs which would have been incurred by him if the cargo had been collected or removed, solely by reason of the total failure of a consignee to collect or remove cargo at the port of discharge or place of delivery, but only if and to the extent that such liabilities or costs exceed the proceeds of sale of the cargo and the Member has no recourse to recover those liabilities or costs from any other party.

D THROUGH OR TRANSHIPMENT BILLS OF LADING
Liability for loss, shortage, damage or other responsibility in respect of cargo carried by a means of transport other than the insured vessel, when the liability arises under a through or transhipment bill of lading, or other form of contract approved by the Managers in writing, which provides for carriage partly to be performed by the insured vessel.

E PROVISOS
i HAGUE AND HAGUE-VISBY RULES
Unless the Member has previously obtained appropriate special cover by agreement with the Managers or the Board in its discretion otherwise determines, there shall be no recovery from the Association in respect of liabilities which would not have been incurred or sums which would not have been payable by the Member if the cargo had been carried on terms no less favourable to the Member than those laid down in the Hague or Hague-Visby Rules, save where the contract of carriage is on terms less favourable to the Member than those laid down in the Hague or Hague-Visby Rules solely because of the relevant terms of carriage being of mandatory application.

ii REGULATIONS AS TO TERMS AND METHODS OF CARRIAGE
The Board shall have power from time to time to make Regulations prescribing the use of any particular clause or form of contract, either generally or in any particular trade or in relation to the system and method of carriage, storage, transport, custody and handling of cargo intended to be, being or having been carried in an insured vessel. The Board may in its discretion reject or reduce a claim on the Association arising as a consequence of the failure by a Member to adhere to the terms of such Regulations.

iii DEVIATION
Unless the Board in its discretion shall otherwise determine, or cover has been agreed by the Managers in writing prior to the deviation, there shall be no recovery from the Association in respect of liabilities, costs and expenses arising from a deviation, in the sense of a departure from or delay in prosecution of the contractually agreed voyage or adventure, or from events occurring during or after a deviation, if as a result of such deviation the Member is not entitled to rely on any defences or rights of limitation which would otherwise have been available to him to eliminate or reduce his liability.

iv CERTAIN EXCLUSIONS FROM COVER
Unless the Board in its discretion shall otherwise determine, there shall be no right of recovery from the Association in respect of any liabilities, costs and expenses arising from:
a the issue of a bill of lading, way bill or other document containing or evidencing the contract of carriage, issued with the knowledge of the Member or his Master with an incorrect description of the cargo or its quantity or its condition.
b the issue of a bill of lading, way bill or other document containing or evidencing the contract of carriage which contains any fraudulent misrepresentation, including but not limited to the issue of an ante-dated or post-dated bill of lading.
c delivery of cargo carried under a negotiable bill of lading without production of that bill of lading by the person to whom delivery is made.
d delivery of cargo carried under a way bill or similar non-negotiable document to a party other than the party nominated by the shipper as the person to whom delivery should be made.
e discharge of cargo at a port or place other than in accordance with the contract of carriage.
f late arrival or non-arrival of the insured vessel at a port or place of loading, or failure to load or delay in loading any particular cargo, other than liabilities and expenses arising under a bill of lading already issued.
g any deliberate breach of the contract of carriage on the part of the Member or his manager.

v VALUE DECLARED ON BILL OF LADING
Where the value of any cargo is declared upon the bill of lading at a figure in excess of US$2,500 (or the equivalent in the currency in which the declared value is expressed) per unit, piece or package, the right of recovery from the Association under this Section shall not exceed US$2,500 per unit, piece or package unless otherwise agreed by the Managers in writing.

vi RARE AND VALUABLE CARGO
There shall be no right of recovery from the Association in respect of claims relating to the carriage of specie, bullion, precious metals or stones, plate, works of art or other objects of a rare or precious nature, bank notes or other forms of currency, bonds or other negotiable instruments, unless otherwise agreed by the Managers in writing.

vii PROPERTY OF THE MEMBER
In the event that any cargo lost or damaged on board the insured vessel shall be the property of the Member, he shall be entitled to the same right of recovery from the Association and the Association shall have the same rights as if the cargo had belonged to a third party and that third party had concluded a contract of carriage of the cargo with the Member on terms at least as favourable to the Member as the Hague-Visby Rules.

viii FISHING VESSELS
Where the insured vessel is a fishing vessel, there shall be no right of recovery under this Section for liabilities and expenses relating to the catch of that vessel or to any fish or fish products carried therein.


Section 15: Unrecoverable general average contributions

The proportion of general average expenditure, special charges or salvage which the Member is or would be entitled to claim from cargo or from some other party to the marine adventure and which is not legally recoverable by reason only of a breach of the contract of carriage.

