Specialist Operations & Other Risks - Scope of Cover

What can be covered?

Introduction
Specialist operations are contracted works undertaken by the Member that are of such a nature they fall beyond that usually carried out by traditional shipowners. Many specialist operations may result in the interference with the seabed and so potentially may cause damage to property or equipment located on or under the seabed including pipelines, cables and infrastructure such as undersea tunnels.

Rule 17 C of the Club’s Rules sets out a definitive list of what are considered to be specialist operations:

“Dredging, blasting, piledriving, well-intervention, cable or pipelaying, construction, installation or maintenance work, core sampling, depositing of spoil, power generation and decommissioning.”

Scope of Cover
Under its Offshore and Renewable Energy Cover the Club offers additional insurance to Members for their liabilities which arise out of the specialist nature of these operations. The cover sits as an extension of the Member’s normal P&I Rules cover.

Where required, this cover for specialist operations can be integrated with the cover for Extended Contractual Liabilities, so providing a single combined offshore insurance package up to an agreed limit tailored to the individual Member’s contractual needs.

The following example illustrates how the Specialist Operations Cover operates alongside normal P&I Rules cover:

Where a vessel is engaged in dredging and becomes involved in a collision caused by an error in navigation then the claim would fall under normal P&I Rules Cover for RDC risks. However, if the incident occurred because the vessel was unable to adequately manoeuvre to avoid the collision due to the dredging operation then the incident would fall under a specialist operations exclusion as the incident was materially caused by the specialist operation. Any claim would then fall under the Specialist Operations cover.

Divers
Diving operations are similar to specialist operations and so Members who are responsible for the activities of commercial divers from their vessels will require an extended cover, as liabilities from and to divers are excluded risks under normal P&I Rules cover.

Such responsibility would arise where the Member is the employer of the divers, engages a third party to undertake the works on the Member’s behalf or has agreed an indemnity under a contract that assumes

liability for the activities of the divers. If the Member is not responsible for the activities of the divers - for example where the vessel is chartered out and is merely used as a dive platform and the charterer or diving contractor is responsible for the activities of the divers - then normal P&I Rules cover remains in place and additional cover for divers is usually not required.

Members should ensure they have an indemnity from the charterer in respect of liabilities

arising form diving activities. The Club can provide extended insurance for the liability of divers under its Offshore and Renewable Energy Cover for their third party liabilities arising from the diving activities. The Club can also provide cover for liabilities to divers as part of a bespoke package of additional cover.

Mini-submarines, Diving Bells, Saturation Diving Habitats and RoVs
Members will require additional cover for the operation of the above craft, as normal P&I Rules cover excludes liabilities arising from the operation of mini-submarines, diving bells, saturation diving habitats and remotely operated vessels (ROV). This exclusion applies where the Member is actually carrying out the operation of or is responsible for the operation of ROVs or similar underwater equipment. If the vessel is merely providing a platform for such operations and the underwater operation is being

conducted by and at the risk of others then normal P&I Rules cover continues in place and generally no additional cover is required.

If the Member is using their own underwater equipment or is responsible for conducting the underwater operations, then the Club can provide an extension of cover for such activities under our Offshore and Renewable Energy Cover, including any legal obligation to remove the wreck of any lost equipment.

Accommodation units
Accommodation vessels can be covered under normal P&I Rules cover, but it should be noted that under Rule 17 (e) there is no cover for non-crew personnel accommodated on any vessel providing accommodation to an oil or gas facility where either such vessel is located on or about an oil or gas production facility, where there has not been a contractual allocation of risk between the Member and the employer of the personnel on terms approved by the Managers.

Where these criteria are not met then the Club’s Offshore and Renewable Energy Cover can provide protection against the Member’s liability to these non-crew personnel.

It should be noted that a variety of offshore vessels can be used for accommodating personnel and not just accommodation units; the test is whether the entered vessel is actually providing accommodation on or about an oil or gas facility.

Loss of or damage to Contract Works
Contract Works includes the plant, equipment and materials that an owner is contracted to construct or work on. The Club Rules (Rule 17 (c)) exclude claims in respect of loss of or damage to contract works brought by any party for whom the specialist operations are performed. Such damage to contract works is also a standard exclusion under Specialist Operations cover.

This exclusion exists because damage to contract works risks is generally covered by a separate construction risk insurance purchased by the head contracting operator (for whom the Member will be working) - called Contractors All Risks (CAR) Insurance.

It has become the practice of the main contracting operators to pass onto Members the risk for loss of or damage to contract works up to the limit of their CAR deductible. In response to this, the Club can provide cover where the Member is held liable for such risks under the charter party.

War Risks
Normal P&I Rules cover provides P&I war risk cover excess of the hull value, with the primary P&I war risk up to hull value being usually covered by the Hull P&I war underwriters.