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Tuesday, January 16, 2018

WAR RISK CLAUSES UPDATE – BP ISSUES REVISED CLAUSE

We wish to advise members that BP has revised their war risk clause dealing with additional hull and machinery war risk insurance premiums. We welcome this revision, which now provides that charterers will reimburse owners for these additional expenses.

The clause reads:

QUOTE
"Owners shall effect war risks insurance in respect of the Hull and Machinery of the Vessel and their other interests (including, but not limited to, loss of earnings and detention, the crew and their Protection and Indemnity Risks), and the general premiums and/or calls therefore shall be for their account.

War Risks Insurance additional premiums incurred as a result of the vessel entering an excluded area ("Additional Premium") shall be for Charterer's account, net of alldiscounts or rebates and provided always that Charterers are given notice of the amount of such Additional Premium as soon as possible and, in any event, before such Additional Premium is paid.

The benefits of discounts or rebates on Additional Premium received by owners from their War Risks insurers, underwriters or brokers shall be credited to Charterers in full. Charterers shall reimburse owners any amounts due under this Clause upon receipt of owners' invoice together with full supporting documentation including all associated debit and credit notes.

For the avoidance of doubt any "blocking and trapping", "loss of profit", "loss of hire", "loss of freight", or "loss of bunkers" insurance taken out by owners in respect of the vessel, and any additional premium relating thereto arising from charterers' trading of the vessel, shall be for Owners' account."
UNQUOTE

Members should note the proviso contained in the last paragraph of the clause which makes it clear that any premiums or additional premiums relating to loss of earning cover and blocking and trapping are for owners' account. Difficult questions as to apportionment of premiums may arise where an owner's hull and machinery war risk cover includes an element for loss of earnings and/or blocking and trapping.

Members should also note that the clause does not deal with the additional expenses of crew war bonuses. Therefore, under the BP clause owners will not be able to recover these additional costs from charterers.

In the item in last week's Weekly News we referred members to VOYWAR 1993. By way of clarification this clause deals comprehensively with owners' liberty to deviate in the event that a port or area becomes unsafe and the compensation for such deviation. However, unlike its predecessor, it does not include a provision regarding additional insurance costs. Importantly, CONWARTIME 1993 does include a detailed provision regarding such additional costs including crew war bonuses.

Contact: John Fawcett-Ellis with queries concerning war risk clauses: john.fawcett-Ellis@intertanko.com