Rules Class II - Freight, Demurrage and Defence (1-5)

Publications

1

These Rules are subject to the Act and Bye-Laws of The Steamship Mutual Underwriting Association (Bermuda) Limited, hereinafter referred to as ‘the Club’.

2

Subject to the power of the Managers (expressed in Rule 4 of the Protection and Indemnity Class referred to in Rule 14 of these Rules) to accept entries upon special terms, the Members shall pursuant to the provisions of the Act and Bye-Laws of the Club and these Rules mutually insure each other in accordance with the provisions of these Rules against costs and expenses which they or any of them may become liable to pay or may incur or cause the Club to pay or incur in respect of any entered ship; and for this purpose each Member shall subject to these Rules, unless his entry has been accepted upon special terms which otherwise provide, contribute to the funds of the Club pro rata according to the gross tonnage of the ships or the total number of ships entered by him or on his behalf in the Club.

3

The funds required for the payment of the claims expenses and outgoings falling upon the Club shall be raised as follows:

at the beginning of each policy year the Club shall levy a Mutual Premium at such rate per ton as may be agreed between the Member and the Managers in respect of the ship or ships entered by him or on his behalf subject to any special terms upon which such ship or ships may be entered. Such Mutual Premium shall be levied during the policy year and the two years subsequent thereto in such instalments as the Directors from time to time may determine;

if the claims expenses and outgoings for such year (including the anticipated claims expenses and outgoings, the excess of the claims expenses and outgoings of any closed policy year over the provisions or reserves made therefor, and the setting up of such reserves as the Directors may deem expedient) should exceed the contributions raised by the Mutual Premium, the Directors may in order to make good the deficiency direct that an Additional Premium or Premiums shall be paid by each Member (subject to such special terms) at such time or times and at such rate per gross ton or per ship or at such percentage of the calls already paid as the Directors may decide;

in the event of any Member making default in payment of any contribution due from him to the Club the same shall (subject to the provisions as to entries on special terms) be paid by the other Members entered for insurance rateably in proportion to the contributions last due from them respectively in respect of the policy year concerned and payment may be enforced by the Club;

the Directors may decide that at such time as they may deem expedient any policy year shall be closed, in which event if the contributions obtained as aforesaid in respect of such policy year shall exceed the claims expenses and outgoings falling upon the Club for that year, the Directors may either carry that surplus in whole or in part to such reserve or reserves as the Directors think proper or return it in whole or in part to the persons who made such contributions rateably in proportion thereto;

any Member who may at any time be entitled to receive from the Club any payment in respect of a loss, claim or demand shall bear and contribute the proportion thereof due in respect of any ship or ships entered by him including the ship in respect of which the loss, claim or demand arose.

4

Each Member shall on becoming a Member and thereafter at the beginning of each policy year contribute such management commission as may be agreed with the Directors.

5 Risks Covered

The protection afforded to the Members is in establishing or resisting the following claims arising subsequent to the date of entry in respect of any ship entered, namely:

freight, dead freight and passage money or hire arising under any charterparty, Bill of Lading or other contract and general and particular average contributions or charges;

demurrage or damages for the detention of any Member’s ship or despatch money;

iii

interference, neglect, default or any other cause involving detention of or loss to a Member’s ship by any Department of State, or public body, or other person or persons whatsoever either at home or abroad;

damages for detention of any entered ship in any collision action;

breach of any charterparty, Bill of Lading, or other contract;

supply of inferior or unsatisfactory or unsuitable fuel, outfit or equipment, or other necessaries, or for negligent repair of a ship;

vii

improper loading, lightering, stowage, trimming or discharge of cargo;

viii

overcharges in accounts, howsoever arising;

amounts due from or to Underwriters on ship and/or cargo and/or freight and all other persons and companies conducting the business of insurance in all its branches;

salvage, towage or pilotage services rendered by or to an Entered Ship;

provided always that:

there shall be no cover under this Rule in respect of any tug, supply boat or salvage vessel unless the vessel has been declared as such at the time of entry and any cover has been agreed by the Managers and is specified in the Certificate of Entry;

representation of Members at official investigations, Coroners’ inquests, or other enquiries whatsoever in relation to a Member’s ship;

xii

claims by or against passengers, stowaways, masters, officers, crew and other persons on or about a Member’s ship;

provided always that:

as regards ships not entered in the General Council of British Shipping all claims in respect of masters, officers and crew under this Rule shall only be covered by the Club on request and on payment by the Members concerned (prior to the claim) of such additional calls as may from time to time be decided by the Directors.

xiii

claims by or against or in respect of any parties in connection with the building, conversion, alteration, purchase, sale or mortgage of a Member's ship;

provided always that: cover for such claims has been agreed by the Managers on such terms as they may require.

xiv

claims by or against revenue or customs authorities in connection with a Member’s ship;

all claims, disputes, actions and other matters whatsoever against which in the opinion of the Directors they should be protected and would not be usually protected if fully entered in the other Classes of this Club and War Risks Associations and insured by the ordinary Lloyd’s or Companies’ policies with collision clause attached;

provided always that:

the Club shall not be responsible for costs incurred without its authority nor for the cost of cables or agents’ fees in connection with disputes before litigation or notice to the Club thereof.