Clause 8: 3/4ths Collision Liability
8.1 The Underwriters agree to indemnify the Assured for three-fourths of any sum or sums paid by the Assured to any other person or persons by reason of the Assured becoming legally liable by way of damages for
8.1.1 loss of or damage to any other vessel or property on any other vessel 8.1.2 delay to or loss of use of any such other vessel or property thereon 8.1.3 general average of, salvage of, or salvage under contract of, any such other vessel or property thereon,
where such payment by the Assured is in consequence of the vessel hereby insured coming into collision with any other vessel.
8.2 The indemnity provided by this Clause 8 shall be in addition to the indemnity provided by the other terms and conditions of this insurance and shall be subject to the following provisions:
8.2.1 Where the insured vessel is in collision with another vessel and both vessels are to blame then, unless the liability of one or both vessels becomes limited by law, the indemnity under this Clause 8 shall be calculated on the principle of cross-liabilities as if the respective Owners had been compelled to pay to each other such proportion of each other's damages as may have been properly allowed in ascertaining the balance or sum payable by or to the Assured in consequence of the collision.
8.2.2 In no case shall the Underwriters' total liability under Clauses 8.1 and 8.2 exceed their proportionate part of three-fourths of the insured value of the vessel hereby insured in respect of any one collision.
8.3 The Underwriters will also pay three-fourths of the legal costs incurred by the Assured or which the Assured may be compelled to pay in contesting liability or taking proceedings to limit liability, with the prior written consent of the Underwriters.
EXCLUSIONS
8.4 Provided always that this Clause 8 shall in no case extend to any sum which the Assured shall pay for or in respect of
8.4.1 removal or disposal of obstructions, wrecks, cargoes or any other thing whatsoever
8.4.2 any real or personal property or thing whatsoever except other vessels or property on other vessels
8.4.3 the cargo or other property on, or the engagements of, the insured vessel
8.4.4 loss of life, personal injury or illness
8.4.5 pollution or contamination of any real or personal property or thing whatsoever (except other vessels with which the insured vessel is in collision or property on such other vessels).
CompareComments to ITCH
Liability arising out of a collision is covered either by H&M or P&I insurers. The P&I rules are designed to cover any liabilities that the H&M insurance does not cover.
ITCH Cl. 8 key points to note are that the clause covers 3/4ths of the most significant liabilities arising from a collision between the insured vessel and any other vessel. That is liability for:
- loss or damage to the other vessel or any property on the other vessel – cargo normally being the most significant;
- liability for delay to or loss of use of the other vessel or property on the other vessel; and
- general average and salvage in respect of the other vessel or property on the other vessel.
Litigation and legal costs are also recoverable with 3/4ths under ITCH.
NMIP Comparison
NMIP Cl. 13-1, stipulates a 4/4 liability. While ITCH covers only collision to other vessel, NMIP covers both collision and striking to a vessel and any other object. NMIP Ch. 13 covers liability of the assured arising from collision or striking by the ship, its accessories, equipment or cargo, or by a tug used by the ship to any other object. Any exclusions must be named in the contract to be exempted from the cover. Litigation and legal costs in connection with the claim settlement is recoverable in full – 4/4ths – under NMIP. Another significant difference is that NMIP covers both liability arising from tort and contract, while ITCH only covers liability arising from tort.
Comments to ITCH Cl. 8.2
The cover provided by Cl. 8.2 can be claimed in addition to the sum insured for damage or loss of the insured vessel itself.
Further, in the case of a both-to-blame collision the cross-liability rule is applied. The cross-liability rule only applies if neither vessel is able to limit their liability. This is a disadvantage to the assured as recoveries in respect of uninsured losses not separates out in a single liability settlement and therefore cannot be allocated to the assured.
Litigation and legal costs are also recoverable with 3/4ths under ITCH as per Cl. 8.3
NMIP Comparison
Equal to ITCH, collision liability is additional to other indemnities under NMIP. A major difference between NMIP and ITCH is that the cross-liabilities principle in Cl. 4-14 is to be applied in all cases, even when one or both vessels in a both-to-blame collision are able to limit their liability.
Another difference is that litigation and legal costs in connection with the claim settlement are recoverable in full – 4/4ths – under NMIP.
Comments to ITCH Cl. 8.4 (Exclusions)
The P&I insurer covers any named exclusions in Cl.8, including the remaining 1/4ths of the collision liability.
NMIP Comparison
Any exclusions must be named in the contract to be exempted from the cover, see NMIP Cl. 13-1 a-j. These exclusions will be covered by the P&I insurer.