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RAETSMARINES COMPREHENSIVE
CHARTERERS LIABILITY COVER
INTRODUCTION
The RaetsMarine Comprehensive Charterers Liability Cover has been designed
to specially meet the needs of charterers, traders and cargo owners. As one of
the leaders in the field of Charterers Liability RaetsMarine is able to provide
tailor-made insurance cover by offering flexible terms and a network of service
providers on a worldwide basis. In addition RaetsMarine have a very experienced
team of claim handlers able to handle all type of Charterers Liability claims in a
efficient and professional manner.
In most cases the Charterer even appears twice in the contractual chain. He is
the Charterer in the contract with the Shipowner (Time- or Voyage C/P) and he
becomes the disponent-owner in the contract with the cargo owners (Voyage
C/P, Booking Note, Contract of Affreightment or direct Bill of Lading booking).
Sometimes the contractual chain is longer with back-to-back and sub-charters,
which means there are more parties involved.
Under any Charter Party the Charterer is ultimately liable for damages to the
chartered vessel. These damages may be caused by stevedores, by an unsafe
port or berth, by the cargo, or by the wrong fuel supplied to the vessel.
Apart from the major risks, being liability to cargo and liability to damages to the
vessel, the Charterer may also be held liable for other claims, such as collision,
personal injury, pollution, salvage, fines, stowaways, etc.
Lets have a look at the shipping practice and explain the contractual chain in a
string of contracts between the various parties, which is also showing the types
of Charterers.
(CIF SELLER)
An owner of goods needs a ship to perform his Sale Contract (S/C). He may
either be a CIF-seller or a FOB-buyer, the consequence of which will be that he
must charter a ship and thereby becomes a Charterer.
An owner of a ship needs goods to carry and will enter in to a Time charter (T/C)
or a Voyage charter (V/C) to get employment for his ship.
1. Companies, which are operating a liner service, but do not own ships
(SHIPCO - FREIGHTCO).
Local agents, who are appointed by the company operating the liner service,
generally book the cargoes. Usually the bookings are concluded on the shipping
line's Bills of Lading conditions and on a Liner Booking Note (B/N), which is
resulting in a contractual relationship between the liner company and the cargo
owner (shipper or consignee, depending on CIF/FOB conditions).
As time charterer the liner company will be directing the ship to ports. If a port or
berth appeared not to be safe the time charterer will be liable for the damages to
the vessel.
The liner company is also appointing stevedores for loading and discharging.
Even if the stevedores would be liable for damages to the vessel, it is the time
charterers direct liability under the charter party with the Ship owner.
Under a time charter party the Charterer has to buy the fuel for the vessels
engines. If the fuel supplied to the vessel is causing damages to the engines the
time charterer will not be able to escape from liability.
In many Charter Parties the Charterer is also liable for a variety of loss of or
damage to the cargo. This means the Charterer may
Charterers shipping their
be liable for loss of or damage to his OWN cargo, but own cargoes must match
cargo and charterers
this risk he had already covered under his cargo liability insurance
insurance. How is this possible?
The answer is simple: At the time the loss or damage becomes apparent the
Consignee is taking delivery against presentation of the Bill of Lading. If there is
a loss of or damage to cargo the insurance company covering the cargo will be
notified. If they pay for a loss or damage they will be subrogated in the rights of
the Consignee and will subsequently try to recover their loss from the Ship owner
under the Bill of Lading. If they succeed the Ship owner (or rather his P. & I.
Club) will take recourse under the terms of the Charter Party. It may thus happen
that a loss or damage, which has been recovered by the marine cargo insurer in
the first place must be paid back to the Ship owner in the second place, which
means that the marine cargo insurance company has received a premium and
will say: "Thank you very much".
The solution is also simple: Upon agreeing the marine cargo insurance policy it is
necessary to demand a waiver of recourse clause, which means that the marine
cargo insurance company will stop their recovery, if it appears that the Assured
can be held liable in the scenario as explained above. With such a waiver of
recourse clause it will be possible to exclude liabilities to cargo under our
Charterers Liability Insurance, which will reduce the premium substantially.
Under a CIF sale or a FOB purchase the seller (shipper) resp. the buyer
(consignee) is the Charterer of the vessel. In both cases there will be a marine
cargo insurance in their own name and for their own account, which means that
the required waiver of recourse clause can be agreed Is the sale contract
CIF, FOB or C+F?
upon. There is however one situation where the cargo
owner has no control over the marine cargo insurance
and that is in respect of a C+F sale. Under such conditions the buyer (consignee)
will take out the marine cargo insurance, whereas the seller (shipper) is still
chartering the vessel. In such cases it will be necessary to include in our
Charterers Liability Insurance a so-called contingent coverage for cargo liabilities,
which we can provide.
the Ship owner takes care for a seaworthy ship with valid classification
and employs the Captain and the Crew, enabling the ship to safely sail
between the ports as ordered by the Charterer
the Charterer takes care for the loading, stowage, lashing/securing and
discharge of the cargoes and gives the Captain orders and instructions
as to the cargoes to be shipped to and from various ports
In the tanker business other types of Time Charter Parties are used in which the
main characteristics are similar as above.
the ports between which the cargoes are being carried are known beforehand.
