ADDITIONAL INSURANCES / PART II / Section D - Extended Towage Liabilities / Clause 1

EXTENDED TOWAGE LIABILITIES

This insurance is to indemnify the Assured in respect of liabilities, losses, costs and expenses as would be covered by the Association under Rule 19.14.2 Towage by an Entered Ship^1 2 but where, in the opinion of the Association, the Assured has prejudiced or may have prejudiced such coverage from the Association by virtue of the operation of Rule 19.14.2.2³ and the towage contract failing to conform to the requirements of the Association.

1.1 This insurance excludes liabilities, losses, costs and expenses arising out of:

1.1.1 the towage of rigs, platforms and/or any other offshore structure; and/or

1.1.2 towage contracts subject to the federal or state law of the United States of America.

1.2

In determining whether a towage contract should be approved or when considering whether a towage contract is reasonable, reference is made to paragraph 16 of Appendix V Excluded Losses of the Pooling Agreement of the International Group of P&I Associations [see Extract from 2024 Pooling Agreement quoted below]

16 Towage by an Insured Vessel
Liability for loss of or damage to or wreck removal of a vessel or other floating structure towed by an Insured Vessel or the cargo or other property on such tow (together with costs and expenses associated therewith), save insofar as either
(a) the towage or attempt thereat is made for the purpose of saving or attempting to save life or property at sea, or
(b) the Insured Vessel is towing under a contract approved by the Association in the exercise of a discretion under its Rules, provided that in the exercise of any such discretion the Association shall take account of the following Guidelines ²¹:

(A) Market Forms of Towage Contract under which towage take place
The following contracts are acceptable:
(a) United Kingdom, Netherlands and Scandinavian standard towage conditions;
(b) Towcon and Towhire;
(c) Lloyd’s Open Form of Salvage Agreement (whether or not incorporating SCOPIC);
(d) Supplytime.

(B) Other Acceptable Contracts under which towage takes place
(a) Contracts containing similar exclusions of liability clauses to those in the contracts specified in Guideline (A).
(b) Contracts incorporating a term as between the Insured Owner of the Insured Vessel on the one part, and the owner of the tow and the owners of any cargo or other property on board the tow on the other part, that each shall be responsible for any loss or damage to his own ship, cargo or property, without any recourse whatsoever against the other.
(c) Other contracts where
(i) a term or terms of the contract complying with Guideline (B)(b) is or is likely to be unlawful or unenforceable in whole or in part, and
(ii) the contract does not impose on the Insured Owner any liability to any person arising out of any act, neglect or default of the owner of the tow or any other person; and
(iii) the contract limits the liability of the Insured Owner under the contract or otherwise to the maximum extent possible by law.

(C) Supply Boat Charters
If the Insured Vessel is working under a time charter and there is no contract between the Insured Owner and the owner of the tow, then liability for loss of or damage to or wreck removal of a towed object and/or property on board shall only be covered provided the Association concerned has approved in writing the charter which in their opinion contains:
(a) a clause in terms set out in Guideline (B)(b) above covering the property of sub-contractors of the charterers as well as the property of the charterers themselves, or
(b) a separate clause requiring that all towage be carried out on terms no worse than as provided in Guideline (B)(b); or
(c) it otherwise complies with the requirements of Guideline B(c).

(D) As a general rule, an Association should ensure that, so far as possible, the Insured Owner:
(a) includes in the towage contract, charterparty or other agreement under which the Insured Vessel is employed, a “Himalaya Clause”; or
(b) that the towage contract, charterparty or other agreement under which the Insured Vessel is employed includes a clause specifying that any other contract entered into by the charterer or other contracting party with any other third party shall contain a “Himalaya Clause”.

(a) A Himalaya Clause is a clause stipulating that the servant, agent, or independent contractor employed by the contracting party shall be entitled to the protection and benefit of every right, exemption, limitation, immunity or defence available to that contracting party and that the contracting party is contracting not only on his own behalf but as agent or trustee for such persons.

²¹ Note also that certain towage operations may constitute specialist operations excluded by Appendix V paragraph 18.

¹ For the purposes of this Clause, where the Assured is insured under the Association’s Charterers’ Liability Insurance the reference to Rule 19.14.2 shall include reference to Charterers’ Liability Insurance Clause 14.2 Towage by the Chartered Ship.

² For the purposes of this Clause the term ‘Entered Ship’ shall include a ‘Chartered Ship’ covered under the Association’s Charterers’ Liability Insurance.

³ For the purposes of this Clause, where the Assured is insured under the Association’s Charterers’ Liability Insurance the reference to Rule 19.14.2.2 shall include reference to Charterers’ Liability Insurance Clause 14.2.2.