RULES OF HULL AND MACHINERY INSURANCE 1. General stipulations 2. Object of insurance 3. Insurance risk. Insured events 4. Sum insured 5. Insurance premium 6. Insurance period 7. Conclusion and termination of the contract of insurance 8. Introduction of amendments and additions to the contract of insurance 9. Rights and duties of the Parties 10. Relationship of the Parties in case of loss occurrence 11. Insurance claim settlement. Claim denial 12. Dispute resolution
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RULES OF HULL AND MACHINERY INSURANCE
1. General stipulations
2. Object of insurance
3. Insurance risk. Insured events
4. Sum insured
5. Insurance premium
6. Insurance period
7. Conclusion and termination of the contract of insurance
8. Introduction of amendments and additions to the contract of insurance
9. Rights and duties of the Parties
10. Relationship of the Parties in case of loss occurrence
11. Insurance claim settlement. Claim denial
12. Dispute resolution
1. GENERAL STIPULATIONS
1.1. In accordance with applicable law and the Civil Code of the Russian Federation, the Merchant
Shipping Code of the Russian Federation, the Inland Water Transport Code of the Russian
Federation, the Russian Federation Law on the Organization of insurance business in the Russian
Federation, regulations in the field of insurance and on the basis of these Rules of hull and
machinery insurance (hereinafter referred to as Rules) the Insurer concludes insurance contracts
with legal or capable physical persons (hereinafter the Assured).
1.2. Under the contract of H&M insurance, concluded pursuant to these Rules (hereinafter referred to
as the insurance contract), upon an occurrence of the insured event (loss occurrence) the Insurer
commits himself, in accordance with the contract, to indemnify the Assured or other person, for
whose benefit the contract is signed (the Beneficiary), for losses, caused by this event, in respect
of property interests of the Assured (to pay the insurance indemnity) within the amount, defined
by the insurance contract, (sum insured).
1.3. The Insurer – «ARSENAL INSURANCE COMPANY LLC», conducts insurance business in
accordance with the licence, issued by the insurance supervision body.
1.4. The Assured shall be legal or capable physical persons, entered into an insurance contract with
the Insurer, with a legitimate property interest in the insured object.
1.5. At the conclusion of the insurance contract subject to the Rules, the agreed conditions become the
integral part of the insurance contract and are binding on the Assured and the Insurer.
1.6. The Insurer may not divulge information concerning the Assured and his property status, received
while carrying out the professional activity.
The Insurer depending on a sort of violated rights and nature of violation bears responsibility for
violating the secrecy of insurance in accordance with the procedure prescribed by the Civil law
regulations of the Russian Federation.
1.7. At the conclusion of the insurance contract the parties may agree to alter or waive particular
provisions of these Rules, as well as to supplement the contract with provisions other than those
set out in these Rules, if such amendments do not contradict the applicable law. Provisions of the
insurance contracts shall prevail over provisions of these Rules.
2. OBJECT OF INSURANCE
2.1. Object of insurance is the property interest of the Assured (the Beneficiary), connected with the
shipping: vessels with their machinery and equipment, freight; obligations secured by the vessel,
cargo and freight as well as unforeseen expenses, which may arise while the vessel is in
operation, the Insurer’s liability for the loss, caused to the third parties.
3. INSURED RISK. INSURED EVENT
3.1. Insured risk, in preparation for which this insurance is taken out, is a probable event, which is
likely to occur accidentally.
3.2. According to these Rules insurance risks are events, stipulated by the insurance contract, upon
the occurrence of which there is an obligation on the Insurer to pay an insurance benefit to the
Assured (the Beneficiary).
3.3. According to the insurance contract, concluded on the basis of these Rules, events shall be
recognized as insured events under the following terms:
3.3.1 "With total loss and damages liability".
The insurance contract, based on these conditions, shall cover:
- expenses caused by a total loss of the vessel (actual or constructive) or expenses for
repairs of damages to the hull, machinery, equipment;
- missing of the vessel;
- vessel’s proportion of losses, expenses and contributions in general average;
- necessary and properly incurred expenses for the salvage of the vessel;
- necessary and properly incurred expenses for the purpose of averting, minimizing or
determination of the extent of the loss, if such loss is caused by an insured event
stipulated in the insurance contract;
3.3.2 "With damages liability".
The insurance contract, based on these conditions, covers:
- expenses for repairs of damages to hull, engines, machinery or equipment;
- measures for the purpose of averting, minimizing or determining the loss, if such loss is
caused by an insured event stipulated in the insurance contract.
3.3.3 "With total loss liability”.
