RULES OF HULL AND MACHINERY INSURANCE

1. General stipulations

2. Object of insurance

3. Insurance risk. Insured events

4. Sum insured

5. Insurance premium

6. Insurance period

7. Conclusion and termination of the contract of insurance

8. Introduction of amendments and additions to the contract of insurance

9. Rights and duties of the Parties

10. Relationship of the Parties in case of loss occurrence

11. Insurance claim settlement. Claim denial

12. Dispute resolution

1. GENERAL STIPULATIONS

1.1. In accordance with applicable law and the Civil Code of the Russian Federation, the Merchant

Shipping Code of the Russian Federation, the Inland Water Transport Code of the Russian

Federation, the Russian Federation Law on the Organization of insurance business in the Russian

Federation, regulations in the field of insurance and on the basis of these Rules of hull and

machinery insurance (hereinafter referred to as Rules) the Insurer concludes insurance contracts

with legal or capable physical persons (hereinafter the Assured).

1.2. Under the contract of H&M insurance, concluded pursuant to these Rules (hereinafter referred to

as the insurance contract), upon an occurrence of the insured event (loss occurrence) the Insurer

commits himself, in accordance with the contract, to indemnify the Assured or other person, for

whose benefit the contract is signed (the Beneficiary), for losses, caused by this event, in respect

of property interests of the Assured (to pay the insurance indemnity) within the amount, defined

by the insurance contract, (sum insured).

1.3. The Insurer – «ARSENAL INSURANCE COMPANY LLC», conducts insurance business in

accordance with the licence, issued by the insurance supervision body.

1.4. The Assured shall be legal or capable physical persons, entered into an insurance contract with

the Insurer, with a legitimate property interest in the insured object.

1.5. At the conclusion of the insurance contract subject to the Rules, the agreed conditions become the

integral part of the insurance contract and are binding on the Assured and the Insurer.

1.6. The Insurer may not divulge information concerning the Assured and his property status, received

while carrying out the professional activity.

The Insurer depending on a sort of violated rights and nature of violation bears responsibility for

violating the secrecy of insurance in accordance with the procedure prescribed by the Civil law

regulations of the Russian Federation.

1.7. At the conclusion of the insurance contract the parties may agree to alter or waive particular

provisions of these Rules, as well as to supplement the contract with provisions other than those

set out in these Rules, if such amendments do not contradict the applicable law. Provisions of the

insurance contracts shall prevail over provisions of these Rules.

2. OBJECT OF INSURANCE

2.1. Object of insurance is the property interest of the Assured (the Beneficiary), connected with the

shipping: vessels with their machinery and equipment, freight; obligations secured by the vessel,

cargo and freight as well as unforeseen expenses, which may arise while the vessel is in

operation, the Insurer’s liability for the loss, caused to the third parties.

3. INSURED RISK. INSURED EVENT

3.1. Insured risk, in preparation for which this insurance is taken out, is a probable event, which is

likely to occur accidentally.

3.2. According to these Rules insurance risks are events, stipulated by the insurance contract, upon

the occurrence of which there is an obligation on the Insurer to pay an insurance benefit to the

Assured (the Beneficiary).

3.3. According to the insurance contract, concluded on the basis of these Rules, events shall be

recognized as insured events under the following terms:

3.3.1 "With total loss and damages liability".

The insurance contract, based on these conditions, shall cover:

- expenses caused by a total loss of the vessel (actual or constructive) or expenses for

repairs of damages to the hull, machinery, equipment;

- missing of the vessel;

- vessel’s proportion of losses, expenses and contributions in general average;

- necessary and properly incurred expenses for the salvage of the vessel;

- necessary and properly incurred expenses for the purpose of averting, minimizing or

determination of the extent of the loss, if such loss is caused by an insured event

stipulated in the insurance contract;

3.3.2 "With damages liability".

The insurance contract, based on these conditions, covers:

- expenses for repairs of damages to hull, engines, machinery or equipment;

- measures for the purpose of averting, minimizing or determining the loss, if such loss is

caused by an insured event stipulated in the insurance contract.

3.3.3 "With total loss liability”.

The insurance contract, based on these conditions, covers:

- total loss of a vessel (actual or constructive);

- missing of the vessel;

- vessel’s proportion of losses, expenses and contributions in general average;

- necessary and properly incurred expenses for salvage of the vessel;

- measures for the purpose of averting, minimizing or determining the loss, if such loss is

caused by an insured event stipulated in the insurance contract.

3.4. The liability of the Insurer for all damages, arising out of one insurance event, is limited to the

sum insured. However, the insurance contract may allow determination of the sum insured of all

losses for all insured events, which have occurred during the validity of one contract, or

determination of the sum insured for the different categories of expenses included in the

insurance indemnity for one insurance event. Necessary and properly incurred expenses for the

purpose of averting and minimizing the loss are additional to the compensation, paid in

accordance with items 3.3.1, 3.3.2 or 3.3.3 of these Rules, and shall be limited to amount of the

sum insured.

3.5. The following events shall not be considered as insured events and this insurance does not cover

losses that have occurred as a result of:

3.5.1 malice or negligence of the Assured or Beneficiary or their representatives, however the

Master Officer and crew of the insured vessel are not to be considered;

3.5.2 unseaworthiness of the vessel, which Assured, the Beneficiary or their representatives were

aware of, or should have been aware of, prior to sailing;

3.5.3 corrosion or wear and tear of the vessel, its parts, machinery, equipment or accessories;

3.5.4 operation of the vessel in conditions not allowed by its class;

3.5.5 direct or indirect influence of radiation or radioactive contamination, caused by any reason;

3.5.6 wages and maintenance of the Master Officer and crew except for the cases stipulated in

item 10.3 of these Rules;

3.5.7 losses and expenses connected with removing or disposal of obstruction, wreck of the

insured vessel, pollution or contamination, damage to health, life and property of the third

parties, or consequential loss of the Assured;

3.5.8 elimination of any defect unless the defect has caused a total loss or damage to the hull,

mechanisms, machines and equipment;

3.5.9 the Assured’s duties to compensate the damage to the owner of any other vessel due to

collision;

3.5.10 the Assured’s duties to compensate the damage to any fixed or movable object incurred by

the third parties;

3.5.11 loss of hire;

3.5.12 warlike operations and their consequences, civil wars, strikes, civil commotions and labour

conflicts as well as a seizure of a vessel by pirates or any other risks of piracy, including

possible expenses for the release of hostages and (or) vessel, as well as expenses for

general or partial average, connected with a seizure of vessel;

3.5.13 actions of the governmental authorities in respect of the insured vessel, except for total loss

or damages to the vessel insured due to measures undertaken to prevent or minimize the

danger of pollution by the vessel having damages, for which the Insurer is liable according

to the insurance contract.

3.6. If mutually agreed by the parties, risks, listed in items 3.5.9 - 3.5.12 of these Rules, can be

included in the insurance contract.

3.6.1. In case the risks specified in item 3.5.10 of these Rules, are included in the insurance

contract, the following losses of the Assured are covered:

- losses due to destruction or damage of any other vessel or property on any other vessel;

- losses due to the obligation to compensate the third parties for lost income due to

detention or loss of use of other damaged or missing vessel, or property thereon;

- vessel’s proportion of losses, expenses and contributions in general average and salvage

remuneration, salvage of another vessel or the property on board (based on a contract).

3.6.2. In case the risks, specified in item 3.5.10 of these Rules, are included in the insurance

contract, the following losses of the Insured are covered:

- destruction or damage of any fixed or movable or other object;

- losses due to the obligation to compensate third parties for unreceived income due to

detention or loss of use of floating, fixed or other object or property thereon.

In case the risks, specified in items 3.5.9 and 3.5.10 of these Rules, are included in the

insurance contract, the following losses of the Insured are not covered:

- damage to or loss of cargo and other property on the insured vessel;

- death, injury or damage to life and health of natural persons;

- removal or disposal of obstructions, wrecks, cargoes or any other thing whatsoever;

- pollution or contamination of environment, of any real or personal property or thing

(including expenses on prevention of such pollution or contamination), except other

vessels, with which the insured vessel is in collision, and property on such vessels;

- contractual obligations of the vessel;

- full or partial inability of using the vessel or any other object, which was not damaged in

collision.

If in case of collision of the insured vessel with any other vessel both vessels are

liable for collision and at least for one of them such liability is not limited by law,

the indemnity is calculated on the principle of separate liability i.e. losses caused to

the other vessel are paid subject to the extent of liability of the insured vessel

irrespective of the amount to be paid in anyone’s favour as a result of adjustment

of counter claims.