PROVIDED THAT
i All the provisos to Section 14 shall also apply to claims under this Section.
ii Unless the Member has previously obtained appropriate special cover by agreement with the Managers, the proportions of general average expenditure which the Member is or would be entitled to claim from cargo or from some other party to the marine adventure shall be deemed to have been adjusted in accordance with the York/Antwerp Rules 1974 or 1994 and the Member's right of recovery from the Association limited accordingly.


Section 16: Ship's proportion of general average

Ship's proportion of general average, special charges or salvage not recoverable under the hull and machinery policies solely by reason of the sound value of an insured vessel having been assessed for contribution to general average, special charges or salvage at a value in excess of the amount for which such vessel should have been insured if it had been "fully insured" in accordance with the meaning of those words in Rule 24.


Section 17: Property on board the insured vessel

Liability for loss of or damage to any equipment, fuel or other property on board the insured vessel, other than cargo and the effects of any person aboard the insured vessel.

PROVIDED THAT
A There shall be no right of recovery under this Section for loss of or damage to any property which forms part of the insured vessel or which is owned, leased or hired in by the Member or by any company associated with or under the same management as the Member; and

B Unless the Member has obtained appropriate special cover by agreement with the Managers, there shall be no right of recovery from the Association of any liability which arises under a contract or indemnity entered into by him and would not have arisen but for such contract or indemnity.


Section 18: Special compensation to salvors

A Liability of the Member to reimburse a salvor of the insured vessel for his "reasonably incurred expenses" (together with any increment awarded thereon) under the exception to the principle of "no cure - no pay" contained in Clause 1(a) of the Lloyd's Standard Form of Salvage Agreement 1980 (LOF 1980).

B Liability of the Member to pay to a salvor of the insured vessel "special compensation" within the meaning of Article 14 of the International Convention on Salvage 1989 as incorporated by Clause 2 of Lloyd's Standard Form of Salvage Agreement 1990 (LOF 1990) and as included in Lloyd's Standard Form of Salvage Agreement 1995 (LOF 1995), for operations to prevent or minimise damage to the environment.

C Liability of the Member to pay to a salvor of the insured vessel "Scopic Remuneration" within the meaning of the Scopic Clause as supplementary to Lloyd's Standard Form of Salvage Agreement 1995 (LOF 1995) or as incorporated into Lloyd's Standard Form of Salvage Agreement 2000 (LOF 2000).

PROVIDED THAT
In respect of a claim under paragraph C of this Section, in the event of the salvage of the vessel or any property on board and, in accordance with the Scopic Clause, there is no Article 13 award, the residual value of the vessel and of any property to which the Member is entitled shall first be deducted from or set off against such liability and only the balance shall be recoverable from the Association.


Section 19: Fines

Fines as set out in paragraphs A to D below when and to the extent that they are imposed in respect of an insured vessel by any competent court, tribunal or authority and are imposed upon the Member or upon any seaman whom the Member may be legally liable to reimburse or reasonably reimburses with the agreement of the Managers.

A For short or over delivery of cargo, or failure to comply with regulations relating to the declaration of goods, or documentation of cargo, provided that the Member is covered by the Association for cargo liabilities under Rule 2 Section 14 and subject to the provisions of that Rule.

B For breach of any immigration law or regulation.

C In respect of accidental escape or discharge of oil or other substance from the insured vessel.

D For smuggling by master or crew.

E PROVISOS
i Notwithstanding the terms of Rule 27 paragraph 1 the Board in its discretion may admit claims for loss of an insured vessel following final confiscation of the vessel by a competent court, tribunal or authority by reason of infringement of any customs law or customs regulation, to such extent as it shall think fit. The amount recoverable shall not exceed the market value of the insured vessel at the date of final confiscation, disregarding any charter or other engagements, to which the vessel may be committed.
ii There shall be no right of recovery under this Section for fines arising out of infringements or violations of or non-compliance with the provisions regarding construction, adaptation and equipment of ships contained in the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 and as modified or amended by any subsequent protocol, or the legislation of any state giving effect to that Convention; but the Board in its discretion may admit claims for such fines to such extent as it shall think fit.
iii There shall be no right of recovery under this Section for fines arising out of infringements or violations of or non-compliance with the provisions of the ISM or ISPS Codes; but the Board in its discretion may admit claims for such fines to such extent as it shall think fit.


Section 20: Inquiries and criminal proceedings

A Expenses incurred by the Member in protecting his interests before a formal inquiry into the loss of or a casualty involving the insured vessel.

B Expenses incurred by the Member in connection with the defence of criminal proceedings brought against the Master of or a seaman aboard the insured vessel or some other servant or agent of the Member or some other person associated with the Member.

C PROVISOS
No costs or expenses shall be recoverable under this Section unless:
i they were incurred with the agreement of the Managers in writing; or
ii the Board in its discretion decides that they should be recoverable from the Association.


