American Club Circular No. 31/17 1 DECEMBER 14, 2017 CIRCULAR NO. 31/17 TO MEMBERS OF THE ASSOCIATION Dear Member: WAR AND TERRORISM RISKS: COVER IN RESPECT OF BIOLOGICAL AND BIO-CHEMICAL WEAPONS – 2018 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 2018 policy year. War and terrorism risks For 2018, 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 for $500 million for 2018, the same figure as obtains for the current policy year. Addendum I to this Circular sets out the terms of this excess cover. It will apply 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 because most War Risk Hull and P&I policies contain a biochemical 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 2017) any one event for each vessel. Addendum II to this Circular sets out the terms of this cover. It will apply 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. 31/17 2 United States Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) Both special covers as described above will include liabilities arising from risks as originally defined by the US Terrorism Risk Insurance Act of 2002 (TRIA), reauthorized some three years ago by TRIPRA. For eligible vessels, cover for such risks will be deemed to attract a premium of $0.0025 per GT per annum and be included in the vessel’s overall premium. It should be noted that, under the terms of the extension of the original TRIA provisions to year-end 2020, an industry-wide cap of $100 billion will continue to apply to all claims recoverable on the basis of TRIA/TRIPRA 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. 31/17 3 ADDENDUM I TO CIRCULAR NO. 31/17 DATED DECEMBER 14, 2017 WAR AND TERRORISM RISKS 2018 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 inc