In all other cases the insurance indemnity is calculated on the principle of common

liability, basing on actual expenses of the insured which are subject to

indemnification under the terms of the insurance contract. In case the risks, specified in items 3.5.9 and 3.5.10 of these Rules, are included in the

insurance contract, liability of the Insurer on these risks is limited to the sum insured and

considered additional to liability on other risks.

3.6.3. In case the risks, specified in item 3.5.11of these Rules, are included in the insurance

contract, loss of hire in the period of demurrage due to the insured accident, which is

recognized as such in compliance with the contract of insurance, is to be indemnified.

The compensation is calculated by multiplication of the agreed daily freight rate on the

number of days of demurrage less the coordinated initial period of demurrage that is a

deductible on the given risk. The period of demurrage is calculated from the moment of the

insurance accident and includes the period of salvage and repair of the damages, resulted

from the insurance accident.

Time spent for the transportation to the place of repair is included into the period of

demurrage, subject to vessel had to interrupt the voyage and proceed immediately to the

place of repairs. Loss of hire, caused by demurrage during the repair of the vessel, shall be

indemnified in case of such repair was made during the currency of the insurance contract.

Loss of hire is not covered in case of a total loss (actual or constructive) of the insured

vessel.

The Insurer’s liability on the given risk is limited by the agreed sum insured and is

considered additional to the liability on other risks.

3.6.4. In case the risks, specified in item 3.5.12 of these Rules, are included in the insurance

contract, on demand of the Insurer the Assured shall provide all necessary information for

evaluation of the extend of the risk.

Insurance coverage of the risks of piracy does not cover the expenses, which a person may

be enforced to release the hostages.

Insurance coverage under item 3.5.12 of these Rules shall not apply to areas that are

included in thef the Institute of London Underwriters’ war risks list, applicable at the time

of the event and (or) determined by the Insurer as high-risk areas (hereinafter - the "Risk

Areas").

The list of specific Risk Areas is determined by the Insurer in the form of a special clause

in the insurance contract or in the additional agreement thereto, or as a separate written

notification of the Insurer, directed to the Assured (his representative) prior or at the

conclusion of the contract of insurance as well as during the validity period of the contract.

Above-noted notice of the list (scope) of the Risk Areas becomes an integral part of the

contract of insurance upon being directed to the Assured (his representative) by the Insurer.

Change in the list of the Risk Areas on notice within the term of the contract of insurance,

providing insurance coverage according to item 3.5.12. of these Rules, is qualified as a

significant change in the degree of risk, and wherefore the Insurer is entitled to demand

modification of the insurance conditions.

In the event, that the Assured refuses modification of the insurance conditions (change in

the list of the Risk Areas) and (or) does not provide written consent to such change at the

time specified by the Insurer in his notification, the effect of insurance coverage in

accordance with paragraph 3.5.12 of these Rules is prematurely terminated from the date,

specified in the notification of the Insurer, and if such date is not specified then from the

date of such notification.

3.6.5. By agreement of the Parties, at extra charge and with approval of additional conditions

further to the policy according to item 3.5.12 of these Rules, the Insurer may provide single

voyage insurance in respect of the navigation in the Risk Area, provided that application

for insurance of the Assured (his representative) has to be filed and terms and conditions of

the insurance have to be confirmed by the Insurer in advance prior to the call of the insured

vessel into the Risk Area.

In order to make a decision on granting additional insurance coverage under this item of

the Rules, the Insurer is entitled to request information about the shipping route,

availability/unavailability of armed guards or other security measures of the vessel while in

the Risk Area or on the way to it, type of cargo and other information, needed to assess the

extent of the insurance risk.

The Insurer is also entitled to demand the implementation of sufficient security measures

for navigation in the Risk Area (armed guards, vessels escort, representatives of authority

on board etc.).

Arrangement of the additional single voyage insurance in respect of the navigation in the

Risk Area is executed as a separate document (notice, policy, etc.) containing terms and

conditions of such additional coverage, and becomes an integral part of the contract of

insurance from the time the document was forwarded by the Insurer to the Assured (his

representative).

In the event, that the Assured disagrees on the terms of additional coverage under this item

of the Rules and (or) if the Assured fails to-fulfil the special conditions, determined by the

Insurer as conditions for the provision of additional insurance coverage and (or) to pay the

additional premium at the time specified by the Insurer in its document, forwarded to the

Assured (his representative), / invoice, the effect of the additional insurance coverage in

respect of the navigation in the Risk Areas shall be interpreted as not agreed by the parties

and as not provided, and the Insurer shall not be liable for incidents that took place within

such territory.

3.7. Except as otherwise provided herein, insurance contract does not indemnify:

3.7.1. 10% (ten per cent) of damage repair costs of machines, boilers and equipment of the vessel;

3.7.2. 25% (twenty five per cent) of damage repair costs resulting from contact with ice, for

which the Insurer is liable under the contract of insurance;

3.8. In all other cases, the recoverable amount of the loss (deductible) shall be agreed in the contract

of insurance.

3.9. Except as otherwise provided herein, the insurance contract does not indemnify for losses,

connected with the transportation of military loadings - weapons of war or their parts (packages),

including ammunition, other charges, mines, bombs and other parts and appendages of implement

of war.

3.10. If it is agreed by the parties and specified in the insurance contract, the Insurer and the Assured

can apply Additional conditions of insurance, based on the Clauses of the Institute of London

Underwriters (Appendix A hereto). In this case, the Clauses of the Institute of London

Underwriters become an integral part of the contract of insurance.

4. SUM INSURED

4.1. The sum insured is the amount of money determined by the contract of insurance, which is the

basis for determination of the levels of both the premium and indemnity upon the occurrence of

an insured event.

4.2. The sum insured is the maximum sum the Insurer shall pay in the aggregate as compensation for

losses, resulted from all insured events.

4.3. Vessel is considered to be insured for the sum that is declared by the Assured. If the sum insured

appears to be above the insurance value, the liability of the Insurer shall be limited to the

insurance value of the vessel. If the sum insured appears to be below the insurance value, the loss

is paid proportionally to the relation of the sum insured to insurance value.

4.4. If the contract of insurance does not determine insurance value, the insurance value of the vessel

is deemed to be the average world market price of similar vessel at the time of conclusion of the

contract of insurance.

5. INSURANCE PREMIUM

5.1. The insurance premium is payment for the insurance which the Assured has to pay to the Insurer

in order and terms, stipulated by the contract of insurance.

The amount of the insurance premium is determined based on the sum insured, insurance rate and

corrective ratios for the insurance tariff.

5.2. The insurance rate is a rate of insurance premium from the unit of the sum insured with the

consideration of the insurance object and the character of insurance risks. The insurance rate is

determined by the contract of insurance upon mutual agreement of the parties.

5.3. The insurance premium subject to the contract of insurance can be paid by the Assured either in a

lump sum - as a single payment for the whole period of insurance, or by instalments pursuant to

the procedure established by the contract of insurance.

6. INSURANCE PERIOD

6.1. The insurance contract is concluded for the period of 12 months or other period agreed by the

parties.

6.2. The insurance contract shall enter into force upon the payment of the insurance premium or its

first instalment, except as otherwise provided by the insurance contract.

6.3. The day of payment of the insurance premium, except as otherwise provided herein, shall be:

6.3.1. in case of cash payment – the day of payment at the billing office of the Insurer;

6.3.2. under cashless payment scheme – the day of depositing funds on the current account of the

Insurer.

6.4. The insurance contract can be concluded “for a time” or “on voyage”.

6.5. In case of "time insurance" the contract of insurance enters into effect at 0 hours and stops at 24

hours (time at a place of the policy issuance) of the dates specified in the contract of insurance.

6.6. In case of “voyage insurance” the contract of insurance enters into effect with the unmooring or

weighing in the port of departure and ends from the mooring or anchoring in the port of

destination.

6.7. If the contract of insurance allows for entry into effect on the date different from the date of

payment of the insurance premium or its first instalment, in case of failure to pay the insurance

premium or its initial instalment within 10 days of the date, specified in the contract of insurance

as the date of payment of the insurance premium or its first instalment, the Insurer is entitled to

terminate the contract unilaterally by sending a written notice to the Assured.