The insurance contract, based on these conditions, covers:
- total loss of a vessel (actual or constructive);
- missing of the vessel;
- vessel’s proportion of losses, expenses and contributions in general average;
- necessary and properly incurred expenses for salvage of the vessel;
- measures for the purpose of averting, minimizing or determining the loss, if such loss is
caused by an insured event stipulated in the insurance contract.
3.4. The liability of the Insurer for all damages, arising out of one insurance event, is limited to the
sum insured. However, the insurance contract may allow determination of the sum insured of all
losses for all insured events, which have occurred during the validity of one contract, or
determination of the sum insured for the different categories of expenses included in the
insurance indemnity for one insurance event. Necessary and properly incurred expenses for the
purpose of averting and minimizing the loss are additional to the compensation, paid in
accordance with items 3.3.1, 3.3.2 or 3.3.3 of these Rules, and shall be limited to amount of the
sum insured.
3.5. The following events shall not be considered as insured events and this insurance does not cover
losses that have occurred as a result of:
3.5.1 malice or negligence of the Assured or Beneficiary or their representatives, however the
Master Officer and crew of the insured vessel are not to be considered;
3.5.2 unseaworthiness of the vessel, which Assured, the Beneficiary or their representatives were
aware of, or should have been aware of, prior to sailing;
3.5.3 corrosion or wear and tear of the vessel, its parts, machinery, equipment or accessories;
3.5.4 operation of the vessel in conditions not allowed by its class;
3.5.5 direct or indirect influence of radiation or radioactive contamination, caused by any reason;
3.5.6 wages and maintenance of the Master Officer and crew except for the cases stipulated in
item 10.3 of these Rules;
3.5.7 losses and expenses connected with removing or disposal of obstruction, wreck of the
insured vessel, pollution or contamination, damage to health, life and property of the third
parties, or consequential loss of the Assured;
3.5.8 elimination of any defect unless the defect has caused a total loss or damage to the hull,
mechanisms, machines and equipment;
3.5.9 the Assured’s duties to compensate the damage to the owner of any other vessel due to
collision;
3.5.10 the Assured’s duties to compensate the damage to any fixed or movable object incurred by
the third parties;
3.5.11 loss of hire;
3.5.12 warlike operations and their consequences, civil wars, strikes, civil commotions and labour
conflicts as well as a seizure of a vessel by pirates or any other risks of piracy, including
possible expenses for the release of hostages and (or) vessel, as well as expenses for
general or partial average, connected with a seizure of vessel;
3.5.13 actions of the governmental authorities in respect of the insured vessel, except for total loss
or damages to the vessel insured due to measures undertaken to prevent or minimize the
danger of pollution by the vessel having damages, for which the Insurer is liable according
to the insurance contract.
3.6. If mutually agreed by the parties, risks, listed in items 3.5.9 - 3.5.12 of these Rules, can be
included in the insurance contract.
3.6.1. In case the risks specified in item 3.5.10 of these Rules, are included in the insurance
contract, the following losses of the Assured are covered:
- losses due to destruction or damage of any other vessel or property on any other vessel;
- losses due to the obligation to compensate the third parties for lost income due to
detention or loss of use of other damaged or missing vessel, or property thereon;
- vessel’s proportion of losses, expenses and contributions in general average and salvage
remuneration, salvage of another vessel or the property on board (based on a contract).
3.6.2. In case the risks, specified in item 3.5.10 of these Rules, are included in the insurance
contract, the following losses of the Insured are covered:
- destruction or damage of any fixed or movable or other object;
- losses due to the obligation to compensate third parties for unreceived income due to
detention or loss of use of floating, fixed or other object or property thereon.
In case the risks, specified in items 3.5.9 and 3.5.10 of these Rules, are included in the
insurance contract, the following losses of the Insured are not covered:
- damage to or loss of cargo and other property on the insured vessel;
- death, injury or damage to life and health of natural persons;
- removal or disposal of obstructions, wrecks, cargoes or any other thing whatsoever;
- pollution or contamination of environment, of any real or personal property or thing
(including expenses on prevention of such pollution or contamination), except other
vessels, with which the insured vessel is in collision, and property on such vessels;
- contractual obligations of the vessel;
- full or partial inability of using the vessel or any other object, which was not damaged in
collision.
If in case of collision of the insured vessel with any other vessel both vessels are
liable for collision and at least for one of them such liability is not limited by law,
the indemnity is calculated on the principle of separate liability i.e. losses caused to
the other vessel are paid subject to the extent of liability of the insured vessel
irrespective of the amount to be paid in anyone’s favour as a result of adjustment
of counter claims.
