Air & Sea Insurance Corp. assists clients seeking insurance coverage for risk exposures. Based on our experience as insurance brokers, coverage can often be prejudiced by the assured's lack of good practice, documentation and procedures.

In general terms, a Policy Warranty can be defined as "a promise by the assured to perform in a specific manner, or simply not to do something, or just a promise that some condition shall be fulfilled". The most common breaches of policy warranties that may prejudice your rights of recovery are, as follows:

1. Failure to disclosure of all material information or facts: Assured must disclose all information that might influence Underwriters in reaching a decision to insure or continue to insure a risk.   

2. Failure to disclose changes of circumstances: This is a continuing obligation on the Assured's part which may be expressed or implied in the contract of insurance.  If the Assured is unsure whether the information may be material or not, immediately send a written correspondence to our office.

3. Misrepresenting a circumstance, condition or exposure to Underwriters or their agents.

4. Failure to pay due premiums on agreed dates.

5. Not insuring a vessel for Hull & Machinery risks without the consent of a P&I Club.

6. Trading beyond the specific area of navigation agreed by Underwriters.

7. Failure to perform a condition survey with an approved surveyor as required by  Underwriters within a mandated time period.

8. Any failure to comply with survey recommendations within a time scale specified by the surveyor and/or Underwriters.

9. Failure to notify Underwriters of a change in the type of cargo carried or change in the vessel operations or flag state.

10. Failure to maintain the approved Classification Society and/or resolving pending issues within Class surveyors time scale.

11. Failure to comply with IMO, Coast Guard, Flag State regulations and certifications.

12. Assured's failure to immediately notify an incident or occurrence to Underwriters.

13. Failure to document the loading and discharge operations, marking the B/L and other documents appropriately.

14. Forgery or alteration of documents. 

15. Failure to properly document losses, damages, accidents, and third party claims.

16. Any admission of liability without Underwriters prior consent.

17. Violation of B/L clauses and/or Charter Party warranties and protections.

18. Non-compliance with ISM, DOC, ISPS, etc.

19. Failure to secure the underwriters subrogation rights against third parties.

20. Any breach of warranty as to cargo, trade, locality, towage, salvage services, date of sailing, crew nationality, criminal activity or willful misconduct of the assured and/or their agents.

Special consideration should be paid to the following Clauses:

Ship Defects Warranty:

Following a survey of a ship, the assured has been notified of certain defects that require repair or attention. Consequent upon this survey, any liabilities, costs or expenses arising from such defects enumerated therein are excluded from the Entered Ship's Certificate of Entry or Contract of Insurance. It is a condition precedent to the maintenance of coverage hereunder that the enumerated defects are attended to at the earliest opportunity by the Member/Assured within a specified time scale and that their rectification be confirmed in writing by attending surveyor.

Duties of the Assured:

It is the duty of the Assured and their Agents in all cases to take such measures as may be reasonable for the purpose of averting or minimizing a loss and to ensure that all rights against carriers, bailees and other third parties are properly exercised and preserved.  Copies of all letters holding other parties liable for loss or damages together with any other correspondence should be sent to underwriters as soon as possible.

Immediate notice requirement in the event of a possible pollution claim:

Underwriters require IMMEDIATE notice upon awareness of any incident, accident, occurrence, discharge, or spill which may result in a pollution claim. Failure to notify underwriters IMMEDIATELY may result in the denial of coverage.

Steel Survey Clause:

Should an Entered Ship be required to load a Cargo of steel products, the Member or Assured will promptly advise the P&I Club who will arrange for an approved surveyor at the Member's expense, to conduct a pre-loading survey at the port(s) of shipment to establish the condition of the steel immediately prior to its loading aboard the Ship.  All applicable bills of lading (B/L) issued in respect of the Cargo of steel products are to be claused in accordance with the findings of the surveyor.  It is a condition precedent to the maintenance of coverage under The P&I Club for any steel products, that the foregoing provisions are complied with.  Any steps taken to assist the Member/Assured shall not be deemed a waiver of the Club's rights hereunder.

Bagged Cargo Clause:

Should an Entered Ship be required to load bagged Cargo, the Member or Assured will promptly advise the P&I Club who will arrange for an approved surveyor at the Member's expense, to conduct a pre-loading survey at the port(s) of shipment to supervise the loading, stowage and note the apparent condition of the bagged Cargo as it is loaded aboard the Ship.  All bills of lading issued in respect of such Cargo are to be claused in accordance with any findings of the surveyor.

On discharge of the bagged Cargo, a discharge survey is to be organized using a Club approved surveyor at the Member's expense to supervise the discharge, tally the bagged Cargo and determine the nature of any apparent damaged or torn bags, any shortage of Cargo and any loss or damage attributable to stevedores.

It is a condition precedent to the maintenance of P&I coverage for any bagged Cargo, that the foregoing provisions are complied with.  Any steps taken to assist the Member shall not be deemed a waiver of the Club's rights hereunder.

Clean Oil Carriage Clause:

The Certificate of Entry or Insurance Cover is only to provide cover for liability in respect of Cargo on board the Entered Ship in accordance with the Club rules when such Cargo is homogeneous liquids in bulk of a non-persistent nature.

Non-persistent shall be deemed to only apply to any oil which consists of hydrocarbon fractions:

1. At least 50 percent of which, by volume, distils at a temperature of 340 degrees            Centigrade (645 degrees Fahrenheit), and

2. At least 95 percent of which, by volume, distils at a temperature of 370 degrees            Centigrade (700 degrees Fahrenheit) when tested by the ASTM method D86/78 or any other subsequent revision thereof.

Cargo Common Carrier's Liability Clause:

(cargo not declared under B/L as agreed by Underwriters)

Cargo cover is provided in respect of common carrier's liability for loss or damage to Cargo carried not declared under a B/L in the entered ship in accordance with the laws of the country within which the transportation occurs subject to documenting the cargo quantities and condition through a "voyage or delivery or bunker receipt" or an alternative document detailing both loading and discharge quantities and circumstances.

Preparing a ship for inspection:

Ship-owners and Operators should prepare the vessel and her crew before the boarding of a Port State Control inspector, Coast Guards officer and any surveyor or authority on board.  The following areas may be subject to scrutiny:

1. Validity of vessel certificates including COFR or Blue Cards.

2. Copy of the vessel insurance/certificate of P&I Entry.

3. Classification Society certification and status.

4. Log Books and other records.

5. Previous boarding inspections and/or survey reports.

6. ISM, DOC, ISPS Code status including implementation standards.

7. Good seamanship, familiarity of crew with the current trade and type of cargo being carried, no communication barriers, crew certificates in compliance STCW..

8. Navigation/passage planning, charts, publications, electronic navigation aids and communication systems.

9. Cargo-worthiness of relevant spaces on board including condition of holds, closing arrangements, hatch seals, ventilation, bilge pumping and regular alarm procedure implemented and documented.

10. Planning for all load/discharge operations, cargo documentation, ensuring remarks conform to Mate’s Receipts, etc.

11. Records of monitoring stability and recording calculations, monitoring of Stevedore activity.

12. Bunkering procedures, SOPEP and ability to adequately deal with Spills.

13. Preparedness for Fire and other Emergencies (including provision of safety equipment).

14. Engine room condition and evidence of proper machinery maintenance.Preparedness for navigating in adverse weather conditions including evidence of a Hurricane Plan.Document recruiting procedures, including licensing, work history, medical records, drug testing, criminal background checks, etc.

If you have questions regarding this notice, coverage or other related issues, our staff is available for your convenience.