If the contract of insurance has not come into force at the time of the Insurer's right to terminate

the contract of insurance in accordance with this item, the contract shall be deemed not entered

into force and shall not entail any legal consequences for the parties.

6.8. In case of failure to pay the next instalment within 10 days from the date fixed in the contract of

insurance as the date of payment, the Insurer is entitled to terminate the contract unilaterally, by

sending a written notice to the Assured.

6.9. The date of the termination of the contract, stipulated by items 6.7 and 6.8 of these Rules, shall be

the date stated in the contract of insurance for the payment of insurance premium (instalment).

The Insurer shall be released from the obligation to perform the insurance indemnity in respect of

insured event occurred after the date of the termination of the contract of insurance, specified in

accordance with the terms of this item.

6.10. In the event the Insurer terminates the contract unilaterally on the grounds and pursuant to the

procedure established by items 6.7 and 6.8 of these Rules the insurance premium paid to the

Insurer is not subject to return.

6.11. Other consequences of the failure of the Assured to pay the insurance premium (instalment) may

be determined by the contract of insurance.

7. CONCLUSION AND TERMINATION OF THE CONTRACT OF INSURANCE 7.1. The insurance contract is an agreement between the Assured and the Insurer, in virtue of which

the Insurer undertakes to provide the insurance payment for the Assured in case of loss

occurrence, and the Assured undertakes to pay the insurance premium within the prescribed time

limits.

7.2. The insurance contract is concluded on the basis of a written application of the Assured with the

accurate information about the vessel (vessel type, name, year of construction, class, deadweight)

and specification of:

- the sum insured;

- insurance terms and conditions;

- in case of “time” insurance – the sailing area and insurance period and in case of “single

voyage” insurance - the sailing start and end points, duration and points of call.

7.3. The Assured must provide the Insurer with all data, which are known or should be known to the

Assured, as well as data requested by the Insurer concerning circumstances having essential value

for risk assessment.

7.4. Accepting a vessel for insurance cover the Insurer has the right to demand a survey of the insured

vessel in a dock in the presence of his representative.

7.5. The Insurer shall issue to the Assured a document evidencing a contract of insurance (insurance

policy or other insurance document) and shall provide the Assured for the insurance terms and

conditions.

7.6. The Insurer shall indemnify only for losses occurred in the navigation zone stipulated in the

contract of insurance. The liability of the Insurer ceases for the time the vessel goes outside the

navigation zone or in case of the deviation from the voyage course, stipulated in the contract of

insurance.

7.6.1. The Insurer may decide on continuing with the contract of insurance, if the Assured

notified him promptly about the upcoming change of the navigation zone or the voyage

course and gave his consent to pay an additional premium.

7.6.2. Deviation from the intended track or sailing out of the navigation zone in order to save

human lives, ships and cargo, as well as the deviation, caused by the necessity of the

voyage security, shall not be deemed to be a violation of the contract of insurance. The

Assured has to notify the Insurer immediately about any deviations like these.

7.7. The contract of insurance will be terminated in case of:

7.7.1. expiration of the contract term;

7.7.2. full (actual or constructive) loss of the vessel;

7.7.3. fulfilment of the contract obligations by the Insurer in full;

7.7.4. failure to pay the premium by the Insured in terms determined by the contract, if not

coordinated otherwise;

7.7.5. in other cases stipulated by law of Russian Federation.

7.8. The contract of insurance shall be terminated early, if after its entry into force the possibility of

the loss occurrence has disappeared due to the circumstances other than the insured event. The

Insurer has the right to a part of the insurance premium in proportion to the time during which the

insurance was in effect.

7.9. The Assured has the right to repudiate the contract at any time if at the moment of repudiation of

contract the possibility of the loss occurrence has not disappeared due to the circumstances

specified in item 7.8. of these Rules.

The contract of insurance can be terminated early on demand of the Insurer in cases stipulated by

the current legislation of the Russian Federation and (or) by the contract of insurance.

7.10. In case of early termination of the contract of insurance on demand of the Assured, the Insurer

shall return to him the insurance premium for the unexpired term of the contract less the expenses

incurred. If the Assured’s demand is conditioned upon the Insurer’s violation of the Rules of

insurance, the Insurer shall return to the Assured the insurance premium paid by him in full.

7.11. In case of early termination of the contract of insurance on demand of the Insurer, conditioned

upon non-compliance of these Rules by the Assured, the Insurer shall return to the Assured the

insurance premium for the unexpired term of the contract less the expenses incurred.

7.12. If the vessel was in safe port for 30 or more consecutive days during the insurance period (day of

entering the port and day of leaving is considered one day), the Assured has the right for a refund

of part of the insurance premium, unless the insurance contract is not agreed otherwise.

7.13. The sum subject to return makes:

- 75% (seventy five per cent) of the insurance premium, falling on the time of demurrage,

for every 30 consecutive days of stay in safe port provided that in this period the vessel

was not under repair and there was no cargo on the vessel;

- 50 % (fifty per cent) of the insurance premium, falling on the time of demurrage, for

every 30 consecutive days of stay under repair.

In order to substantiate the right to return a part of the insurance premium, the Assured should:

- inform the Insurer about the lay-up (repair) of the vessel not later than the day, following

the day of such lay-up, as well as about the day of the end of lay-up (repair) not later than

the day, following the last day of the lay-up (repair);

- provide documents, confirming vessel’s lay-up (repair), within six (6) months from the

date of the termination of the insurance.

7.14. The insurance premium is not refundable:

7.14.1. if the Assured has notified the Insurer of stay in safe port later then stipulated by item 7.12

of these Rules;

7.14.2. if the vessel stay in safe port makes less than 30 (thirty) consecutive days;

7.14.3. in case of total loss of the vessel in the period of insurance, except for the cases when the

contract of insurance is concluded according to item 3.3.2. of these Rules;

7.14.4. if in the period of insurance there were losses payable according to the contract of

insurance.

8. INTRODUCTION OF AMENDMENTS AND ADDITIONS TO THE CONTRACT OF

INSURANCE

8.1. Modification of the contract of insurance may by agreement of the parties, unless otherwise

provided by the contract, in case of a substantial change of circumstances from which the parties

proceeded when concluding the contract.

Change of circumstances shall be recognized as substantial, when they have changed to such an

extent that could the parties foreseen it reasonably, the contract would not be concluded at all or

would be concluded on considerably different terms.

8.2. The agreement on the amendment or termination of the contract is made in the same form as the

contract, unless the law, other legal acts, contract or traditional business practices otherwise

require.

8.3. Upon modification of the contract obligations of the parties remain in a modified form.

8.4. In case of modification of the contract of insurance, obligations are deemed to be modified from

the time the agreement of the parties to modify or terminate the contract was made, unless

otherwise follows from the agreement or the nature of the contract amendments.

9. RIGHTS AND DUTIES OF THE PARTIES

9.1. The Insurer shall: 9.1.1. 9.1.1. familiarize the Assured with the content and serve him with one copy of these Rules,

on the basis of which the contract of insurance was concluded;

9.1.2. 9.1.2. in case of the loss occurrence pay an insurance benefit due to the contract date;

9.1.3. 9.1.3. compensate the expenses, incurred by the Assured in case of the loss occurrence in

order to reduce the amount of damages the Insurer is liable for;

9.1.4. 9.1.4. not disclose information about the Assured and his property status, if it does not

contradict the legislative acts of the Russian Federation.

9.2. The Insurer has the right:

9.2.1. to verify the information, provided by the Assured, by any means available, not

contradicting the applicable legislation of the Russian Federation;

9.2.2. to require changes in terms of the contract of insurance or payment of an additional

premium under the circumstances, leading to an increase of risk, in proportion to its

increase;

9.2.3. to terminate the contract of insurance with the onset of the changes, which increases the

risk, if the Assured does not agree to change the terms or refuses to pay an additional

premium;

9.2.4. to terminate the insurance contract after considering the results of the inspection of the

insured vessel;

9.2.5. to demand the recognition of the contract of insurance as invalid and the application of

consequences of invalidity, stipulated by current legislation, in case the Insurer when

concluding the contract of insurance provided to the Insurer knowingly false information

on the object of insurance;

9.2.6. to verify the information, reported by the Assured, by any means available and not

contradicting the legislation of the Russian Federation, including an appropriate expert

examination;

9.2.7. to direct requests to the applicable authorities for the relevant documents and information

confirming the fact and the cause of the loss occurrence;

9.2.8. to defer the payment of insurance benefit before the end of the investigation and / or trial in

case of initiation by the authorized state bodies (applicable authorities of the foreign state)

of criminal case on the facts, having the features of the insured event;

9.2.9. to participate as a third party in the court during the hearing of any case, related to the

occurrence of the insured event;

9.2.10. to refuse to pay an insurance payment in accordance with section 11 of these Rules.

