Author: James Swinnen
Date: July 1, 2001
MARINE INSURANCE AND GENERAL AVERAGE
EXCLUSION OF CANCELLATION
OF CHARTER AND LIABILITY
ARISING OUT OF TOWAGE
[Notwithstanding anything to the contrary contained in this
policy, no liability attaches to the Assurer:]
For any loss, damage or expense arising from the
cancellation or breach of any charter, bad debts, fraud of
agents, insolvency, loss of freight hire or demurrage, or as a
result of a breach of any undertaking to load any cargo, or
in respect of the vessel named herein engaging in any
unlawful trade or performing any unlawful act, with the
knowledge of the Assured.
A freights policy containing a similar provision has been held under English
law not to cover loss where the parties did not mutually consent to cancellation of the charter
party, although performance of the charter was rendered impossible by damage which the
vessel sustained from stranding. Jamieson v. Newcastle Steamship Freight Insurance
Association, 2 Q.B. 90, 7 Aspinall's Reports of Maritime Cases 593 (Court of Appeals
For any loss, damage, expense, or claim arising out of or
having relation to the towage of any other vessel or craft,
whether under agreement or not, unless such towage was to
assist such other vessel or craft in distress to a port or place
of safety, provided, however, that this clause shall not apply
to claims under this policy for loss of life or personal injury
to passengers and/or members of the crew of the vessel
named herein arising as a result of towing.
For any claim for loss of life or personal injury in relation to
the handling of cargo where such claim arises under a
contract of indemnity between the Assured and his sub-contractor.
Towage has been held to include delivery of the barge to an apparently safe
berth and in an apparently safe position. Accordingly, a similar provision was held to
exclude losses resulting when the vessel towed two barges and moored them negligently so
that the barges later broke loose from their moorings, drifted into a bridge, and sank. Crain
Bros., Inc. v. Hartford Fire Ins. Co., 149 F.Supp. 663, 1958 AMC 1468 (W.D. Pa. 1957).
A similar provision was held not to exclude coverage for damages resulting
from towage of a sixteen-section tow of logs as the logs were not a "vessel or craft" within
the meaning of the exclusion. Halvorsen v. Aetna Ins. Co., 1954 AMC 1996 (Super. Ct.,
King County, Wash. 1954).
A similar provision in a hull policy was held to exclude coverage for losses
arising when generator failure aboard the tug resulted in both tug and its tow alliding with
an offshore platform. The court also found that coverage had been voided due to a breach
of the implied warranty of seaworthiness. Employers Ins. of Wausa v. International Marine
Towing, 864 F.2d 1224, 1989 AMC 2974 (5th Cir. 1984).
A policy containing a similar provision also carried an endorsement providing
that hte P&I policy "provides Excess Collision and Tower's Liability". The court held tha
this endorsement constituted excess hull coverage, and is not an additional enumerated P&I
risk for collision and tower's liability. Ins. Co. of North America v. Board of Commissioners
of the Port of New Orleans, 733 F.2d 1161, 1985 AMC 1460 (5th Cir. 1984).
Injury to a member of the crew of the tug who was assisting in unloading a
barge was held covered under a provision insuring against liability arising out of towage for
loss of life or personal injury only to passengers and/or members of the crew, since the
unloading was part of the towage operation and one of the duties of the tug's crew members.
Upper Columbia River Towing Co. v. Glens Falls Ins. Co., 179 F.Supp. 705 (D. Ore. 1959).