[Federal Register Volume 61, Number 10 (Tuesday, January 16, 1996)]
[Rules and Regulations]
[Pages 1130-1144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-292]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Maritime Administration
46 CFR Part 308
[Docket No. R-164]
RIN 2133-AB23
War Risk Insurance
AGENCY: Maritime Administration.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Maritime Administration (MARAD) is revising its war risk
regulations to remove voluminous forms that may be obtained from MARAD
and to make minor nonsubstantive changes regarding agency organization
and procedure with respect to application for war risk insurance,
payment of premiums and payment for loss claims. This rulemaking is the
result of the President's Regulatory Reinvention Initiative.
EFFECTIVE DATE: January 16, 1996.
FOR FURTHER INFORMATION CONTACT: Edmond J. Fitzgerald, Director, Office
of Subsidy and Insurance, 400 Seventh Street SW, Washington, DC 20590,
Tel. (202)366-2400.
SUPPLEMENTARY INFORMATION: Pursuant to the President's Regulatory
Reinvention Initiative announced on March 4, 1995, which included a
page-by-page review of all regulations, MARAD is amending its war risk
insurance regulations with respect to MARAD's procedures for
application for war risk insurance and the payment of premiums and
claims. It was determined that the existing regulations are cumbersome
and excessive in content because of the inclusion of many lengthy
forms. As revised, the part provides a general description of the
content of the various forms which may be obtained from MARAD.
As authorized by Title XII of the Merchant Marine Act of 1936, as
amended (46 App. U.S.C. 1283), the Secretary may provide war risk
insurance adequate for the needs of the waterborne commerce of the
United States, if such insurance coverage cannot be obtained on
reasonable terms and conditions from companies authorized to conduct an
insurance business in a state of the United States. This U.S.
Government war risk insurance program is a standby emergency program.
It becomes effective simultaneously with the automatic termination of
ocean marine commercial war risk insurance policies. Those policies are
terminated automatically upon the outbreak of war, whether declared or
not, between any of the five great powers (United States, United
Kingdom, France, People's Republic of China or Russia) or upon the
hostile detonation of a weapon of war employing atomic or nuclear
fission and/or fusion or other like reaction or radioactive force or
matter.
This program makes it possible for applicants to obtain war risk
insurance from the U.S. Government when such insurance is unavailable
on reasonable terms and conditions in the commercial market. The
program is mutually beneficial to the United States and to the
shipowner in that it assures continued flow of essential U.S. trade and
protection of the shipowner from loss by risks of war.
While authority to issue war risk insurance expired on June 30,
1995, these amendments to 46 CFR Part 308 are being issued under
MARAD's general rulemaking authority found in 46 App. U.S.C. 1114 in
anticipation that pending legislation will be enacted to reauthorize
the program and in order that there be no unnecessary impairment to the
continuity of this emergency program.
Rulemaking Analyses and Notices
Executive Order 12866 (Regulatory Planning and Review) and DOT
Regulatory Policies and Procedures
This rulemaking is not considered to be an economically significant
regulatory action under section 3(f) of E.O. 12866, and is not
considered to be a significant rule under the
[[Page 1131]]
Department's Regulatory Policies and Procedures (44 FR 11034, February
26, 1979). Accordingly, it was not reviewed by the Office of Management
and Budget. A full regulatory evaluation is not required because the
rule has no mandatory effects and imposes no regulatory costs.
MARAD has determined that this rulemaking presents no substantive
issue which it could reasonably expect would produce meaningful public
comment since it eliminates forms, which are described and may be
obtained from MARAD or its agent, makes other conforming amendments and
reflects MARAD organizational changes. Accordingly, pursuant to the
Administrative Procedure Act, 5 U.S.C. 553(c) and (d), MARAD finds that
good cause exists to publish this as a final rule, without opportunity
for public comment, and to make it effective on the date of
publication.
Federalism
The Maritime Administration has analyzed this rulemaking in
accordance with the principles and criteria contained in Executive
order 12612, and has determined that it does not have sufficient
federalism implications to warrant the preparation of a Federalism
Assessment.
Regulatory Flexibility Act
The Maritime Administration certifies that this rulemaking will not
have a significant economic impact on a substantial number of small
entities.
Environmental Assessment
The Maritime Administration has considered the environmental impact
of this rulemaking and has concluded that an environmental impact
statement is not required under the National Environmental Policy Act
of 1969.
Paperwork Reduction Act
This rulemaking contains an information collection that has been
approved by OMB under 5 CFR part 1320, pursuant to the Paperwork
Reduction Act of 1980 (44 U.S.C. 3501, et seq.). Approval number 2133-
0011 has been assigned to the collection requirement.