Section 21: Liabilities and expenses incurred by direction of the Managers

Liabilities and expenses reasonably and necessarily incurred or sustained by the Member for the purpose or as a result of carrying out a specific written direction of the Managers in connection with the insured vessel.


Section 22: Sue and labour and legal costs

A Extraordinary costs and expenses (other than those set out in paragraph B of this Section) reasonably incurred on or after the occurrence of any casualty, event or matter liable to give rise to a right of recovery from the Association and incurred solely for the purpose of avoiding or minimising any liability or expenditure against which the Member is wholly or, by reason of a deductible or otherwise, partly insured by the Association.

B Legal costs and expenses relating to any liability or expenditure against which the Member is wholly, or, by reason of a deductible or otherwise, partly insured by the Association, but only to the extent that those costs and expenses have been incurred with the agreement of the Managers or to the extent that the Board in its discretion decides that the Member should recover from the Association.

PROVIDED THAT
There shall be no right of recovery under this Rule for any cost or expense related to ransom demands, extortion, blackmail, bribery or any illegal payments.

RULE 3: SPECIAL COVER

1 The Managers may accept entries of vessels on special terms as to calls, or which afford cover against any special or additional risks. The nature and extent of the risks and the terms and conditions of insurance incorporating any such special terms shall be as agreed by the Managers in writing.

2 Notwithstanding Rule 1 paragraph 6 a Member may be insured on the special term that the risks insured may arise otherwise than in respect of the insured vessel or otherwise than in connection with the operation of the insured vessel provided that this shall have been agreed by the Managers in writing.

RULE 4: SPECIAL COVER FOR SALVORS, CHARTERERS AND SPECIALIST OPERATIONS

1 Salvors

Notwithstanding Rule 28, provided that special cover has been agreed by the Managers in writing and endorsed on the certificate of entry, and provided that he has paid such calls as may be required by the Managers, a Member who is the owner or operator of a salvage tug or other vessel intended to be used for salvage operations may be covered for the following:

A Liabilities and expenses arising in respect of risks covered under Rule 2.

B Liabilities and expenses caused by oil pollution during salvage operations whether or not they arise in respect of the Member's interest in the insured vessel.

C Liabilities and expenses, not covered under paragraph 1A or B of this Rule, caused by events occurring during salvage operations whether or not they arise in respect of the Member's interest in the insured vessel. Cover under this paragraph 1C of this Rule is only available as specifically agreed by the Managers in writing and endorsed on the certificate of entry and on payment of such additional calls as the Managers may require.

PROVIDED THAT
i There shall be no right of recovery under this Rule of any liability or expense which is incurred under the terms of an indemnity or contract unless the terms of the indemnity or contract have been agreed by the Managers in writing.
ii The cover afforded under this Rule in connection with any salvage or attempted salvage operations shall be in all respects the same as that afforded under Rule 2 in respect of the operations of the insured vessel save that in the case of cover afforded under paragraph 1B or 1C of this Rule the liabilities and expenses need not arise in respect of an insured vessel or out of the operation of an insured vessel provided that they arise in connection with the Member's business as a salvor.
iii It shall be a condition of cover under this Rule that the Member shall apply to enter for insurance in the Association every vessel intended to be used in connection with salvage operations at the time when the insurance is given and, thereafter, at least 30 days before the beginning of each policy year.

2 Charterers

When the entry of an insured vessel in the Association is in the name of or on behalf of a charterer, the following liabilities and expenses may be covered on such terms and conditions as may be agreed by the Managers in writing.

A Liability of the charterer, together with expenses incidental thereto, to indemnify the owner or disponent owner of the insured vessel in respect of the risks set out in Rule 2.

B Notwithstanding the provisions of paragraphs 1, 2 and 3 of Rule 27, the charterer's liability, together with the costs and expenses incidental thereto, for loss of or damage to the insured vessel.

C Notwithstanding the provisions of paragraph 2 of Rule 27, the loss incurred by the charterer as a result of loss of or damage to bunkers, fuel or other property of the charterer on board the insured vessel.

3 Specialist operations

A Member may be covered against any of the liabilities or expenses which arise out of or during any of those operations in respect of which cover is excluded or restricted either under Rule 28 or otherwise under these Rules upon such terms and conditions as may be agreed by the Managers in writing.

RULE 5: OMNIBUS RULE

Notwithstanding anything to the contrary contained in these Rules the Board in its discretion shall have power to admit a right of recovery by a Member in respect of liabilities or expenses incidental to the business of owning, operating or managing vessels, which in the opinion of the Board fall within the scope of the cover of Rules 2, 3 or 4.

PROVIDED THAT
A Any amount claimed under this Rule which but for this Rule would be expressly excluded by the provisions of any other Rule may only be paid if the decision of those members of the Board present when the claim is considered is unanimous.

B Any amount claimed under this Rule shall be recoverable to such extent only as the Board in its discretion may determine.

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