Hull clauses. Although cover is available to the shipowner for a specified voyage most ships are insured for a period of 12 months, the policy being renewed at the annual expiry date.
Accordingly, the most commonly used hull clauses cover a period of time, and are called “Institute Time Clauses (Hulls)”. It is fairly common for one to hear w these referred to as the Institute “All Risks” clauses, but, in fact they cover only “specified” perils. They are also referred to as “full conditions”. The principle of proximate cause is applied strictly to hull insurance (this is not always the case with cargo insurance, where one often needs to show only that the loss is reasonably attributable to certain perils (say, fire) for a claim to be paid). “Proximate cause” is the immediate cause remoteness is not allowed, e.g. if a navigation light is extinguished and a ship strands on a reef, the proximate cause is the accidental stranding, not the extinguished light.
Although we will not examine the individual perils covered by the standard hull clauses, the following “perils” from the ITC 1983 may be of interest:
“6.1 This insurance covers loss of or damage to the subject matter caused by:
6.1.1. perils of the sea, rivers, lakes or other navigable waters
6.1.2. fire, explosion
6.1.3. violent theft by persons from outside the Vessel
6.1.6. breakdown or accident to nuclear installations or reactors
6.1.7. contact with aircraft or similar objects, or objects falling there from, land conveyance, dock or harbour equipment or installation.
6.1.8. earthquake, volcanic eruption or lightning
6.2 This insurance covers loss or damage to the subject matter insured caused by:
6.2.1. accidents in loading, discharging or shifting cargo or fuel
6.2.2. bursting of boilers breakage of shafts or any latent defect in the machinery or hull
6.2.3. negligence of Master, Officers, Crew or Pilots
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.
Provided such loss or damage has not resulted from want of due diligence by the Assured, Owners or Managers.” It is interesting to note that “piracy”, which was always considered to be a war risk in the past, is now treated as a marine peril; also that these clauses, designed to attach to the Marine Insurance Act 1906, omit all the out-of-date wording in use on the old SG policy.
Under the Institute Time Clauses (Hulls) 1983, the insurer indemnifies for loss of or damage caused to the vessel by the named perils and also by government action to prevent or minimise a pollution hazard or threat by the vessel insured because of damage which the insurance covers. This means that if a government orders that the damaged vessel be towed off-shore and sunk, the underwriters will pay for the loss, even if the sinking was not accidental. Cover is also provided for collision liability.