9.3. The Assured shall:

9.3.1. keep to the terms of these Rules and the terms of the contract of insurance;

9.3.2. pay the insurance premium in the amount and terms, determined by the contract of

insurance;

9.3.3. when concluding the contract of insurance, inform the Insurer of all circumstances known

to him, relevant to the assessment of the insurance risk, as well as of all contracts of

insurance, concluded or being concluded in respect of the vessel;

9.3.4. at the request of the Insurer provide the opportunity to the Insurer’s representative to

inspect the insured vessel;

9.3.5. in the period of insurance notify the Insurer immediately of all significant changes in risk,

such as:

- sale of the insured vessel or transfer of the insured vessel on hire basis;

- change, termination or suspension of a class of a vessel;

- change of the flag;

- replacement of the operator;

- voyage delay;

- deviation from the sailing line, stipulated in the contract of insurance;

- sailing out of the navigation area, navigation in ice, wintering of the vessel which has not

been stipulated at the conclusion of the contract of insurance;

- towage of other ships by the insured vessel;

- incidents, that could lead to loss and (or) potential insured event, as well as any

emergency repairs/reconstruction or refit of the vessel, etc.

The cases when the insured vessel makes trial voyages, provides assistance or towing to

vessels in distress, or when it itself is towed by another vessel in the course of the rescue

operation, or when sailing under tow satisfies local customs are not deemed significant

changes in the risk.

9.3.6. cooperate with the Insurer in investigations, including, but not limited to reporting of the

information required, as well as provide the conditions for obtaining any further

information about the event;

9.3.7. inform the Insurer of any legal proceedings, related to the events having features of the

insured event;

9.3.8. independently or at the request of the Insurer take measures, stipulated by the current

legislation, necessary to exercise right of claim against the person guilty of the insured

event, surrender all documents and facts of evidence to the Insurer, give him information,

necessary to exercise right of claim, which has been transferred to the Insurer.

9.4. in case of the occurrence, having features of the insured event, the Assured or his

representative shall:

9.4.1. use reasonable best efforts to avert or minimize losses and also to secure the right of claim

against the guilty party, that is, act as if the vessel was not insured;

9.4.2. in the most expeditious manner possible notify the Insurer of the insured event, that a

representative of the latter has the opportunity to clarify the circumstances of the insured

event and to take part in the salvage and preservation of the insured vessel. In this case,

actions of the Insurer for the salvage and preservation of the vessel are not the basis for the

recognition of the right of the Assured for reimbursement;

9.4.3. if due to an insured event vessel repair is required, notify the Insurer before repair and

provide an opportunity for his representative to inspect damages to the vessel;

9.4.4. coordinate with the Insurer (his representative) time and place of the vessel repair, in case

time and place of repair are not coordinated, the sum of indemnity is to be determined

proceeding from reasonable and expedient repair expenses.

9.5. The Assured has the right:

9.5.1. to demand from the Insurer fulfilment of the contract obligations;

9.5.2. to terminate the insurance contract halfway in accordance with the procedure specified

in the civil legislation of the Russian Federation and these Rules;

9.5.3. to obtain from the Insurer information regarding his financial stability, which is not a trade

secret;

9.6. The contract of insurance may additionally allow for other rights and duties of the parties with

account of particular qualities of the object of insurance.

10. RELATIONSHIP OF THE PARTIES IN CASE OF LOSS OCCURRENCE

10.1. After receiving reports and statements of the event happened the Insurer shall perform the

following steps to establish the happening of an event:

10.1.1. to control the compliance of the information on the event happened, provided by the

Assured in a statement, (time, place, circumstances, events etc.) with the terms of the

contract of insurance and these Rules;

10.1.2. to state the fact and cause of the event, resulted in a loss (on the basis of documents

provided by the Assured or the relevant expert organizations);

10.1.3. to carry out other actions to establish the happening of the event.

10.2. The recoverable amount of the repair cost is considered as the sum of the costs necessary to bring

the vessel to the operating state it was in at the moment of conclusion of the insurance contract,

and costs of the damage repair of separate parts of the vessel shall be compensated without

discount for wear and tear.

10.3. If, as a consequence of a loss, the vessel is compelled to interrupt voyage and to proceed

immediately to the place of repair, the insurance shall cover reasonable and expedient expenses

on trip of the vessel to the place of repair and back. The expenses on trip of the vessel from the

last point of call up to the place of repair shall be covered by the sum exceeding normal costs of

operation for such trip.

10.4. The recoverable amount of repair includes only the charges on clearing and painting of the vessel

parts which were damaged, provided that damage repair is made within 12 months from the

moment of the last painting of the hull.

10.5. The expenses on bringing the vessel in and out of dock or its hoisting and descending with help of

a slip dock as well as costs for the time of usage of dry dock or slip dock shall be included in the

recoverable amount of repair in full, provided that works performed during repair were directed

solely on consequences of the accident insured.

10.6. If repair of the damages, resulted from the event insured, is carried out simultaneously with other

works, the recoverable amount of repair includes 50 % of expenses on bringing the vessel to and

out of the dry dock and its hoisting and descending with help of a slip dock. At the same time,

calculation of recoverable costs for using a dry dock or slip dock is based on the time it would

take to repair the consequences of the event insured, as if such repair was made separately.

10.7. In case of sale of the vessel the Assured has the right for reimbursement of damages, resulted

from the event insured, if the repair of the damaged vessel was not made. The amount of the

reimbursement is determined, proceeding from a reasonable cost of repair that could be made

before the expiry of the term of insurance, but no more than the sum of discount because of the

damages, covered under the terms of insurance. In case of sale of the vessel for scrap the Insured

has no right for reimbursement.

10.8. Reimbursement at a rate of the full-insured sum, but no more than insurable value, shall be paid

in the following cases:

10.8.1. total actual loss of the vessel (the vessel is completely destroyed or irretrievably lost);

10.8.2. the event of vessel missing (no news about the vessel within six months after the latest

news on the vessel, and the latest news on the vessel were obtained before the expiration of

the insurance contract);

10.8.3. total constructive loss of the vessel (restoration or repair of the vessel is economically

inexpedient). The full constructive loss of the vessel is admitted in case the total sum of

expenses on elimination of consequences of the insured event will make not less than 100

% of insurance value of vessel. The sum of expenses on elimination of consequences of the

insured event includes costs necessary to bring the ship to the operating state it was in at

the moment of conclusion of the insurance contract, as well as costs for the salvage and

towage to the place of repair and general average contributions on vessel’s share.

10.8.4. In case of the reimbursement payment in a total actual loss or vessel missing, the

ownership of insured vessel shall pass to the Insurer within the limits of the sum paid. If the latter abandons the property right for the insured vessel, the indemnity shall be paid

with no deduction of residual cost of the insured property.

10.9. All costs connected with the insured event shall be initially paid by the Insured and then be

reimbursed by the Insurer. The insurer, at his own discretion, may pay for services/works directly

to the organizations provided such services or executed such works. Insurance contract may

provide for a different procedure for the payment of expenses related to the insured event.

10.10. For reimbursement the Insured shall document the loss occurrence and provide documents

required by the Insurer for consideration of claims.

11. INSURANCE CLAIM SETTLEMET. CLAIM DENIAL

11.1. Insurance indemnity is sum of money set by the contract of insurance paid by the Insurer to the

Assured upon occurrence of the insured event.

11.2. In case of recognition of the occurrence as an insured event, the insurance indemnity shall be paid

by the Insurer to the Assured in compliance with the contract of insurance on the basis of:

a) insurance claim;

b) claim report;

c) insurance document (policy) and payment documents confirming the conclusion and

payment of the insurance contract;

d) other documents related to the insured event, additionally provided by the Insured at the

Insurer’s request.

11.3. The Insurer within 30 (thirty) working days after the signing of the claim report or the notice of

claim denial, respectively pays out an insurance indemnity or sends the Insured notice of claim

denial.

11.4. If the Insured (Beneficiary) has received compensation for the loss from the third parties, the

Insurer pays only a difference between the sum which was paid under terms of insurance and the

sum received from third parties.

