Commentary: Rule 19 Omnibus clause
The opening part of Rule 2, which describes the nature of cover, states that the cover by the Club “is set out in these Rules”. It means that the wording of the Rules provides the limit for the Club’s obligations to compensate Members for liabilities, costs or expenses arising.
Situations may arise when, with all facts considered, it is reasonable and in the spirit of Club cover to compensate a Member for a loss even if it is outside the cover defined in these Rules. In such a case the Member has no right to compensation, but may place the question of compensation before the Club.
19.2 Discretion is exercised by the Board
The Club’s ordinary claims processing functions possess the necessary authority to handle and compensate claims within the framework of these Rules. Approval of compensation for claims not covered under these Rules can only be made by or with the authority of the Club’s Board. The discretion under the Omnibus Rule to compensate the Member partly or in full is, therefore, exercised by the Board to whom such claims are referred.
19.3 Nature of liabilities to be considered under the Omnibus Rule
It is a condition that the liabilities, costs or expenses for which the Board may exercise its discretion, are of the nature described in the second part of Rule 2. They should have been incurred in the Member’s capacity as Owner, operator or Charterer of the entered ship. The event should have arisen during the period of insurance. It should be a direct consequence of the operation of the entered ship. These conditions are a prerequisite for compensation of liabilities covered under these Rules and must apply with even greater force to liabilities outside the Rules.
19.4 Board’s decision is absolutely discretionary
As the liability being considered has not arisen from but rather from outside the contract of insurance and as the Board’s decision is completely discretionary, it is final and not subject to Rule 18.
The Board does not have to give any reason for its decision.
19.5 Board’s discretion is limited to Club Pool retention
By exercising its discretion under this Rule the Board cannot bind the Group Clubs to participate in the loss by way of pooling. The Group will decide whether any compensation admitted under this Rule beyond the applicable Club Pool retention (for the policy year 2021/2022 USD 10 million) should be pooled.
19.6 Board’s decision does not constitute precedent
It follows from Rule 17 that any indulgence by the Board in exercising its discretion in favour of a Member does not constitute a waiver of the Club’s rights under these Rules. It creates no precedent for further claims of a similar nature neither for that Member nor other Members.