War P&I cover

This matter has been extensively discussed and advised to all members of Group P&I Clubs, however we are surprised that the majority of shipowners in China have not taken any measures to ensure they are covered for this risk.

It is important to note the P&I Club's cover excludes liability for war risks unless the claim is in excess of the amounts recoverable under the owner's Hull war insurance policy. If the owners has no Hull war insurance policy arranged or the insured value under the policy is less than the vessel's market value, the P&I Club only becomes liable for war risks in excess of the vessel's market value up to a maximum limit of US$200 million.

The underlying layer of war P&I cover is in practice included without additional premium into the Hull war cover by means of a standard war P&I inclusion clause, and the P&I cover is not a substitute for this traditional market cover.

Under the current Hull war cover of many shipowners in China which does not contain this war P&I inclusion clause, any crew, cargo and oil pollution claims which are caused by warlike risks will not be covered. Further the payment of an additional Hull war premium for entry into a war zone area under the aforementioned arrangement does not entitle the owner to enjoy the benefit of war P&I cover, which is the most important risk to the owner in this situation.

If your hull war insurers are not able to include the inclusion of war P&I cover, alternative arrangements should be made with the Lloyds market at lower premiums and on far wider coverage than available in China.