11.5. After payment of insurance indemnity the right of claim, which the Insured (Beneficiary) has

against the person responsible for the damage caused, passes to the Insurer within the limits of the

paid sum. On receipt of the insurance indemnity the Insured (Beneficiary) is obliged to surrender

all documents and proofs available to the Insurer and execute all necessary formalities for

realization of this right.

11.6. If the Insured (Beneficiary) has refused the right of claim against the person responsible for the

damage caused, or realization of this right appears impossible due to his fault (missing terms of

claim application etc.), the Insurer is exempted from the duty to pay respective part of the

insurance indemnity, and, in case the payment has already been made, the Insured (Beneficiary)

shall return to the Insurer the insurance indemnity with the compensatory legislated interests for

use of another’s money , calculated from the date of arrival of funds to the account of the Insured

(Beneficiary).

11.7. The Insurer has the right to refuse payment of indemnity, if the Insured:

11.7.1. reported falsely about the circumstances of substantial significance for the estimation of the

risk insured (item 7.2 and7.3 of these Rules);

11.7.2. did not notify the Insurer of all significant changes in the risk (item 9.3.5 of these Rules ) ;

11.7.3. did not fulfil the duties specified in items 9.4.1 - 9.4.4 of these Rules.

11.8. Decision on claim denial is reported to the Insured in writing, providing argumentation of denial,

in the manner and within the time period specified in item 11.3 of these Rules.

11.9. The refusal of the Insurer to pay the insurance indemnity may be appealed by the Insured to court.

12. DISPUTE RESOLUTION

12.1. Disputes arising in connection with the contract of insurance shall be settled in compliance with

the legislation of the Russian Federation at the Insurer’s location (unless otherwise provided by

the contract of insurance).

12.2. A claim concerning liabilities arising from the contract of insurance can be made within the

limitation period, stipulated by the current legislation of the Russian Federation.

12.3. All other conditions, not specified in these Rules, shall be regulated by the legislation of the

Russian Federation.

Annex A

To the Rules of Hull and Machinery Insurance

ADDITIONAL CONDITIONS

of insurance on the basis of the Institute Time Clauses

(hereinafter - Additional conditions)

While concluding insurance contracts under these Rules the parties may agree upon use of the Institute Time Clauses (one or several).

The below Institute Time Clauses shall apply if a contract (policy) of insurance has a direct

reference to their use, or they are included in the text of the contract of insurance (policy).

Content:

Section 1 Institute Time Clauses Hulls (Cl.280, 01.11.1995);

Section 2 Institute Warranties (Cl.26, 01.07.1976);

Section 3 Institute Cyber Attack Exclusion Clause (Cl.380, 11.10.2003);

Section 4 Institute Radioactive Contamination, Chemical, Biological, Biochemical And

Electromagnetic Weapons Exclusion Clause (Cl.370, 11.10.2003);

Section 5 Electronic Date Recognition Endorsement-C

Section 1 Institute time hull insurance clause (Cl.280, 01.11.1995)

Institute Time Clauses Hulls 1/11/95 Cl. 280 (ITC)

1. Navigation

1.1. The Vessel is covered subject to the provisions of this insurance at all times and has leave to sail

or navigate with or without pilots, to go on trial trips and to assist and tow vessels or craft in distress,

but it is warranted that the Vessel shall not be towed, except as is customary or to the first safe port or

place when in need of assistance, or undertake towage or salvage services under a contract previously

arranged by the Assured and /or Owners and/or Managers and/or Charterers. This Clause 1.1. shall not

exclude customary towage in connection with loading and discharging.

1.2. This insurance shall not be prejudiced by reason of the Assured entering into any contract with

pilots or for customary towage which limits or exempts the liability of the pilots and/or tugs and/or

towboats and/or their owners when the Assured or their agents accept or are compelled to accept such

contracts in accordance with established local law or practice.

1.3. The practice of engaging helicopters for the transportation of personnel, supplies and equipment to

and/or from the Vessel shall not prejudice this insurance.

1.4. In the event of the Vessel being employed in the trading operations which entail cargo loading or

discharging at sea from or onto another vessel (not being a harbour or inshore craft) no claim shall be

recoverable under this insurance for loss of or damage to the Vessel or liability to any other vessel

arising from such loading or discharging operations, including whilst approaching, lying alongside and

leaving, unless previously notice that the Vessel is to be employed in such operations has been given to

the Underwriters and any amended terms of cover and any additional premium required by them have

been agreed.

1.5. In the event of the Vessel sailing (with or without cargo) with the intention of being (a) broken up,

or (b) sold for breaking up, any claim for loss of or damage to the Vessel occurring subsequent to such

sailing shall be limited to the market value of the Vessel as scrap at the time when the loss or damage

is sustained, unless previous notice has been given to the Underwriters and any amendments to the

terms of cover, insured value and premium required by them have been agreed. Nothing in this Clause

1.5. shall affect claims under Clauses 8 and/or 10.

2. Continuation.

Should the Vessel at the expiration of this insurance be at sea and in distress or missing, she shall,

provided notice be given to the Underwriters prior to the expiration of this insurance, be held covered

until arrival at the next port in good safety, or if in port and in distress until the Vessel is made safe, at

a pro rata monthly premium.

3. Breach of Warranty.

Held covered in case of any breach of warranty as to cargo, trade, locality, towage, salvage services or

date of sailing, provided notice be given to the Underwriters immediately after receipt of advices and

any amended terms of cover and any additional premium required by them be agreed.

4. Classification.

4.1. It is the duty of the Assured, Owners and Managers at the inception of and throughout the period

of this insurance to ensure that

4.1.1. the Vessel is classed with a Classification Society agreed by the underwriters and that her class

within that Society is maintained,

4.1.2. and recommendations requirements or restrictions imposed by the Vessel’s Classification

Society which relate to the Vessel’s seaworthiness or to her maintenance in a seaworthy condition are

complied with by the dates required by that Society.

4.2. In the event of any breach of duties set out in Clause 4.1. above, unless the Underwriters agree to

the contrary in writing, they will be discharged from their liability under this insurance as from the

date of the breach provided that if the Vessel is at sea at such date the Underwriters’ discharge from

liability is deferred until arrival at her next port.

4.3. Any incident condition or damage in respect of which the Vessel’s Classification Society might

make recommendations as to repairs or other action to be taken by the Assured, Owners or Managers

must be promptly reported to the Classification Society.

4.4. Should the Underwriters wish to approach the Classification Society directly for information

and/or documents., the Assured will provide the necessary authorisation.

5. Termination.

This Clause 5 shall prevail notwithstanding any provisions whether written typed or printed in this

insurance inconsistent therewith.

Unless the Underwriters agree to the contrary in writing, this insurance shall terminate automatically

at the time of

5.1. change of the Classification Society of the Vessel, or change, suspension, discontinuance,

withdrawal or expiry of her Class therein, or any of the Classification Society’s periodic surveys

becoming overdue unless an extension of time for such survey be agreed by the Classification Society,

provided that if the Vessel is at sea such automatic termination shall be deferred until arrival at her

next port. However where such change, suspension, discontinuance or withdrawal of her Class or

where a periodic survey becoming overdue has resulted from loss or damage covered by Clause 6 of

this insurance or which would be covered b an insurance of the Vessel subject to current Institute War

and Strikes Clauses Hulls - Time such automatic termination shall only operate should the Vessel sail

from her next port without the prior approval of the Classification Society or in the case of a periodic

survey becoming overdue without the Classification Society having agreed an extension of time for

such survey.

5.2. any change, voluntary or otherwise, in the ownership or flag, transfer to new management, or

charter on a bareboat basis, or requisition for title or use of the Vessel, provided that, if the Vessel has

cargo on board and has already sailed from her loading port or is at sea in ballast, such automatic

termination shall if required be deferred, whilst the Vessel continues her planned voyage, until arrival

at final port of discharge if with cargo or at port of destination if in ballast. However, in the event of

requisition for title or use without the prior execution of a written agreement by the Assured, such

automatic termination shall occur fifteen days after such requisition whether the Vessel is at sea or in

port.

A pro rata daily net return of premium shall be made provided that a total loss of the Vessel, whether

by insured perils or otherwise, has not occurred during the period covered by this insurance or any

extension thereof.