In all other cases the insurance indemnity is calculated on the principle of common
liability, basing on actual expenses of the insured which are subject to
indemnification under the terms of the insurance contract. In case the risks, specified in items 3.5.9 and 3.5.10 of these Rules, are included in the
insurance contract, liability of the Insurer on these risks is limited to the sum insured and
considered additional to liability on other risks.
3.6.3. In case the risks, specified in item 3.5.11of these Rules, are included in the insurance
contract, loss of hire in the period of demurrage due to the insured accident, which is
recognized as such in compliance with the contract of insurance, is to be indemnified.
The compensation is calculated by multiplication of the agreed daily freight rate on the
number of days of demurrage less the coordinated initial period of demurrage that is a
deductible on the given risk. The period of demurrage is calculated from the moment of the
insurance accident and includes the period of salvage and repair of the damages, resulted
from the insurance accident.
Time spent for the transportation to the place of repair is included into the period of
demurrage, subject to vessel had to interrupt the voyage and proceed immediately to the
place of repairs. Loss of hire, caused by demurrage during the repair of the vessel, shall be
indemnified in case of such repair was made during the currency of the insurance contract.
Loss of hire is not covered in case of a total loss (actual or constructive) of the insured
vessel.
The Insurer’s liability on the given risk is limited by the agreed sum insured and is
considered additional to the liability on other risks.
3.6.4. In case the risks, specified in item 3.5.12 of these Rules, are included in the insurance
contract, on demand of the Insurer the Assured shall provide all necessary information for
evaluation of the extend of the risk.
Insurance coverage of the risks of piracy does not cover the expenses, which a person may
be enforced to release the hostages.
Insurance coverage under item 3.5.12 of these Rules shall not apply to areas that are
included in thef the Institute of London Underwriters’ war risks list, applicable at the time
of the event and (or) determined by the Insurer as high-risk areas (hereinafter - the "Risk
Areas").
The list of specific Risk Areas is determined by the Insurer in the form of a special clause
in the insurance contract or in the additional agreement thereto, or as a separate written
notification of the Insurer, directed to the Assured (his representative) prior or at the
conclusion of the contract of insurance as well as during the validity period of the contract.
Above-noted notice of the list (scope) of the Risk Areas becomes an integral part of the
contract of insurance upon being directed to the Assured (his representative) by the Insurer.
Change in the list of the Risk Areas on notice within the term of the contract of insurance,
providing insurance coverage according to item 3.5.12. of these Rules, is qualified as a
significant change in the degree of risk, and wherefore the Insurer is entitled to demand
modification of the insurance conditions.
In the event, that the Assured refuses modification of the insurance conditions (change in
the list of the Risk Areas) and (or) does not provide written consent to such change at the
time specified by the Insurer in his notification, the effect of insurance coverage in
accordance with paragraph 3.5.12 of these Rules is prematurely terminated from the date,
specified in the notification of the Insurer, and if such date is not specified then from the
date of such notification.
3.6.5. By agreement of the Parties, at extra charge and with approval of additional conditions
further to the policy according to item 3.5.12 of these Rules, the Insurer may provide single
voyage insurance in respect of the navigation in the Risk Area, provided that application
for insurance of the Assured (his representative) has to be filed and terms and conditions of
the insurance have to be confirmed by the Insurer in advance prior to the call of the insured
vessel into the Risk Area.
In order to make a decision on granting additional insurance coverage under this item of
the Rules, the Insurer is entitled to request information about the shipping route,
availability/unavailability of armed guards or other security measures of the vessel while in
the Risk Area or on the way to it, type of cargo and other information, needed to assess the
extent of the insurance risk.
The Insurer is also entitled to demand the implementation of sufficient security measures
for navigation in the Risk Area (armed guards, vessels escort, representatives of authority
on board etc.).
Arrangement of the additional single voyage insurance in respect of the navigation in the
Risk Area is executed as a separate document (notice, policy, etc.) containing terms and
conditions of such additional coverage, and becomes an integral part of the contract of
insurance from the time the document was forwarded by the Insurer to the Assured (his
representative).
In the event, that the Assured disagrees on the terms of additional coverage under this item
of the Rules and (or) if the Assured fails to-fulfil the special conditions, determined by the
Insurer as conditions for the provision of additional insurance coverage and (or) to pay the
additional premium at the time specified by the Insurer in its document, forwarded to the
Assured (his representative), / invoice, the effect of the additional insurance coverage in
respect of the navigation in the Risk Areas shall be interpreted as not agreed by the parties
and as not provided, and the Insurer shall not be liable for incidents that took place within
such territory.
3.7. Except as otherwise provided herein, insurance contract does not indemnify:
3.7.1. 10% (ten per cent) of damage repair costs of machines, boilers and equipment of the vessel;
3.7.2. 25% (twenty five per cent) of damage repair costs resulting from contact with ice, for
which the Insurer is liable under the contract of insurance;
3.8. In all other cases, the recoverable amount of the loss (deductible) shall be agreed in the contract
of insurance.
