American Club Circular No. 08/12 1 FEBRUARY 02, 2012 CIRCULAR NO. 08/12 TO MEMBERS OF THE ASSOCIATION Dear Member: WAR AND TERRORISM RISKS: COVER IN RESPECT OF BIOLOGICAL AND BIO-CHEMICAL WEAPONS – 2012 POLICY YEAR This Circular describes the arrangements which have been made to provide special cover for war and terrorism risks, and cover in respect of biological and bio-chemical weapons for the 2012 policy year. War and Terrorism Risks For 2012, cover for war and terrorism risks will remain available from the Club in accordance with the relevant proviso to Rule 3.1.1 of the Rules of Class I. This cover will apply in excess of an insured vessel’s proper hull value, or $100 million, whichever is the less, and will be $500 million for 2012, the same figure as obtains for the current policy year. Addendum I to this Circular sets out the terms of this excess cover which will be applicable to all vessels insured on fully mutual conditions in accordance with the Rules of Class I into the cover of which these terms will be deemed to be incorporated. Cover in Respect of Biological and Bio-Chemical Weapons The International Group of P&I Clubs’ pooling facility to provide cover for certain war and terrorism risks, which are otherwise excluded by reason of most War Risk Hull and P&I policies containing a bio-chemical exclusion, will continue for the forthcoming policy year. The risks covered by virtue of the pooling facility are in respect of a Member’s liability: a. to pay damages, compensation or expenses in consequence of the personal injury to, or illness or death of, any seaman (including diversion expenses, repatriation and substitute expenses and shipwreck unemployment indemnity); and b. for the legal costs and expenses incurred solely for the purpose of avoiding or minimizing any other P&I liability arising from a bio-chemical event (other than under Class 1, Rule 2, Section 20, being the “Omnibus Clause”). The limit of cover will be $30 million (the same as for 2011) any one event for each vessel. Addendum II to this Circular sets out the terms of this cover which will be applicable to all vessels insured on fully mutual conditions in accordance with the Rules of Class I, into the cover of which these terms will be deemed to be incorporated. American Club Circular No. 08/12 2 United States Terrorism Risk Insurance Act (TRIA) Both special covers as described above will include liabilities as defined by TRIA. For eligible vessels, cover for TRIA risks will be deemed to attract a premium of $0.0025 per GT per annum and be included in a vessel’s overall premium. It should be noted that under the terms of the extension of TRIA to year-end 2014, an industry-wide cap of $100 billion will apply to all claims recoverable on the basis of TRIA provisions. Should any Member have any questions as to the intention or extent of either special cover described above, the Managers will, as always, be pleased to respond. Yours faithfully, Joseph E.M. Hughes, Chairman & CEO Shipowners Claims Bureau, Inc., Managers for THE AMERICAN CLUB American Club Circular No. 08/12 3 ADDENDUM I TO CIRCULAR NO. 08/12 DATED FEBRUARY 02, 2012 WAR AND TERRORISM RISKS 2012 POLICY YEAR EXCESS COVER It is hereby agreed in accordance with the provisions of Class I, Rule 3, Section 1.1 that cover is extended to include such liabilities, costs and expenses as would be covered under the Rules of the Association but for the exclusion of War and Terrorism Risks as set out in the said