On Liner Terms the Ship owner takes care for loading, stowage and discharge,
whereas on FIOS terms (Free In Out Stowed) the Charter Parties and Booking
Charterer takes care for it. In both cases it is not Notes are negotiated between
the parties and are only valid
the Charterer who gives instructions to the between these parties
Captain, but always the Ship owner. Consequently the liabilities for a Voyage
Charterer are slightly less than for a Time Charterer.
3. BOOKING NOTE
A Booking Note (B/N) is a contract between the CIF-seller or FOB-buyer
(Merchant) and a shipping company (Carrier) for the carriage by sea of certain
goods. The form used in most cases is the "CONLINEBOOKING" Liner Booking
Note. The special nature of this contract is that the terms and conditions of the
Booking Note are superseded by the Bills of Lading conditions at the time of
actual shipment of the goods.
We constantly give advice about Charter Parties, Bills of Lading and other
contracts of carriage. We draft and recommend specific clauses and make pro-
forma Charter Parties, as and when required. This additional service plays an
important role in our active loss prevention programs.
Bills of Lading
Whereas the Charter Party is a contract negotiated between the parties on the
basis of freedom of contract, the Bill of Lading is a document, which springs in to
existence upon completion of loading and is binding
Bills of Lading spring in to
between various parties, who have not contracted existence between various
parties
with each other, on the basis of the clauses of the Bill
of Lading and compulsory law, such as the Hague-Visby Rules.
Many liner companies use their own Bills of Lading. Although they may be differ
in layout and content these Bills of Lading are mostly based on the standard
Conline B/L.
When goods are sold there is a seller and a buyer, who become the shipper and
the consignee in the B/L. When the goods are traded on a letter of credit, the
banks will also come in to play as parties. It is also possible that the goods are
sold one or more times during the voyage, which means that the Bill of Lading is
changing hands.
On the other side of the string is the carrier. Primarily this is the shipowner, but if
other names appear on the face of the Bill of Lading or if the Bill of Lading is
signed on behalf of the Charterer, those other parties will be the carrier.
The problem about Bill of Lading law is that every case will be considered on the
prevailing circumstances and many countries have different laws about the
interpretation of the Bill of Lading.
The reason for this warranty is simply to unravel the complexity of the Bill of
Lading, and more importantly the liabilities resulting from it. Our rates are a
reflection of the risk. It must therefore be clear from the beginning which liabilities
we must insure, hence our practical solution with the Bill of Lading warranty.
agents, etc etc, however, the responsibility for navigation, safety, compliance
with ISM and ISPS and seaworthiness will remain with the Master and the
Shipowner. Those responsibilities cannot even be delegated to the Charterer.
Just for this reason the Charterer should never voluntarily choose to become the
carrier under the Bill of Lading.
4. Bunker Insurance
5. Freight Insurance
7. Ancillary covers
Ship and cargo are together during the voyage, but the parties to be identified in
the string of contracts are not. Certain liabilities are inherent to chartering and
cannot be avoided.
damage to cargo
collision
wreck removal
quarantaine costs
pollution
general average
fines
The main risks are liability to loss of or damage to cargo, liability to damage to
the vessel and costs, which are explained as follows:
bad stowage
The type of liabilities for which the Charterers can be held liable are:
stevedore damages
unsafe port/berth
If the chartered ship must be repaired and the Charterer is liable for the damages
to the ship the time lost by the repairs are also covered.
1.3. COSTS
All costs, which have to be made to defend a legal liability claim are covered
under the Charterers' Liability insurance. The costs that The costs play an
are regularly incurred are survey expenses and lawyer important part in the
coverage
fees. Even if the Charterer is not liable, but a party is
pursuing a claim, the costs for such unwarranted liability claim are also covered.
1. It is not allowed to waive any rights of legal limitation sums, which will
apply in any legislation or convention.
3. P. & I. insurance will give subsidiary cover, which means that any other
policy, which will cover certain liabilities, will prevail.
The reasonable legal costs and expenses are covered in respect of claims and
disputes in connection with:
The cover includes - free of charge - all the work being carried out by our claim
handling staff, who are all have shipping and chartering experience and will do
their utmost to bring defence claims to a quickest possible solution. It should
however be noted that an insurance policy cannot be treated as an extension of
your operations department. Each dispute will require the full attention and
support of your chartering and/or operations staff, especially in providing full
background information, collecting of evidence and copies of all correspondence
and contracts.