3.9. Except as otherwise provided herein, the insurance contract does not indemnify for losses,
connected with the transportation of military loadings - weapons of war or their parts (packages),
including ammunition, other charges, mines, bombs and other parts and appendages of implement
of war.
3.10. If it is agreed by the parties and specified in the insurance contract, the Insurer and the Assured
can apply Additional conditions of insurance, based on the Clauses of the Institute of London
Underwriters (Appendix A hereto). In this case, the Clauses of the Institute of London
Underwriters become an integral part of the contract of insurance.
4. SUM INSURED
4.1. The sum insured is the amount of money determined by the contract of insurance, which is the
basis for determination of the levels of both the premium and indemnity upon the occurrence of
an insured event.
4.2. The sum insured is the maximum sum the Insurer shall pay in the aggregate as compensation for
losses, resulted from all insured events.
4.3. Vessel is considered to be insured for the sum that is declared by the Assured. If the sum insured
appears to be above the insurance value, the liability of the Insurer shall be limited to the
insurance value of the vessel. If the sum insured appears to be below the insurance value, the loss
is paid proportionally to the relation of the sum insured to insurance value.
4.4. If the contract of insurance does not determine insurance value, the insurance value of the vessel
is deemed to be the average world market price of similar vessel at the time of conclusion of the
contract of insurance.
5. INSURANCE PREMIUM
5.1. The insurance premium is payment for the insurance which the Assured has to pay to the Insurer
in order and terms, stipulated by the contract of insurance.
The amount of the insurance premium is determined based on the sum insured, insurance rate and
corrective ratios for the insurance tariff.
5.2. The insurance rate is a rate of insurance premium from the unit of the sum insured with the
consideration of the insurance object and the character of insurance risks. The insurance rate is
determined by the contract of insurance upon mutual agreement of the parties.
5.3. The insurance premium subject to the contract of insurance can be paid by the Assured either in a
lump sum - as a single payment for the whole period of insurance, or by instalments pursuant to
the procedure established by the contract of insurance.
6. INSURANCE PERIOD
6.1. The insurance contract is concluded for the period of 12 months or other period agreed by the
parties.
6.2. The insurance contract shall enter into force upon the payment of the insurance premium or its
first instalment, except as otherwise provided by the insurance contract.
6.3. The day of payment of the insurance premium, except as otherwise provided herein, shall be:
6.3.1. in case of cash payment – the day of payment at the billing office of the Insurer;
6.3.2. under cashless payment scheme – the day of depositing funds on the current account of the
Insurer.
6.4. The insurance contract can be concluded “for a time” or “on voyage”.
6.5. In case of "time insurance" the contract of insurance enters into effect at 0 hours and stops at 24
hours (time at a place of the policy issuance) of the dates specified in the contract of insurance.
6.6. In case of “voyage insurance” the contract of insurance enters into effect with the unmooring or
weighing in the port of departure and ends from the mooring or anchoring in the port of
destination.
6.7. If the contract of insurance allows for entry into effect on the date different from the date of
payment of the insurance premium or its first instalment, in case of failure to pay the insurance
premium or its initial instalment within 10 days of the date, specified in the contract of insurance
as the date of payment of the insurance premium or its first instalment, the Insurer is entitled to
terminate the contract unilaterally by sending a written notice to the Assured.
If the contract of insurance has not come into force at the time of the Insurer's right to terminate
the contract of insurance in accordance with this item, the contract shall be deemed not entered
into force and shall not entail any legal consequences for the parties.
6.8. In case of failure to pay the next instalment within 10 days from the date fixed in the contract of
insurance as the date of payment, the Insurer is entitled to terminate the contract unilaterally, by
sending a written notice to the Assured.
6.9. The date of the termination of the contract, stipulated by items 6.7 and 6.8 of these Rules, shall be
the date stated in the contract of insurance for the payment of insurance premium (instalment).
The Insurer shall be released from the obligation to perform the insurance indemnity in respect of
insured event occurred after the date of the termination of the contract of insurance, specified in
accordance with the terms of this item.
6.10. In the event the Insurer terminates the contract unilaterally on the grounds and pursuant to the
procedure established by items 6.7 and 6.8 of these Rules the insurance premium paid to the
Insurer is not subject to return.
6.11. Other consequences of the failure of the Assured to pay the insurance premium (instalment) may
be determined by the contract of insurance.
