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Section F: Scope of Recovery and Limits
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- Section F: Scope of Recovery and Limits
6.1 - Net loss
If a member incurs any of the liabilities set out in rule 3, he is entitled to recover the net amount of such liabilities, deducting any costs and expenses which would have been incurred in any event together with any savings accruing to him and any recoveries made by him, unless otherwise agreed by the managers.
6.2.1 - Limits of recovery
Unless and to the extent the board otherwise determines, under no circumstances shall the recovery by any person exceed:
- the amount to which the member is entitled to limit his liability, or would have been so entitled under any relevant law had he so petitioned;
- any other limit contained in these rules or set out in the member’s certificate of entry;
- if less than the full tonnage of the ship is entered in the club, such proportion of the amount referred to in rule 6.1, or the limits referred to in paragraphs (1) and (2) above, as the entered tonnage bears to the full tonnage of the ship.
If the claims of all insured parties in respect of liabilities insured by the club exceed or may exceed in the aggregate any limit of cover set out in the rules or in the certificate of entry:
- the member shall be entitled to recover in respect of such claims in priority to the claims of any other insured parties and any joint entrants shall be entitled to recover in respect of such claims in priority to the claims of any co-assureds;
- where the aggregate of the claims of the member exceeds or may exceed the said limit, the member shall be entitled to recover in respect of such claims to the exclusion of any claims of any other insured parties;
- where the aggregate of the claims of any joint entrants exceeds or may exceed the said limit or any part thereof remaining after application of rule 6.2.2(1), any joint entrant shall be entitled to recover in respect of such claims:
- a to the exclusion of any claims of any co-assureds; and
- b only such proportion of the remaining part of the limit as the claim of that joint entrant bears to the total of all claims of all joint entrants;
4. where the aggregate of the claims of any co-assureds exceeds or may exceed the said limit or any part thereof remaining after the application of rules 6.2.2(1) and (3), any co-assured shall be entitled to recover in respect of such claims only such proportion of the remaining part of the limit as the claim of that co-assured bears to the total of all claims of all co-assureds.
If in the opinion of the managers the claims of all insured parties in the aggregate exceed or may exceed any limit set out in the rules or in the certificate of entry, the managers may defer payment of a claim or any part thereof.
Where a guarantee, undertaking or certificate provided for in rule 4.5 has been issued and, in the opinion of the managers, the claims of all insured parties in the aggregate exceed or may exceed any limit set out in the rules or in the certificate of entry, the managers:
- may defer payment of a claim or any part thereof as they see fit; and
- shall not be under any obligation to reimburse a member until they are satisfied that all liabilities arising under demands made or which may be made under any such guarantee, undertaking or certificate have been or can be satisfied within such limit.
Any limits on the cover provided by the club apply in the aggregate to all insured parties and affiliated or associated companies.
Subject to any lower limits of cover contained in the rules or set out in the member’s certificate of entry, the liability of the club to all insured parties for all claims, costs and expenses arising under any one owner’s entry shall be limited in the aggregate to US$500 million any one event.
If a claim arises following a collision involving two ships belonging to the same member, he is entitled to recover from the club, and the club has the same rights, as if the ships had belonged to different owners.
If a claim arises under rules 3.7 or 3.9 following loss of or damage to any ship, cargo or other property or object belonging to the member in respect of whose ship the claim arose, the member is entitled to recover from the club, and the club has the same rights, as if such ship, cargo or other property or object lost or damaged had belonged to a third party, but only to the extent that such loss or damage is not recoverable under any other insurance upon the said ship, cargo or other property or object.
If the cargo in respect of which a claim arises under rule 3.13 is the property of the member, he is entitled, subject to the exclusions to rule 3.13, to recover such liabilities as would have been recoverable if that property belonged to a third party and that third party had concluded a contract of carriage with the member.
6.8 - Amounts owing to the club
The club is not liable to make any payment in respect of any claim while any sum is due from the member, or due in respect of a ship entered under the same group rating agreement; however, if any payment is made, the club may deduct any sum which is due from a member relating to any policy year.
6.9 - Interest
In no case is interest payable on sums due from the club.
6.10 - Pay to be paid
Unless the managers otherwise determine, it is a condition precedent of a member’s right to recover in respect of any liabilities that he must have first discharged or paid the same out of funds belonging to him unconditionally and not by way of loan or otherwise.
6.11.1 - Crew claims
Notwithstanding rule 6.10, where a member has failed to discharge a legal liability to pay damages or compensation for crew injury, illness or death, the club shall discharge or pay such claim on the member’s behalf directly to such crewmember or dependant thereof.
There shall be no recovery unless the crewmember or dependant has no enforceable right of recovery against any other party and would otherwise be uncompensated.
Subject to rule 6.11.4, the amount payable by the club shall under no circumstances exceed the amount which the member would have been able to recover from the club under the rules and his terms of entry.
Where the club is under no liability to the member by virtue of rule 17.3, the club shall nevertheless discharge or pay that claim to the extent only that it arises from an event occurring prior to the date of cancellation, but as agent only of the member, and the member shall be liable to reimburse the club for the full amount of such claim.
6.12 - Deductibles
Any sum recoverable, including fees, costs and expenses, shall be subject to such deductible as has been agreed by the managers or, if not so agreed, shall be subject to the standard deductibles determined by the board from time to time. Unless otherwise agreed, deductibles shall apply any one event.
The club may undertake the defence of a member or institute legal proceedings on his behalf in respect of any amount not recoverable by reason of any deductible in order to ascertain the legal position of the member. Although the club may pay the costs of such legal proceedings, the member shall bear any damages therein adjudged or awarded against him.
6.14 - Wilful misconduct
No claim is recoverable in respect of any liabilities which in the opinion of the club has been incurred owing to the privity or wilful misconduct of an insured party.
6.15 - Obligation to sue and labour
A member must at all times take all reasonable steps to avoid or minimise any loss, damage or liability in respect of which he may be insured by the club. If a member is in breach of this obligation, the board may reject any claim by the member for reimbursement or reduce the sum payable by the club.
6.16 - Waiver of subrogation
Where a party is named as a joint entrant or co-assured and a waiver of subrogation is required under a contract, rights of subrogation against such joint entrant or co-assured are waived only where the managers have agreed such a waiver; any such waiver applies only in respect of those liabilities which are borne by the member or other joint entrant under the terms of the relevant contract and not to any liabilities which are to be borne by the other party unless otherwise agreed by the managers.
6.17 - Sanctions
The member shall in no circumstances be entitled to recover from the club that part of any liabilities which is not recovered by the club under any reinsurance(s) because of a shortfall in recovery from reinsurers thereunder by reason of any sanction, prohibition or adverse action against them by any state or international organisation or the risk thereof if payment were to be made by such reinsurers. For the purposes of this rule 6.17, “shortfall” includes any failure or delay in recovery by the club by reason of the reinsurers making payment into a designated account in compliance with the requirements of any state or international organisation.