2.3.1 Perils (Institute Time Clauses, Hulls, 1.10.83)
The perils covered in the Clause 6 of the Institute Time Clauses (HULLS) 1.10.83 fall into two sections.
Clause 6.1 covers the following:
6.11 Perils of the seas, rivers, lakes or other navigable waters.
(These obviously cover groundings, collisions, heavy weather, contacts. In most cases, it is clear what is a peril of the sea and what is not. However, take the example of cracked shell plating from an ageing but not necessarily old bulker in moderately heavy weather. Is the cause of the loss heavy weather, peril of the sea, latent defect, or is it ordinary wear and tear because of a certain amount of wastage?
6.1.2 Fire explosion.
(Little comment required.)
6.1.3 Violent theft by a person from outside the vessel.
(As opposed to clandestine theft or pilferage which is not covered.)
6.1.4 Jettison.
(No comment.)
6.15 Piracy.
(Although piracy is on the increase, it does not lead to many claims because cash and valuables seem to be the current target of the pirated and the claim may not exceed the policy deductible.)
6.1.6. Breakdown of or accident to nuclear installations or reactors.
(These perils do not require further comments)
6.1.7 Contact with aircraft or similar objects, or objects falling therefore, land conveyance, dock or harbour equipment or installation.
6.1.8 Earthquake volcanic eruption or lightning.
Clause 6.2 covers loss of or damage to the subject matter insured caused by:
6.2.1 Accident in loading, discharging or shifting cargo or fuel.
(This is self-explanatory.)
6.2.2 Bursting of boilers, breakage of shafts or any latent defect in the machinery or hull.
( it is important to note that this only covers damage caused by these items. Therefore it would be dangerous to agree that the cause of damage was latent defect in a crankshaft since only the consequential damage on the crankshaft would be paid for by the Hull Insurers not the crankshaft itself.)
6.2.3 Negligence of master, officers, crew or pilots.
( A simple definition of negligence could be an omission to do something that they ought not to do. The bulk of machinery damage claims are recoverable under this section of the policy.
6.2.4 Negligence of repairers or Charterers provided such repairers or Charterers are not an Assured hereunder.
6.2.5 Barratry of master, officers or crew.
(Barratry is a wrongful act wilfully committed by the master or crew to the prejudice of the Owners)
Under 1.11.95 Clauses, there has been some re-ordering of the perils, for instance, Clause 6.1.6 has been removed. Clause
6.1.7 now includes contact with helicopters, and has been moved to section 6.2 . However, the overall effect of these changes is very minor.
2.3.2 Additional Perils Clause
A wide cover which a available to Owners at an increased premium and may only be granted to vessels of a certain age / condition. This replaces Clause 6 of the Institute Time Clauses (Hulls 1.10.83.
Clause 1.1 Cover the cost of replacing and replacing:
1.1.1 Any boiler which bursts or shaft which breaks.
(This is self-explanatory and provides wider cover then the standard Institute Time Clauses (Hulls 1.10.83)
1.1.2 Any defective part which has caused loss or damage to the vessel covered by 6.2.2 of Institute Time Clauses.
(This Particularly covers a latent defective part where you can only claim consequential damage on the basic Clauses.)
Clause 1.2 Covers loss or damage to the vessel caused by any accident or by negligence, incompetence or error of judgment of any person whatsoever.
(This is the most important additional cover given by the Clause. It is a much wider cover and you only need show was caused by an accident or by negligence etc. You would not have to establish the cause of the accident.)
Clause 2 states “Except as provided in 1.1.1 and 1.1.2, nothing in these Additional perils clauses shall allow any claim for the cost of repairing or replacing any part found to be defective as a result of a fault or error in design or construction and which has not caused loss of or damage to the vessel.”
(This is designed to cover the situation that occurred in the late 1970's with StoorWerkspoor bedplates damage where, though a design weakness, damage to bedplates occurred initially causing consequential damage. These claims were paid by Hull Insurers under the Liner Negligence Clause [now replaced by the Additional Perlis Clause]. However a number of similar engines were opened up for precautionary inspections and cracks were found which had not caused damage to the vessel. Insurers disputed that they were liable to pay for them since there was no consequential damage and they were not liable to pay for the remedying of the design. Therefore, under this Clause, you have to find some consequential damage, however, minute.)