7. CONCLUSION AND TERMINATION OF THE CONTRACT OF INSURANCE 7.1. The insurance contract is an agreement between the Assured and the Insurer, in virtue of which
the Insurer undertakes to provide the insurance payment for the Assured in case of loss
occurrence, and the Assured undertakes to pay the insurance premium within the prescribed time
limits.
7.2. The insurance contract is concluded on the basis of a written application of the Assured with the
accurate information about the vessel (vessel type, name, year of construction, class, deadweight)
and specification of:
- the sum insured;
- insurance terms and conditions;
- in case of “time” insurance – the sailing area and insurance period and in case of “single
voyage” insurance - the sailing start and end points, duration and points of call.
7.3. The Assured must provide the Insurer with all data, which are known or should be known to the
Assured, as well as data requested by the Insurer concerning circumstances having essential value
for risk assessment.
7.4. Accepting a vessel for insurance cover the Insurer has the right to demand a survey of the insured
vessel in a dock in the presence of his representative.
7.5. The Insurer shall issue to the Assured a document evidencing a contract of insurance (insurance
policy or other insurance document) and shall provide the Assured for the insurance terms and
conditions.
7.6. The Insurer shall indemnify only for losses occurred in the navigation zone stipulated in the
contract of insurance. The liability of the Insurer ceases for the time the vessel goes outside the
navigation zone or in case of the deviation from the voyage course, stipulated in the contract of
insurance.
7.6.1. The Insurer may decide on continuing with the contract of insurance, if the Assured
notified him promptly about the upcoming change of the navigation zone or the voyage
course and gave his consent to pay an additional premium.
7.6.2. Deviation from the intended track or sailing out of the navigation zone in order to save
human lives, ships and cargo, as well as the deviation, caused by the necessity of the
voyage security, shall not be deemed to be a violation of the contract of insurance. The
Assured has to notify the Insurer immediately about any deviations like these.
7.7. The contract of insurance will be terminated in case of:
7.7.1. expiration of the contract term;
7.7.2. full (actual or constructive) loss of the vessel;
7.7.3. fulfilment of the contract obligations by the Insurer in full;
7.7.4. failure to pay the premium by the Insured in terms determined by the contract, if not
coordinated otherwise;
7.7.5. in other cases stipulated by law of Russian Federation.
7.8. The contract of insurance shall be terminated early, if after its entry into force the possibility of
the loss occurrence has disappeared due to the circumstances other than the insured event. The
Insurer has the right to a part of the insurance premium in proportion to the time during which the
insurance was in effect.
7.9. The Assured has the right to repudiate the contract at any time if at the moment of repudiation of
contract the possibility of the loss occurrence has not disappeared due to the circumstances
specified in item 7.8. of these Rules.
The contract of insurance can be terminated early on demand of the Insurer in cases stipulated by
the current legislation of the Russian Federation and (or) by the contract of insurance.
7.10. In case of early termination of the contract of insurance on demand of the Assured, the Insurer
shall return to him the insurance premium for the unexpired term of the contract less the expenses
incurred. If the Assured’s demand is conditioned upon the Insurer’s violation of the Rules of
insurance, the Insurer shall return to the Assured the insurance premium paid by him in full.
7.11. In case of early termination of the contract of insurance on demand of the Insurer, conditioned
upon non-compliance of these Rules by the Assured, the Insurer shall return to the Assured the
insurance premium for the unexpired term of the contract less the expenses incurred.
7.12. If the vessel was in safe port for 30 or more consecutive days during the insurance period (day of
entering the port and day of leaving is considered one day), the Assured has the right for a refund
of part of the insurance premium, unless the insurance contract is not agreed otherwise.
7.13. The sum subject to return makes:
- 75% (seventy five per cent) of the insurance premium, falling on the time of demurrage,
for every 30 consecutive days of stay in safe port provided that in this period the vessel
was not under repair and there was no cargo on the vessel;
- 50 % (fifty per cent) of the insurance premium, falling on the time of demurrage, for
every 30 consecutive days of stay under repair.
In order to substantiate the right to return a part of the insurance premium, the Assured should:
- inform the Insurer about the lay-up (repair) of the vessel not later than the day, following
the day of such lay-up, as well as about the day of the end of lay-up (repair) not later than
the day, following the last day of the lay-up (repair);
- provide documents, confirming vessel’s lay-up (repair), within six (6) months from the
date of the termination of the insurance.
7.14. The insurance premium is not refundable:
7.14.1. if the Assured has notified the Insurer of stay in safe port later then stipulated by item 7.12
of these Rules;
7.14.2. if the vessel stay in safe port makes less than 30 (thirty) consecutive days;
7.14.3. in case of total loss of the vessel in the period of insurance, except for the cases when the
contract of insurance is concluded according to item 3.3.2. of these Rules;
7.14.4. if in the period of insurance there were losses payable according to the contract of
insurance.
