7.2.1 Adaptation to P&I Hull Liability Cover
Although the main function of Casco insurance is compensation for loss or damage to the insured vessel (in this sense, Casco insurance is property insurance), important elements of liability and salvage risk insurance are added. The scope of liability coverage under Kasko insurance is specified in the applicable hull conditions, for other liability risks coverage may be requested within the scope of P&I insurance.
Collision liability that remains covered by the P&I policy is subject to exclusions in hull coverage. While some exceptions are covered by other Rules, such asRule 3(Obligations in relation to people) irule 6(Pollution Obligations), this sectionrule 7provides protection against other important exclusions of comprehensive insurance, namely the limitation of comprehensive coverage to liability in the event of a collision, as well as liability that exceeds the value of comprehensive insurance. It also covers any part of a collision damage claim payable under US law that involves cargo carried on the entered vessel.
7.2.2 1/4 RDC (Running Running)
7.2.2.1 General comments on 1/4 RDC
Traditionally, comprehensive insurance covers only 3/4 of collision liability, the "uninsured discount" of the remaining 1/4 of collision liability is held by the P&I clubs. 1/4 RDC (Running Down Clause) is therefore one of the traditional P&I risks. Comprehensive insurance today often covers 4/4 liability in the event of a collision.
7.2.2.2 When 4/4 of the RDCs are covered by the hull policy
If the comprehensive insurance offers total collision liability coverage or 4/4 RDC, coverage for 1/4 RDC is not required under the P&I policy.
7.2.2.3 1/4 RDC coverage makes P&I the leading collision insurer
If 1/4 of the RDC's coverage is owned by the P&I Club, P&I traditionally takes the lead on claims matters, including negotiation and settlement, on behalf of all interested insurers. This is because comprehensive coverage is often shared among several insurers that individually cover less than 25%.
7.2.3 Shared collision: single or crossed?
7.2.3.1 General comments on the assignment of responsibility conflicts
Apportioning responsibility for a collision is straightforward when one of the ships is 100% at fault or when no ship is at fault. In the first case, all responsibility is borne by a ship or its insurers (depending on who is responsible for the collision). In the second case, each ship bears its own loss.
In most collision cases, both vessels are at fault, leading to joint liability depending on the degree of damage. The assignment of liability is often achieved through an amicable agreement between the parties. If negotiations fail, the case will have to be decided in court.
There are two ways of distributing liability for disputes, namely the single liability system and the multiple liability system.
7.2.3.2 Exclusive responsibility
In the single liability system, the agreed distribution of liability applies to the total amount of damage suffered by the two vessels. Depending on the quantified losses and the error rate, the ship will receive compensation from the other ship or from its contractors. Normally, the losses suffered by a ship consist of insured and uninsured losses (eg hull damage, loss of time, discounts, etc.). The disadvantage of a single liability agreement is the distribution among different parties who often have interests in the ship, which would often be based on an agreement on the presumed liability.
7.2.3.3 Cross responsibility
In a multiple liability system, liability is not attributed to the total damage to the two ships, but to the damage suffered by each ship separately. It is then possible to prorate each part of the individual loss, whether it is comprehensive insurance damage, P&I collision rate, insured loss of time, or uninsured loss suffered by the owner.
Which system is preferred or which offers greater equality depends on several factors, such as the conditions of the comprehensive insurance policy or if an overall limit is included, and will have to be decided on a case-by-case basis. This section of Rule 7 allows compensation for collision liabilities not covered by the incoming ship's hull insurance, regardless of how liability is apportioned.
7.2.4 Excess Liability for Collision
7.2.4.1 Coverage when liability in the event of a collision exceeds the value of the hull insurance
Casco coverage is limited to a certain value agreed between the Member and the Casco carrier at the beginning of each policy period. This price may be adjusted during the term of the policy to reflect significant changes in the market. If the incoming vessel suffers a total loss, the amount insured under Hull insurance will be used to fully compensate the Member. For liability losses covered by Kasko insurance, the Kasko policy generally provides a separate limit up to the insured value. If these legal liabilities exceed the contracted value of the hull insurance, the P&I insurance covers the balance in accordance with this section as excess collision liability.
The bodily injury portion of coverage and the collision liability portion are separate and not cumulative, meaning the "unused" portion of one limit cannot be carried over to the other.
7.2.4.2 The importance of the adequate value of all risk insurance
The P&I policy's exposure to this risk refers to the amount insured under the Hull policy. Members are advised to report any helmet price changes to their P&I Club to allow for proper risk assessment.
7.2.5 Responsibilities in the event of a collision for the removal of wreckage from another ship
The last paragraph of this rule states that the limits of coverage under (a) and (b) do not apply to wreck removal and all related obligations of the ship with which the Member collides, as long as the coverage of Helmet insurance is not provided.
If the member's liability arising from a collision exceeds ¼ of the P&I covered by RDC, the excess liability is also covered with respect to the removal of the wreck and the cargo of the other ship.
7.2.6 Collision Damage Liability Under US Law in Relation to Cargo Carried on an Incoming Vessel
As can be seen fromcomments under 4.1.8.3, boarding constitutes an acceptable exception to liability for loss of or damage to cargo carried on board an incoming vessel under the Hague and Hague-Visby Rules, exception to Article IV Rule 2(c). The owner or consignee of the lost cargo may claim compensation from the other vessel involved in the collision. Under the 1910 Brussels Boarding Agreement (the "Boarding Agreement"), cargo can only recover a part of the loss equal to the degree of fault of that ship. Consequently, there is no excess liability in a collision claim against the ship on which the cargo was actually transported. Thus, the exclusion of liability of the Hague and Hague-Visby rules becomes effective even in the event of conflict.
The United States has not ratified the Conflict Convention. This means that in cases subject to US jurisdiction, the owners of the cargo on board can fully recover the loss from the non-cargo ship, provided the ship is to some degree of fault. A ship other than the carrier is free to include the loss in the collision claim and recover the carrier's share of the damage according to its degree of fault. Without prejudice to the exclusion of liability under the Hague and Hague-Visby Rules, the carrier is liable for compensation for loss of or damage to its own cargo. This responsibility is excluded from the coverage of the Casco policy. Instead, the member will be covered by this section.
To avoid this circumvention of the liability exception of the Hague and Visby rules, a conflict between the two liability clauses was introduced. Briefly, the clause states that the owner of the cargo will reimburse the carrying vessel for any amount paid to the non-carrying vessel as compensation for the loss of or damage to that cargo. Although the conflict clause is considered void in the US, it is considered a standard term in terms ofRule 10, Section 2It must be included on all bills of lading and charters.