6. Perils.

6.1. This insurance covers loss of or damage to the subject-matter insured caused by

6.1.1. perils of the sea rivers lakes or other navigable waters

6.1.2. fire, explosion

6.1.3. violent theft by persons from outside the Vessel

6.1.4. jettison

6.1.5. piracy

6.1.6. contact with land conveyance, dock or harbour equipment or installation

6.1.7. earthquake volcanic eruption or lightning

6.1.8. accident in loading discharging or shifting cargo or fuel

6.2. This insurance covers loss of or damage to the subject-matter insured caused by

6.2.1. bursting of boilers breakage of shafts or any latent defect in the machinery or hull

6.2.2. negligence of Master Crew or Pilots

6.2.3. negligence of repairers or charterers provided such repairers or charterers are not an Assured

hereunder

6.2.4. barratry of Master Officers or Crew

6.2.5. contact with aircraft, helicopters or similar objects, or objects falling therefrom

provided that such loss or damage has not resulted from want of due diligence by the Assured,

Owners, Managers or Superintendents or any of their onshore management.

6.3. Master Officers Crew or Pilots not to be considered Owners within the meaning of this Clause 6

should they hold shares in the Vessel.

7. Pollution Hazard.

This insurance covers loss of or damage to the Vessel caused by any governmental authority acting

under the powers vested in it to prevent or mitigate a pollution hazard or damage to the environment,

or threat thereof, resulting directly from damage to the Vessel for which the Underwriters are liable

under this insurance, provided that such act of governmental authority has not resulted from want of

due diligence by the Assured, Owners or Managers to prevent or mitigate such hazard or damage, or

threat thereof. Master Officers Crew or Pilots not to be considered Owners within the meaning of this

Clause 7 should they hold shares in the Vessel.

8. 3/4th Collision Liability.

8.1. The Underwriters agree to indemnify the Assured for three-fourth 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:

82.1. 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 proportions of each other’s damages as may have been properly allowed in

ascertaining the balance of 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, or threat thereof, 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) or damage to the environment, or threat thereof, save that this exclusion shall not extend

to any sum which the Assured shall pay for or in respect of any salvage remuneration in which the

skill and efforts of the salvors in preventing or minimising damage to the environment as is referred to

Article 13 paragraph 1 (b) of the International Convention on Salvage, 1989 have been taken into

account.

9. Sistership

Should the Vessel hereby insured come into collision with or receive salvage services from another

vessel belonging wholly or in part to the same Owners or under the same management, the Assured

shall have the same rights under this insurance as they would have were the other vessel entirely the

property of Owners not interested in the Vessel hereby insured; but in such cases the liability for the

collision or the amount payable for the services rendered shall be referred to a sole arbitrator to be

agreed upon between the Underwriters and the Assured.

10. General Average and Salvage

10.1. This insurance covers the Vessel’s proportion of salvage, salvage charges and/or general average,

reduced in respect of any under-insurance, but in case of any general average sacrifice of the Vessel

the Assured may recover in respect of the whole loss without first enforcing their right of contribution

from other parties.

10.2. Adjustment to be according to the law and practice at the place where adventure ends, as if the

contract of affreightment contained no special terms upon the subject; but where the contract of

affreightment so provides the adjustment shall be according to the York-Antwerp Rules.

10.3. When the Vessel sails in ballast, not under charter, the provisions of the York-Antwerp Rules,

1994 (excluding Rules XI (d), XX and XXI) shall be applicable, and the voyage for this purpose shall

be deemed to continue from the port or place of departure until the arrival of the Vessel at the first port

or place thereafter other than a port or place of refuge or a port or place of call for bunkering only. If at

any such intermediate port or place there is an abandonment of the adventure originally contemplated

the voyage shall thereupon be deemed terminated.

10.4. No claim under this Clause 10 shall in any case be allowed where the loss was not incurred to

avoid or in connection with the avoidance of a peril insured against.

10.5. No claim under this Clause 10 shall in any case be allowed for or in respect of

10.5.1. special compensation payable to a salvor under Article 14 of the International Convention on

Salvage, 1989 or under any other provision in any statute, rule, law or contract which is similar in

substance;

10.5.2. expenses or liabilities incurred in respect of damage to environment, or the threat such damage,

or as a consequence of escape or release of pollutant substances from the Vessel, or the threat of such

escape or release.

10.6. Clause 10.5. shall not however exclude any sum which the Assured shall pay to salvors for or in

respect of salvage remuneration in which the skill and efforts of the salvors in preventing or

minimising damage to the environment as is referred to in Article 13 paragraph 1 (b) of the

International Convention on Salvage, 1989 have been taken into account.

11. Duties of Assured (Sue & Labour)

11.1. In case of any loss or misfortune it is the duty of the Assured and their servants and agents to

take such measures as may be reasonable for the purpose of averting or minimising a loss which

would be recoverable under this insurance.

11.2. Subject to the provisions below and to Clause 12 the Underwriters will contribute to charges

properly and reasonably incurred by the Assured their servants or agents for such measures. General

average, salvage charges (except as provided for in Clause 11.5.), special compensation and expenses

as referred to in Clause 10.5. and collision defence and attack costs are not recoverable under this

Clause 11.

11.3. Measures taken by the Assured or the Underwriters with the object of saving, protecting or

recovering the subject-matter insured shall not be considered as a waiver or acceptance of

abandonment or otherwise prejudice the rights of either party.

11.4. When expenses are incurred pursuant to this Clause 11 the liability under this insurance shall not

exceed the proportion of such expenses that the amount insured hereunder bears to the value of the

Vessel as stated herein, or to the sound value of the Vessel at the time of the occurrence giving rise to

the expenditure if the sound value exceeds that value. Where the Underwriters have admitted a claim

for total loss and property insured by this insurance is saved, the foregoing provisions shall not apply

unless the expenses of suing and labouring exceed the value of such property saved and then shall

apply only to the amount of the expenses which is in excess of such value.

11.5. When a claim for total loss of the Vessel is admitted under this insurance and expenses have been

reasonably incurred in saving or attempting to save the Vessel and other property and there are no

proceeds, or the expenses exceed the proceeds, then this insurance shall bear its pro rata share of such

proportion of the expenses, or of the expenses in the excess of the proceeds. As the case may be, as

may reasonably be regarded as having been incurred in respect of the Vessel, excluding all special

compensation and expenses as referred to in Clause 10.5.; but if the Vessel be insured for less than its

sound value at the time of the occurrence giving rise to the expenditure, the amount recoverable under

this clause shall be reduced in the proportion to the under-insurance.

11.6. The sum recoverable under this Clause 11 shall be in addition to the loss otherwise recoverable

under this insurance but shall in no circumstances exceed the amount insured under this insurance in

respect of the Vessel.

12. Deductible

12.1. No claim arising from a peril insured against shall be payable under this insurance unless the

aggregate of all such claims arising out of each separate accident or occurrence (including claims

under Clause 8, 10 and 11) exceeds the deductible amount agreed in which case this sum shall be

deducted.

Nevertheless the expense of sighting the bottom after stranding, if reasonably incurred specially for

that purpose, shall be paid even if no damage be found. This Clause 12 shall not apply to a claim for

total loss or constructive loss of the Vessel or, in the event of such a claim, to any associated claim

under Clause 11 arising from the same accident or occurrence.

12.2. Claims for damage by heavy weather occurring during a single sea passage between two

successive ports shall be treated as being due to one accident. In the case of such heavy weather

extending over a period not wholly covered by this insurance the deductible to be applied to the claim

recoverable hereunder shall be the proportion of the above deductible that the number of days of such

heavy weather falling within the period of this insurance bears to the number of days of heavy weather

during the single sea passage. The expression «heavy weather» in this Clause 12.2. shall be deemed to

include contact with floating ice.

12.3. Excluding any interest comprised therein, recoveries against any claim which is subject to the

above deductible shall be credited to the Underwriters in full to the extent of the sum by which the

aggregate of the claim unreduced by any recoveries exceeds the above deductible.

12.4. Interest comprised in recoveries shall be apportioned between the Assured and the Underwriters,

taking into account the sums paid by the Underwriters and the dates when such payments were made,

notwithstanding that by the addition of interest the Underwriters may receive a larger sum than they

have paid.

13. Notice of Claim and Tenders

13.1. In the event of accident whereby loss or damage may result in a claim under this insurance,

notice must be given to the Underwriters promptly after the date on which the Assured, Owners or

Managers become or should have become aware of the loss or damage and prior to survey so that a

surveyor may be appointed if the Underwriters so desire.

If notice is not given to the Underwriters within twelve months of that date unless the Underwriters

agree to the contrary in writing, the Underwriters will be automatically discharged from liability for

any claim under this insurance in respect of or arising out of such accident or the loss or damage.