8. INTRODUCTION OF AMENDMENTS AND ADDITIONS TO THE CONTRACT OF
INSURANCE
8.1. Modification of the contract of insurance may by agreement of the parties, unless otherwise
provided by the contract, in case of a substantial change of circumstances from which the parties
proceeded when concluding the contract.
Change of circumstances shall be recognized as substantial, when they have changed to such an
extent that could the parties foreseen it reasonably, the contract would not be concluded at all or
would be concluded on considerably different terms.
8.2. The agreement on the amendment or termination of the contract is made in the same form as the
contract, unless the law, other legal acts, contract or traditional business practices otherwise
require.
8.3. Upon modification of the contract obligations of the parties remain in a modified form.
8.4. In case of modification of the contract of insurance, obligations are deemed to be modified from
the time the agreement of the parties to modify or terminate the contract was made, unless
otherwise follows from the agreement or the nature of the contract amendments.
9. RIGHTS AND DUTIES OF THE PARTIES
9.1. The Insurer shall: 9.1.1. 9.1.1. familiarize the Assured with the content and serve him with one copy of these Rules,
on the basis of which the contract of insurance was concluded;
9.1.2. 9.1.2. in case of the loss occurrence pay an insurance benefit due to the contract date;
9.1.3. 9.1.3. compensate the expenses, incurred by the Assured in case of the loss occurrence in
order to reduce the amount of damages the Insurer is liable for;
9.1.4. 9.1.4. not disclose information about the Assured and his property status, if it does not
contradict the legislative acts of the Russian Federation.
9.2. The Insurer has the right:
9.2.1. to verify the information, provided by the Assured, by any means available, not
contradicting the applicable legislation of the Russian Federation;
9.2.2. to require changes in terms of the contract of insurance or payment of an additional
premium under the circumstances, leading to an increase of risk, in proportion to its
increase;
9.2.3. to terminate the contract of insurance with the onset of the changes, which increases the
risk, if the Assured does not agree to change the terms or refuses to pay an additional
premium;
9.2.4. to terminate the insurance contract after considering the results of the inspection of the
insured vessel;
9.2.5. to demand the recognition of the contract of insurance as invalid and the application of
consequences of invalidity, stipulated by current legislation, in case the Insurer when
concluding the contract of insurance provided to the Insurer knowingly false information
on the object of insurance;
9.2.6. to verify the information, reported by the Assured, by any means available and not
contradicting the legislation of the Russian Federation, including an appropriate expert
examination;
9.2.7. to direct requests to the applicable authorities for the relevant documents and information
confirming the fact and the cause of the loss occurrence;
9.2.8. to defer the payment of insurance benefit before the end of the investigation and / or trial in
case of initiation by the authorized state bodies (applicable authorities of the foreign state)
of criminal case on the facts, having the features of the insured event;
9.2.9. to participate as a third party in the court during the hearing of any case, related to the
occurrence of the insured event;
9.2.10. to refuse to pay an insurance payment in accordance with section 11 of these Rules.
9.3. The Assured shall:
9.3.1. keep to the terms of these Rules and the terms of the contract of insurance;
9.3.2. pay the insurance premium in the amount and terms, determined by the contract of
insurance;
9.3.3. when concluding the contract of insurance, inform the Insurer of all circumstances known
to him, relevant to the assessment of the insurance risk, as well as of all contracts of
insurance, concluded or being concluded in respect of the vessel;
9.3.4. at the request of the Insurer provide the opportunity to the Insurer’s representative to
inspect the insured vessel;
9.3.5. in the period of insurance notify the Insurer immediately of all significant changes in risk,
such as:
- sale of the insured vessel or transfer of the insured vessel on hire basis;
- change, termination or suspension of a class of a vessel;
- change of the flag;
- replacement of the operator;
- voyage delay;
- deviation from the sailing line, stipulated in the contract of insurance;
- sailing out of the navigation area, navigation in ice, wintering of the vessel which has not
been stipulated at the conclusion of the contract of insurance;
- towage of other ships by the insured vessel;
- incidents, that could lead to loss and (or) potential insured event, as well as any
emergency repairs/reconstruction or refit of the vessel, etc.
The cases when the insured vessel makes trial voyages, provides assistance or towing to
vessels in distress, or when it itself is towed by another vessel in the course of the rescue
operation, or when sailing under tow satisfies local customs are not deemed significant
changes in the risk.
