Commentary: Rule 13 Set-off
Premiums are due for payment on demand which means on the date stated in the premium invoice. Payment of premiums is sometimes delayed. The concept of mutuality requires all Members to fulfil their obligations in a timely fashion. It is unacceptable that Members who are compensated promptly are allowed to delay payment of premiums. This is especially disturbing if compensation is requested for cover where no premium has actually been received.
13.2 Only the Club has the right to set-off
As a remedy for those situations, this Rule provides the Club an opportunity to offset unpaid premiums against compensation. The right is unilateral. The Rule does not allow Members to offset premiums against what they consider justified compensation. There are two reasons for this. The premium is due for payment on demand. It is a clear and undisputed debt. The right to compensation has to be considered on the basis of the documents and facts of the case as reflected on the insurance conditions under these Rules. Therefore, a request for compensation does not constitute an undisputed debt against which premiums can be offset. When the request has been duly processed and approved, payment will follow as soon as the remittance procedure and banking system allow. The second reason is that a system of running accounts should not become standard practice.
13.3 Amounts due from the Member
According to this Rule, the Club is entitled to offset unpaid premiums or other debts in relation to any policy a Member has with the Club against compensation. It is the Club’s policy to provide Members with all the types of insurance necessary to operate ships. It would be unsatisfactory if the Club were unable to collect outstanding premiums for one type of insurance and still found itself having to pay compensation to the Member under other insurances.
13.4 Amounts due to the Member
The right to set-off is not limited to compensation under these Rules. The Club may exercise its right against any other amounts due to the Member under these Rules, such as premium refunds under Rules 28 and 29 and any refund of a surplus under Rule 36.