13.2. The Underwriters shall be entitled to decide the port to which the Vessel shall proceed for

docking or repair (the actual additional expense of the voyage arising from compliance with the

Underwriters’ requirements being refunded to the assured) and shall have a right of veto concerning a

place of repair or a repairing firm.

13.3. The Underwriters may also take tenders or may require further tenders to be taken for the repair

of the Vessel. Where such a tender has been taken and a tender is accepted with the approval of the

Underwriters, an allowance shall be made at the rate of 30% per annum on the insured value for the

time lost between despatch of the invitations to tender required by the Underwriters and the

acceptance of a tender to the extent that such time is lost solely as a result of tenders having been taken

and provided that the tender is accepted without delay after receipt of the Underwriters’ approval.

Due credit shall be given against the allowance as above for any amounts recovered in respect of fuel

and store and wages and maintenance of the Master Officers and Crew or any member thereof,

including amounts allowed in general average, and for any amounts recovered from third parties in

respect of damages for detention and/or loss of profit and/or running expenses, for the period covered

by the tender allowance or any part thereof.

Where a part of the cost of the repair of damage other than a fixed deductible is not recoverable from

the Underwriters the allowance shall be reduced by a similar proportion.

13.4. In the event of failure by the Assured to comply with the conditions of Clauses 13.2. and/or 13.3.

a deduction of 15% shall be made from the amount of the ascertained claim.

14. New for Old

Claims payable without deduction new for old.

15. Bottom Treatment

In no case shall a claim be allowed in respect of scraping gritblasting and /or other surface preparation

or painting of the Vessel’s bottom except that

15.1. gritblasting and/or other surface preparation of new bottom plates ashore and supplying and

applying any «shop» primer thereto,

15.2. gritblasting and/or other surface preparation of:

the butts or area of plating immediately adjacent to any renewed or refitted plating damaged during the

course of welding and/or repairs,

areas of plating damaged during the course of fairing, either in place or ashore,

15.3. supplying and applying the first coat of primer/anti-corrosive to those particular areas mentioned

in 15.1. and 15.2. above,

shall be allowed as part of the reasonable cost of repairs in respect of bottom plating damaged by an

insured peril.

16. Wages and Maintenance

No claim shall be allowed, other than in general average, for wages and maintenance of the Master

Officers and Crew or any member thereof, except when incurred solely for the necessary removal of

the Vessel from one port to another for the repair of damage covered by the Underwriters, or for trial

trips for such repairs, and then only for such wages and maintenance as are incurred whilst the Vessel

is under way.

17. Agency Commission

In no case shall any sum be allowed under this insurance either by way of remuneration of the Assured

for time and trouble taken to obtain and supply information or documents or in respect of the

commission or charges of any manager, agent, managing or agency company or the like, appointed by

or on behalf of the Assured to perform such services.

18. Unrepaired Damage

18.1. The measure of indemnity in respect of claims for unrepaired damage shall be reasonable

depreciation in the market value of the Vessel at the time this insurance terminates arising from such

unrepaired damage, but not exceeding the reasonable cost of repairs.

18.2. In no case shall the Underwriters be liable for the unrepaired damage in the event of a

subsequent total loss (whether or not covered under this insurance) sustained during the period

covered by this insurance or any extension thereof.

18..3. The Underwriters shall not be liable in respect of the unrepaired damage for more than the

insured value at the time this insurance terminates.

19. Constructive Total Loss

19.1. In ascertaining whether the vessel is a constructive total loss, the insured value shall be taken as

the repaired value and nothing in respect of the damage or break-up value of the Vessel or wreck shall

be taken into account.

19.2. No claim for constructive total loss based upon the cost of recovery and/or repair of the Vessel

shall be recoverable hereunder unless such cost would exceed the insured value. In making this

determination, only the cost relating to a single accident or sequence of damages arising from the same

accident shall be taken into account.

20. Freight Waiver

In the event of total or constructive loss no claim to be made by the Underwriters for freight whether

notice of abandonment has been given or not.

21. Assignment

No assignment of or interest in this insurance or in any moneys which may be or become payable

thereunder is to be binding on or recognised by the Underwriters unless a dated notice of such

assignment or interest signed by the Assured, and by the assignor in the case of subsequent

assignment, is endorsed on the Policy and the Policy with such endorsement is produced before

payment of any claim or return of premium thereunder.

22. Disbursements Warranty

22.1. Additional insurances as follows are permitted:

22.1.1. Disbursements, Managers’ Commissions, Profits or Excess or Increased Value of Hull and

Machinery. A sum not exceeding 25% of the value stated herein.

22.1.2. Freight, Chartered Freight or Anticipated Freight, insured for time. A sum not exceeding 25 %

of the value stated herein less any sum insured, however described, under 22.1.1.

22.1.3. Freight or Hire, under contract for voyage. A sum not exceeding the gross freight or hire for the

current cargo passage and next succeeding cargo passage (such insurance to include, if required, a

preliminary and intermediate ballast passage) plus the charges of insurance. In the case of a voyage

charter where payment is made on a time basis, the sum permitted for insurance shall be calculated on

the estimated duration of the voyage, subject to the limitation of two cargo passages as laid down

herein. Any sum insured under 22.1.2. to be taken into account and only the excess thereof may be

insured, which excess shall be the gross amount so advanced or earned.

22.1.4. Anticipated Freight if the Vessel sails in ballast and not under Charter. A sum not exceeding the

anticipated gross freight on next cargo passage, such sum to be reasonably estimated on the basis of

the current rate of freight at time of insurance plus the charges of insurance. Any sum insured under

22.1.2. to be taken into account and only the excess thereof may be insured.

22.1.5. Time Charter Hire or Charter Hire for Series of Voyages. A sum not exceeding 50% of the

gross hire which is to be earned under the charter not exceeding 18 months. Any sum insured under

22.1.2. to be taken into account and only the excess thereof may be insured, which excess shall be

reduced as the hire is advanced or earned under the charter by 50% of the gross amount so advanced

or earned but the sum insured need not be reduced while the total of the sums insured under 22.1.2.

and 22.1.5. does not exceed 50% of the gross hire still to be earned under the charter. An insurance

under this Section may begin on the signing of the Charter.

22.1.6. Premiums. A sum not exceeding the actual premiums of all interests insured for a period not

exceeding 12 months (excluding premiums insured under the foregoing sections, but including, if

required, the premiums or estimated calls on any Club or War etc. Risk insurance) reducing pro rata

monthly.

22.1.7. Returns of Premium. A sum not exceeding the actual returns which are allowable under any

insurance but which would not be recoverable thereunder in the event of a total loss of the Vessel

whether by insured perils or otherwise.

22.1.8. Insurance irrespective of amount against:

Any risk excluded by Clauses 24, 25, 26 and 27 below.

22.2. Warranted that no insurance on any interests enumerated in the foregoing 22.1.1. to 22.1.7. in the

excess of the amounts permitted therein and no other insurance which includes the total loss of the

Vessel P.P.I., F.I.A. or subject to any other like term, is or shall be effected to operate during the

currency of this insurance by or for account of the Assured, Owners, Managers or Mortgagees.

Provided always that a breach of this warranty shall not afford the Underwriters any defence to a claim

by a Mortgagee who has accepted this insurance without knowledge of such breach.

23. Returns for Lay-up and Cancellation

23.1. To returns as follows:

23.1.1. pro rata net for each uncommenced month if this insurance be cancelled by agreement,

23.1.2. for each period of 30 consecutive days the Vessel may be laid up in a port or in a lay-up area

provided such port or lay-up area is approved by the Underwriters

(a) .............................................. per cent net not under repair

(b) ............................................. per cent net under repair.

23.1.3. The Vessel shall not be considered to be under repair when work is undertaken in respect of

ordinary wear and tear of the Vessel and/or following recommendations in the Vessel’s Classification

Society survey, but any repairs following loss of or damage to the Vessel or involving structural

alterations, whether covered by this insurance or otherwise shall be considered as under repair.

23.1.4. If the Vessel is under repair during part only of a period for which a return is claimable, the

return shall be calculated pro rata to the number of days under 23.1.2. (a) and (b) respectively.