9.3.6. cooperate with the Insurer in investigations, including, but not limited to reporting of the
information required, as well as provide the conditions for obtaining any further
information about the event;
9.3.7. inform the Insurer of any legal proceedings, related to the events having features of the
insured event;
9.3.8. independently or at the request of the Insurer take measures, stipulated by the current
legislation, necessary to exercise right of claim against the person guilty of the insured
event, surrender all documents and facts of evidence to the Insurer, give him information,
necessary to exercise right of claim, which has been transferred to the Insurer.
9.4. in case of the occurrence, having features of the insured event, the Assured or his
representative shall:
9.4.1. use reasonable best efforts to avert or minimize losses and also to secure the right of claim
against the guilty party, that is, act as if the vessel was not insured;
9.4.2. in the most expeditious manner possible notify the Insurer of the insured event, that a
representative of the latter has the opportunity to clarify the circumstances of the insured
event and to take part in the salvage and preservation of the insured vessel. In this case,
actions of the Insurer for the salvage and preservation of the vessel are not the basis for the
recognition of the right of the Assured for reimbursement;
9.4.3. if due to an insured event vessel repair is required, notify the Insurer before repair and
provide an opportunity for his representative to inspect damages to the vessel;
9.4.4. coordinate with the Insurer (his representative) time and place of the vessel repair, in case
time and place of repair are not coordinated, the sum of indemnity is to be determined
proceeding from reasonable and expedient repair expenses.
9.5. The Assured has the right:
9.5.1. to demand from the Insurer fulfilment of the contract obligations;
9.5.2. to terminate the insurance contract halfway in accordance with the procedure specified
in the civil legislation of the Russian Federation and these Rules;
9.5.3. to obtain from the Insurer information regarding his financial stability, which is not a trade
secret;
9.6. The contract of insurance may additionally allow for other rights and duties of the parties with
account of particular qualities of the object of insurance.
10. RELATIONSHIP OF THE PARTIES IN CASE OF LOSS OCCURRENCE
10.1. After receiving reports and statements of the event happened the Insurer shall perform the
following steps to establish the happening of an event:
10.1.1. to control the compliance of the information on the event happened, provided by the
Assured in a statement, (time, place, circumstances, events etc.) with the terms of the
contract of insurance and these Rules;
10.1.2. to state the fact and cause of the event, resulted in a loss (on the basis of documents
provided by the Assured or the relevant expert organizations);
10.1.3. to carry out other actions to establish the happening of the event.
10.2. The recoverable amount of the repair cost is considered as the sum of the costs necessary to bring
the vessel to the operating state it was in at the moment of conclusion of the insurance contract,
and costs of the damage repair of separate parts of the vessel shall be compensated without
discount for wear and tear.
10.3. If, as a consequence of a loss, the vessel is compelled to interrupt voyage and to proceed
immediately to the place of repair, the insurance shall cover reasonable and expedient expenses
on trip of the vessel to the place of repair and back. The expenses on trip of the vessel from the
last point of call up to the place of repair shall be covered by the sum exceeding normal costs of
operation for such trip.
10.4. The recoverable amount of repair includes only the charges on clearing and painting of the vessel
parts which were damaged, provided that damage repair is made within 12 months from the
moment of the last painting of the hull.
10.5. The expenses on bringing the vessel in and out of dock or its hoisting and descending with help of
a slip dock as well as costs for the time of usage of dry dock or slip dock shall be included in the
recoverable amount of repair in full, provided that works performed during repair were directed
solely on consequences of the accident insured.
10.6. If repair of the damages, resulted from the event insured, is carried out simultaneously with other
works, the recoverable amount of repair includes 50 % of expenses on bringing the vessel to and
out of the dry dock and its hoisting and descending with help of a slip dock. At the same time,
calculation of recoverable costs for using a dry dock or slip dock is based on the time it would
take to repair the consequences of the event insured, as if such repair was made separately.
10.7. In case of sale of the vessel the Assured has the right for reimbursement of damages, resulted
from the event insured, if the repair of the damaged vessel was not made. The amount of the
reimbursement is determined, proceeding from a reasonable cost of repair that could be made
before the expiry of the term of insurance, but no more than the sum of discount because of the
damages, covered under the terms of insurance. In case of sale of the vessel for scrap the Insured
has no right for reimbursement.
10.8. Reimbursement at a rate of the full-insured sum, but no more than insurable value, shall be paid
in the following cases:
10.8.1. total actual loss of the vessel (the vessel is completely destroyed or irretrievably lost);
10.8.2. the event of vessel missing (no news about the vessel within six months after the latest
news on the vessel, and the latest news on the vessel were obtained before the expiration of
the insurance contract);
10.8.3. total constructive loss of the vessel (restoration or repair of the vessel is economically
inexpedient). The full constructive loss of the vessel is admitted in case the total sum of
expenses on elimination of consequences of the insured event will make not less than 100
% of insurance value of vessel. The sum of expenses on elimination of consequences of the
insured event includes costs necessary to bring the ship to the operating state it was in at
the moment of conclusion of the insurance contract, as well as costs for the salvage and
towage to the place of repair and general average contributions on vessel’s share.
