The New International Hulls Clauses

New International Hulls Clauses have been in effect since 1 November 2002, for use with marine policies issued in London. The clauses replaced those adopted in November 1995. In many respects the 2002 Clauses are similar to their predecessor, however the opportunity has been taken to modernise wordings, and there are a number of important new provisions. The most significant changes are the following;

COVERAGE

The insuring clause, cl 2, retains the distinction between loss caused by perils for which the insurers are strictly liable and (under the Inchmaree Clause) loss caused by perils for which the insurers are liable only if the loss has not resulted from want of due diligence by the assured, owners or managers. The insured perils are largely unchanged, although a number of points may be noted.

loss caused by contact with satellites, aircraft, helicopters or similar objects becomes a strict liability rather than a due diligence peril.

accidents in loading, discharging or shifting cargo and fuel is extended to stores and parts.

the bursting of boilers and breaking of shafts provisions have been amended significantly. The position under the old wording, established in Promet Engineering (Singapore) Pte Ltd v Sturge, The Nukila [1997] 2 Lloyd's Rep 146, was that underwriters were liable for the cost of repairing damage caused by a latent defect although not for the cost of putting right the latent defect itself. The new wording caps the underwriters' liability for such damage at the amount by which the cost of repairing the loss or damage caused by the latent defect exceeds the cost of correcting the latent defect.

the due diligence requirement has been amended to remove the reference to superintendents and onshore management, so that due diligence is now required only of the assured, owners and managers.

cover has been extended to loss of or damage to equipment not owned by the assured but installed for use on the vessel and for which the assured has assumed contractual liability, although cover is capped by reference to the lower of the contractual liability of the assured and the reasonable cost of repairs.

the new wording covers loss of or damage to parts taken off the vessel for up to 60 days as long as the peril is one insured against under the insuring clause, the amount recoverable being the lower of the contractual liability of the assured and the reasonable cost of repairs, subject to a cap of 5% of the insured value of the...