4. BUNKER INSURANCE
This is an insurance for Charterers when they have their own bunkers on board
the vessel they have chartered.
This insurance covers the loss of bunkers as well as the contribution of bunkers
to General Average. The sum insured is the value of bunkers declared by the
client.
5. FREIGHT INSURANCE
When the freight to be earned for the voyage becomes only payable on or after
delivery of the goods in the discharging port, the freight value is at risk during the
voyage. If the cargo is lost during the voyage the Charterer will not receive the
freight. This risk can be covered with a freight insurance.
The sum insured is the freight or profit that the client declares.
Cover is worldwide excluding war risk areas (such as Iraq and Somalia).
7. ANCILLARY INSURANCES
In addition to our Charterers Liability, Marine Defence Insurance, Cargo Owners
Legal Liability insurance, Bunker Insurance, Freight Insurance and Charterers
War P&I Insurance, which are our own products, we facilitate some additional
insurances for our Charterers client base.
S.O.L. INSURANCE
S.O.L. is the standard name of this insurance and it stands for Shipowners
Liability Insurance. Notwithstanding this name Charterers can use it as well.
- Actual port or ports is not in conformity with the port or ports in B/L ;
FREIGHT INSURANCE
When the freight to be earned for the voyage becomes only payable on or after
delivery of the goods in the discharging port, the freight value is at risk during the
voyage. If the cargo is lost during the voyage the Charterer will not receive the
freight. This risk can be covered with a freight insurance.
The sum insured is the freight or profit that the client declares.
DETENTION INSURANCE
This insurance is to cover the net loss of the Charterer if he is unable to use the
vessel following damage to the vessel for which the Charterer is legally liable
under the Charter party.
This insurance will indemnify the Charterer for loss of earnings and/or additional
expenses and/or damage and/or loss of vessel(s) resulting from detainment
and/or confiscation and/or arrest and/or restraint and/or seizure and/or
expropriation or any other form of detention or loss of free use and disposal of
vessel(s) by any government or port or customs authority and/or any authorized
bodies and/or claimants on the vessel in which the assured has no interest,
including but not limited to the discovery of or the suspicion of the presence on
board of illegal narcotics or drugs or by reason of any other infringement of
customs or other regulations.
Before quoting we require information from the Charterer as per attached Enquiry
Form.
CONCLUSION
You could consider RaetsMarine as a mere underwriter of marine liability
insurance. We literally go the distance in rendering this service. We manage
marine liability insurance capacity with first class and transparent financial
security at fixed premiums. You can call us into action
First class
from anywhere in the world. We have a correspondent in financial security
So far so good. These are the facts, the firm aspects of our business. If this is
what you expect from a marine underwriter, you are hereby sufficiently informed.
There is, however, one fact that we believe is so important that it will dominate
the rest of our story:
We believe that our main concern at RaetsMarine is not only the fact that your
financial security is warranted, but also how it is performed. It is of the utmost
importance that we are able to give immediate response, that we create solutions
where needed and that we make firm agreements. Our organization plays a very
decisive role in this somewhat unseen process.
the clients needs. Besides liability coverage, we can offer marine defence (F.D.
& D.) coverage and other insurances, such as bunker-, freight-, war- and S.O.L.
insurance.
All the P. & I. Clubs have made ISM and ISPS compliance a condition of cover,
which means that all Charterers entries are also subject to this obligation, which
is unfair to a Charterer, simply because the Charterer has no actual control over
ISM/ISPS compliance by the Shipowner.
Many costly claims and disputes arise out of inadvertently imprecise drafting of
clauses in Charter Parties, Bills of Lading and other shipping contracts. We
encourage you to contact us about the drafting and checking of proforma Charter
Parties or other contracts. It may also happen that you wish our advice about a
contract or a clause, whilst you are still negotiating a contract.
That means that we, as specialist marine underwriters, must know all about the
Charterers' business. Every aspect has its own conditions, which we must always
take into consideration. And, of course, it is also in our
Shipping knowledge
interest to avoid and minimize claims. Our people are prevails
available and ready to adapt to changing conditions and
demands. Our service is always tailored to your
requirements. You can see how well such a partnership works when you decide
to use RaetsMarine.
For a quick and effective handling of your enquiry, we kindly request you to
provide us with the following information:
Type of vessels
Trading areas
Type of cargoes
Type of Bills of Lading to Blank Owners Bs/L Own Bs/L (with Charterers
be used logo/address on its face)
Percentage of total volume % %
Are Bs/L always signed
by or by authority on
behalf of the Master
Cargo US$
Others US$
Name of insurance
broker
Please complete this form and send it back to us. We will give your enquiry
immediate attention and will respond the same day or latest the first working day
after having received the requested information. Thank you.