23.2. PROVIDED ALWAYS THAT

23.2.1. a total loss of the Vessel, whether by insured perils or otherwise, has not occurred during the

period covered by this insurance or any extent thereof;

23.2.2. in no case shall a return be allowed when the Vessel is lying in exposed or unprotected waters,

or in a port or lay-up area not approved by the Underwriters;

23.2.3. loading or discharging operations or the presence of cargo on board shall not debar returns but

no return shall be allowed for any period during which the Vessel is being used for the storage of cargo

or for lightering purposes;

23.2.4. in the event of any amendment of the annual rate, the above rates of returns shall be adjusted

accordingly;

23.2.5. in the event of any return recoverable under this Clause 23 being based on 30 consecutive days

which fall on successive insurances effected for the same Assured, this insurance shall only be liable

for an amount calculated at pro rata of the period rates 23.1.2. (a) and or (b) above for the number of

days which come within the period of this insurance and to which a return is actually applicable. Such

overlapping period shall run, at the option of the Assured, either from the first day of a period of 30

consecutive days as provided under 23.1.2. (a) or (b) above.

The following clauses shall be paramount and shall override anything contained in this insurance

inconsistent therewith.

24. War Exclusion

In no case shall this insurance cover loss damage liability or expense caused by

24.1. war civil war revolution rebellion insurrection, or civil strife arising therefrom, or any hostile act

by or against a belligerent power

24.2 capture seizure arrest restrain or detainment (barratry and piracy excepted), and the consequences

thereof or any attempt thereat

24.3. derelict mines torpedoes bombs or other derelict weapons of war.

25. Strikes Exclusion

In no case shall this insurance cover loss damage liability or expense caused by

25.1. strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil

commotions

25.2. any terrorist or any person acting from a political motive

26. Malicious Acts Exclusion

In no case shall this insurance cover loss damage liability or expense caused by

26.1 the detonation of an explosive

26.2. any weapon of war

and caused by any person acting maliciously or from a political motive.

27. Radioactive Contamination Exclusion Clause

In no case shall this insurance cover loss damage liability or expense directly or indirectly caused by

or contributed to by or arising from

27.1. ionising radiations from or contamination by radioactivity from any nuclear fuel or from any

nuclear waste or from the combustion of nuclear fuel

27.2. the radioactive, toxic, explosive or other hazardous or contaminating properties of any nuclear

installation, reactor or other nuclear assembly or nuclear component thereof

27.3 any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or

radioactive force or matter.

Section 2 Institute Warranties (Cl.26, 01.07.1976)

1. Warranted no:-

(a) Atlantic Coast of North America, its rivers or adjacent islands,

(i) north of 52° 10' N. Lat. and west of 50° W. Long.;

(ii) south of 52° 10' N. Lat. in the area bounded by lines drawn between Battle

Harbour/Pistolet Bay; Cape Ray/Cape North; Port Hawkesbury/Port Mulgrave and

Baie Comeau/Matane, between 21st December and 30th April both days inclusive.

(iii) west of Baie Comeau/Matane (but not west of Montreal) between 1st December

and 30th April both days inclusive.

(b) Great Lakes or St. Lawrence Seaway west of Montreal.

(c) Greenland Waters.

(d) Pacific Coast of North America its rivers or adjacent islands north of 54°

30' N. Lat., or west of 130° 50' W. Long.

2. Warranted no Baltic Sea or adjacent waters east of 15° E. Long.

(a) North of a line between Mo (63° 24' N. Lat.) and Vasa (63° 06' N. Lat.) between 10th

December and 25th May b.d.i.

(b) East of a line between Viipuri (Vyborg) (28° 47' E. Long.) and Narva (28° 12' E. Long.)

between 15th December and 15th May b.d.i.

(c) North of a line between Stockholm (59° 20'N. Lat.) and Tallinn (59° 24'N. Lat.) between 8th

January and 5th May b.d.i.

(d) East of 22° E. Long, and south of 59° N. Lat. between 28th December

and 5th May b.d.i.

3. Warranted not North of 70° N. Lat. other than voyages direct to or from any port

or place in Norway or Kola Bay.

4. Warranted no Behring Sea, no East Asian waters north of 46° N. Lat.and not to

enter or sail from any port or place in Siberia except Nakhodka and/or Vladivostock.

5. Warranted not to proceed to Kerguelen and/or Croset Islands or south of 50° S.

Lat., except to ports and/or places in Patagonia and/or Chile and/or Falkland Islands, but liberty is

given to enter waters south of 50° S. Lat., if en route to or from ports and/or places not

excluded by this warranty.

6. Warranted not to sail with Indian Coal as cargo:-

(a) between 1st March and 30th June, b.d.i.

(b) between 1st July and 30th September, b.d.i., except to ports in Asia, not West of Aden or

East of or beyond Singapore.

Section 3 INSTITUTE CYBER ATTACK EXCLUSION CLAUSE (CL 380) 10/11/2003

1.1 Subject only to Clause 1.2 below, in no case shall this insurance cover loss damage liability

or expense directly caused by or contributed to by or arising from the use or operation, as a means for

inflicting harm, of any computer, computer system, computer software programme, malicious code,

computer virus or process or any electronic system.

1.2 Where this Clause is endorsed on policies covering risks of war, civil war, revolution,

rebellion, insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent

power, or terrorism or any person acting from a political motive, Clause 1.1. Shall not operate to

exclude losses (which would otherwise be covered) arising from the use of any computer, computer

system computer software programme, or any electronic system in the launch and/o guidance system

and/or firing mechanism of any weapon or missile.

Section 4 INSTITUTE RADIOACTIVE CONTAMINATION, CHEMICAL, BIOLOGICAL,

BIOCHEMICAL AND ELECTROMAGNETIC WEAPONS EXCLUSION CLAUSE

This clause shall be paramount and shall override anything contained in this insurance

inconsistent therewith

1. In no case shall this insurance cover loss damage liability or expense directly or indirectly

caused by or contributed to by or arising from

1.1 ionising radiations from or contamination by radioactivity from any nuclear fuel or

from any nuclear waste or from the combustion of nuclear fuel

1.2 the radioactive, toxic, explosive or other hazardous or contaminating properties of

any nuclear installation, reactor or other nuclear assembly or nuclear component

thereof

1.3 any weapon or device employing atomic or nuclear fission and/or fusion or other like

reaction or radioactive force or matter

1.4 the radioactive, toxic, explosive or other hazardous or contaminating properties of

any radioactive matter. The exclusion in this sub-clause does not extend to

radioactive isotopes, other than nuclear fuel, when such isotopes are being prepared,

carried, stored, or used for commercial, agricultural, medical, scientific or other

similar peaceful purposes

1.5 any chemical, biological, bio-chemical, or electromagnetic weapon.

Section 5 ELECTRONIC DATE RECOGNITION ENDORSEMENT-C

This endorsement shall prevail notwithstanding any provision whether written typed or printed in

this contract inconsistent herewith

1.This contract does not cover loss, damage, liability or expense arising from or in anyway

connected, whether directly or indirectly, with;

(a)the actual or anticipated failure or inability of any computer or electronic device or component

or system or software or embedded programming, whether or not belonging to or in the possession of

the direct Assured;

(ⅰ) correctly and unambiguously to assign any date to the correct day ,week ,year or century.

(ⅱ) correctly to recognise sequence or compute any date which is or is intended to be

beyond 31 December 1998.

(ⅲ) to continue to operate as it would have done had its current date ,the true date and any other

date relevant to any function being carried out by it been prior to 1 January 1999;

(b) the use of any arbitrary, ambiguous or incompletely defined date or date-like code in any

data software or embedded programming;

(c) any measures taken whether preventative remedial or otherwise with the intention of

averting or minimizing any of the above.

2.Notwithstanding 1. (a) and 1. (b) above, this contract shall be extended to include;

(a)loss or damage arising from physical loss of or physical damage to tangible property;

(b) liability for actual or alleged bodily injury;

(c) liability for physical loss of or physical damage to tangible property owned by another

person and resulting loss of use of such physically lost or physically damaged property;

provided that such loss, damage or liability above is within the terms, conditions and exclusions

of the original policy (ies) or contract(s).

3.For the purposes of 2.above, tangible property shall not include;

(a)any data or embedded programming however stored or conveyed;

(b) any computer or electronic device or component or system or software, other than

where such property forms part of an insured cargo or ship’s machinery, which is in any way

connected whether directly or indirectly with loss or damage claimed or from which such loss or

damage arises.

4.This endorsement shall not include loss, damage, liability or expense arising from any contract

solely designed to cover losses arising from any matter referred to in 1. above.