10.8.4. In case of the reimbursement payment in a total actual loss or vessel missing, the
ownership of insured vessel shall pass to the Insurer within the limits of the sum paid. If the latter abandons the property right for the insured vessel, the indemnity shall be paid
with no deduction of residual cost of the insured property.
10.9. All costs connected with the insured event shall be initially paid by the Insured and then be
reimbursed by the Insurer. The insurer, at his own discretion, may pay for services/works directly
to the organizations provided such services or executed such works. Insurance contract may
provide for a different procedure for the payment of expenses related to the insured event.
10.10. For reimbursement the Insured shall document the loss occurrence and provide documents
required by the Insurer for consideration of claims.
11. INSURANCE CLAIM SETTLEMET. CLAIM DENIAL
11.1. Insurance indemnity is sum of money set by the contract of insurance paid by the Insurer to the
Assured upon occurrence of the insured event.
11.2. In case of recognition of the occurrence as an insured event, the insurance indemnity shall be paid
by the Insurer to the Assured in compliance with the contract of insurance on the basis of:
a) insurance claim;
b) claim report;
c) insurance document (policy) and payment documents confirming the conclusion and
payment of the insurance contract;
d) other documents related to the insured event, additionally provided by the Insured at the
Insurer’s request.
11.3. The Insurer within 30 (thirty) working days after the signing of the claim report or the notice of
claim denial, respectively pays out an insurance indemnity or sends the Insured notice of claim
denial.
11.4. If the Insured (Beneficiary) has received compensation for the loss from the third parties, the
Insurer pays only a difference between the sum which was paid under terms of insurance and the
sum received from third parties.
11.5. After payment of insurance indemnity the right of claim, which the Insured (Beneficiary) has
against the person responsible for the damage caused, passes to the Insurer within the limits of the
paid sum. On receipt of the insurance indemnity the Insured (Beneficiary) is obliged to surrender
all documents and proofs available to the Insurer and execute all necessary formalities for
realization of this right.
11.6. If the Insured (Beneficiary) has refused the right of claim against the person responsible for the
damage caused, or realization of this right appears impossible due to his fault (missing terms of
claim application etc.), the Insurer is exempted from the duty to pay respective part of the
insurance indemnity, and, in case the payment has already been made, the Insured (Beneficiary)
shall return to the Insurer the insurance indemnity with the compensatory legislated interests for
use of another’s money , calculated from the date of arrival of funds to the account of the Insured
(Beneficiary).
11.7. The Insurer has the right to refuse payment of indemnity, if the Insured:
11.7.1. reported falsely about the circumstances of substantial significance for the estimation of the
risk insured (item 7.2 and7.3 of these Rules);
11.7.2. did not notify the Insurer of all significant changes in the risk (item 9.3.5 of these Rules ) ;
11.7.3. did not fulfil the duties specified in items 9.4.1 - 9.4.4 of these Rules.
11.8. Decision on claim denial is reported to the Insured in writing, providing argumentation of denial,
in the manner and within the time period specified in item 11.3 of these Rules.
11.9. The refusal of the Insurer to pay the insurance indemnity may be appealed by the Insured to court.
12. DISPUTE RESOLUTION
12.1. Disputes arising in connection with the contract of insurance shall be settled in compliance with
the legislation of the Russian Federation at the Insurer’s location (unless otherwise provided by
the contract of insurance).
12.2. A claim concerning liabilities arising from the contract of insurance can be made within the
limitation period, stipulated by the current legislation of the Russian Federation.
12.3. All other conditions, not specified in these Rules, shall be regulated by the legislation of the
Russian Federation.
Annex A
To the Rules of Hull and Machinery Insurance
ADDITIONAL CONDITIONS
of insurance on the basis of the Institute Time Clauses
(hereinafter - Additional conditions)
While concluding insurance contracts under these Rules the parties may agree upon use of the Institute Time Clauses (one or several).
The below Institute Time Clauses shall apply if a contract (policy) of insurance has a direct
reference to their use, or they are included in the text of the contract of insurance (policy).
Content:
Section 1 Institute Time Clauses Hulls (Cl.280, 01.11.1995);
Section 2 Institute Warranties (Cl.26, 01.07.1976);
Section 3 Institute Cyber Attack Exclusion Clause (Cl.380, 11.10.2003);
Section 4 Institute Radioactive Contamination, Chemical, Biological, Biochemical And