P&I Rules and Exceptions > Part Two: P&I Rules and Comments > Chapter IV Exclusions from cover > Rule 11 Exclusions > Section 6 Other insurance
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Section 6 Other insurance

11.6.1 General

An important purpose of the P&I Insurance is to provide the Member with cover, within the ambit of the P&I Rules, for those liabilities, costs or expenses which are not and cannot be covered under any other kind of insurance. Another important purpose is to avoid double insurance and make sure liabilities are referred to the proper class of insurance, bearing in mind that P&I according to this Rule is a secondary class of insurance.

Most additional kinds of insurance of a nature described by this provision can be covered either by the Club or with the assistance of the Club. It is recommended that Members avail themselves of the Club’s advice on insurance matters and professional service to arrange a suitable combination of insurance in order to reduce the Member’s liability and cost exposure.

11.6.2 Hull insurance

11.6.2.1 General views on Hull insurance

The consequences of the above mentioned principle can be seen in many clauses such Rule 7 Sections 2, 3 and 5 from which it follows that the cover is for liabilities, costs or expenses not covered under the Hull insurance of the entered ship. The cover under these Rules presupposes the existence of a Hull cover of a certain quality as described in this provision. To the extent any existing Hull cover provides less protection, the Member will be exposed to uninsured risks.

11.6.2.2 Flexibility

It may be thought that the demand for a Hull insurance on full and approved terms would create a rigid extent of cover. However, the clause indirectly creates favourable flexibility. If the general terms of the Hull insurance are amended in so far as cover for third party liability is concerned, the Club will consider whether the so extended terms should still be considered as approved. If so, no amendment of the P&I Rules is necessary for the risk to be covered.

11.6.2.3 Hull insurance on full terms

The first part of the provision implies an obligation for the Member to have and to maintain the entered ship fully insured under Hull insurance conditions approved by the Club.

If the entered ship is Hull insured with The Swedish Club, the terms of such insurance are automatically considered to be approved for the purpose of these Rules.

The terms of Hull insurance not effected by The Swedish Club should be presented to the Club at the time of entry for P&I risks. The Club will decide whether the ship shall be considered to be fully insured in such a way that the conditions may be approved for the purpose of these Rules. It is equally important that any change of Hull insurers or of the Hull insurance conditions is immediately referred to the Club for approval. Failure to do so may leave a Member exposed to uninsured risks.

The Club’s P&I Rules are based on the terms of Hull insurance of the Nordic Plan. This does not mean that the Nordic Plan are the only conditions on which the Club can affect Hull insurance, or that the Nordic Plan are the only Hull conditions approved as a basis for P&I Insurance with the Club. As a Hull underwriter, the Club insures ships on various foreign conditions such as English (Institute Time Clauses – Hulls), U.S.A., German conditions etc. P&I cover under these Rules can be adapted to any Hull conditions approved by the Club. Such adaption means, for instance, that cover may have to be included for 1/4 RDC under Rule 7 Section 1 and for FFO under Rule 7 Section 2 if the Hull cover is under Institute Time Clauses Hulls 1/10 1983 (ITC).

According to Rule 1, the definition of Hull insurance includes Hull excess liability insurance, Hull interest insurance, freight interest insurance and other total loss insurance.

11.6.2.4 Hull insurance value

The first part of the provision goes on to qualify that the Hull insurance should be for a sum that at any time should be the market value without commitments.

11.6.2.4.1 “At any time”

As described in the comments under 7.2.4.1, the Hull cover is in respect of a certain value agreed upon between the Member and the Hull underwriter. The insured value is based on the second-hand market situation at the time of entry or at the renegotiation of the insurance terms in preparation of the policy year. However, the second-hand market is subject to considerable fluctuations which may occur during a policy year. If so, the insured value under the Hull policy must be adjusted as necessary during the policy year in such a way that the cover adequately reflects the market value. Although, generally speaking, the second-hand market is closely monitored by Hull underwriters, it is incumbent upon the Member to take the initiative for such an adjustment in order not to be in violation of this provision.

11.6.2.4.2 “The market value”

The value insured under the Hull policy is a product of discussion between the Hull underwriter and the Member at the time of entry or renewal. Both parties will probably have a good professional understanding of the situation and of current trends in the second-hand market. As a P&I underwriter, the Club will at any time accept the value under a Hull policy with The Swedish Club. Should there be any reason for the Club to dispute a value insured under any other Hull policy, the Club may request the ship’s value to be assessed by a broker or a ship’s value appraiser.

11.6.2.4.3 “Without commitments”

A ship’s value may be influenced by the presence of freight or operational commitments. The value may be higher if she has a favourable long-term charter in a falling market or lower if she is committed on unfavourable terms. When assessing the market value in the sense of this clause, any such commercial commitments should be disregarded. It is, however, unavoidable that the value of a highly specialised ship be related to the market situation in that particular area of shipping.

Any additional value created by the presence of a favourable charter or by the fact that the ship is an important link in a commercial shipping concept can be insured under Hull interest insurance. The presence of such a cover does not affect the liability exposure under Rule 7 Section 2.

11.6.2.4.4 Cover dependent upon Hull insurance value

The cover under some Rules depends entirely upon compliance by the Member with the standards for Hull insurance in this clause.

The cover for liabilities in excess of the Hull value in connection with collision with other ships under Rule 7 Section 2 (see the comments under 7.2.4) and with fixed and floating objects (FFO) under Rule 7 Section 3 (see the comments under 7.3.4) requires a Hull insurance value as described in this provision as does the cover for the ship’s proportion in General Average, special charges and salvage under Rule 4 Section 7 (see the comments under 4.7.3) when the ship’s value has been assessed at a sound value in excess of the value insured under the Hull policy.

11.6.3 Insurance other than Hull insurance

11.6.3.1 General

Besides Hull insurance, other types of insurance are affected by P&I Insurance. There is no requirement under these Rules for a Member to take out any such extra insurance. A Member may still decide to do so to protect his interests or because he is obliged by law or a separate contract, to cover such risks beyond the extent of P&I cover. It follows from this clause that the Club does not cover any liabilities, costs or expenses that are or would have been recoverable under such insurance.

11.6.3.2 Social insurance

By law or contract, a Member may be obliged to take out extra insurance in favour of passengers, crew members, longshoremen or other categories of people on board or in relation to the entered ship. See the comments under 3.1.1.6. According to the second part of this provision, there is no cover under these Rules for liabilities, costs or expenses that are or would have been recoverable under such insurance.

This also goes for extra life insurance paid by the Member on behalf of crew members to pay funeral costs. See the comments under 3.1.6.2.

11.6.3.3 Other types of insurance

Several other types of insurance are available to cover various risks excluded under the P&I policy. The opportunity to cover those risks is open only to Members. Examples of such insurances are:

According to the second part of this provision, there is no cover under these Rules for liabilities, costs or expenses that are or would have been recoverable under any such additional insurance. Comments on insurance that augments or complements the P&I Insurance can be traced through the Index under “Insurance.” Insurance concerning a Member’s extended liability can be covered by or through the Club.

11.6.4 Deductibles

As appears from the last part of this provision, there is no cover under these Rules for any franchise or deductible under any other insurance taken out by the Member. Nor is there any cover if the insurance amount is insufficient to cover the Member’s loss nor for the Member’s costs to protect his rights and to proceed against the underwriter of any such insurance.

As regards exclusion of cover for the deductible under the P&I Insurance, see the comments under 2.12.