List of Subjects in 46 CFR Part 308
Cargo vessels, Maritime carriers, Reporting requirements, War risk
insurance.
Accordingly, 46 CFR part 308 is revised to read as follows:
Part 308--War Risk Insurance
Subpart A--General
Sec.
308.1 Eligibility for vessel insurance.
308.2 Requirements for eligible vessels.
308.3 Applications for insurance; warranties; supporting documents;
payment of binder fees.
308.4 [Reserved]
308.5 Voluntary contract of commitment.
308.6 Period of interim binders, updating application information
and new applications.
308.7 Premiums and payment thereof.
308.8 War risk insurance underwriting agency agreement.
Subpart B--War Risk Hull and Disbursements Insurance
308.100 Insured Amount.
308.101 [Reserved]
308.102 Issuance of interim binder; terms and conditions; fees.
308.103 Insured amounts under interim binder.
308.104 Additional war risk insurance.
308.105 Reporting casualties and filing claims.
308.106 [Reserved]
308.107 War risk hull insurance policy.
Subpart C--War Risk Protection and Indemnity Insurance
308.200 Insured Amount--application
308.201 [Reserved]
308.202 Issuance of interim binder; terms and conditions.
308.203 Amount insured under interim binder.
308.204 Additional war risk protection and indemnity insurance.
308.205 Reporting casualties and filing claims.
308.206 [Reserved]
308.207 War Risk protection and indemnity insurance policy.
Subpart D--Second Seamen's War Risk Insurance
308.300 Insured amount--application.
308.301 [Reserved]
308.302 Issuance of interim binder; terms and conditions.
308.303 Amount insured under interim binder.
308.304 Reporting casualties and filing claims.
308.305 [Reserved]
308.306 Second Seamen's War Risk Policy, Form MA-242.
Subpart E--War Risk Builder's Risk Insurance
308.400 Authority.
308.401 Eligibility for insurance.
308.402 Insurance during vessel construction period.
308.403 Insured amounts.
308.404 Application for insurance.
308.405 Form of application.
308.406 Issuance of policies; terms and conditions.
308.407 Premiums and payment.
308.408 Right of Maritime Administrator to change rate of premium.
308.409 Standard form of War Risk Builder's Risk Insurance Policy,
Form MA-283.
308.410 Reporting casualties and filing claims.
Subpart F--War Risk Cargo Insurance
I--Introduction
308.500 Authority.
308.501 Cargoes on which coverage is available.
308.502 Additional insurance.
308.503 Rate schedules.
308.504 Definition of territories and possessions.
II--Open Policy War Risk Cargo Insurance
308.505 General.
308.506 Application for an open cargo policy.
308.507 Security for payment of premiums.
308.508 Issuance of an open cargo policy.
308.509 Collateral deposit fund.
308.510 Surety bond.
308.511 Cancellation of Open Cargo Policy.
308.512 Declaration of shipments under open cargo policy.
308.513 Payment of premiums and fees.
308.514 Return premium.
308.515 Payment in event of loss.
308.516 Failure to comply with Clause 21.
308.517 Open cargo policy, Form MA-300.
308.518 Standard optional endorsement No. 1, Form MA-300-A.
308.519 Standard optional endorsement No. 2, Form MA-300-B.
308.520 Standard optional endorsement No. 3, Form MA-300-C.
308.521 Application for open cargo policy, Form MA-301.
308.522 Collateral deposit fund, letter of transmittal, Form MA-
302.
308.523 Application for revision of open cargo policy, Form MA-303.
308.524 Application for cancellation of open cargo policy, Form MA-
304.
308.525 Application for decrease in amount of cash collateral fund,
Form MA-305.
308.526 Certificate for repayment of decrease of collateral deposit
fund, Form MA-306.
308.527 Application for return premium, Form MA-307.
308.528 Surety Bond A, Form MA-308.
308.529 Surety Bond B, Form MA-309.
308.530 Letter requesting increase or decrease in amount of Surety
bond, Form MA-310.
308.531 Endorsement of surety bond increasing or decreasing amount
of coverage, Form MA-311.
308.532 Release of surety bond, Form MA-312.
308.533 Closing report, Form MA-313.
308.534 Certificate to be attached to closing report, Form MA-313-
A.
308.535 Certificate to be attached to final closing report, Form
MA-313-B.
308.536 Declaration where failure to comply with Clause 21 was
inadvertent, Form MA-314.
308.537 Effective date of endorsement.
III--Facultative War Risk Cargo Insurance
308.538 General.
308.539 Application.
[[Page 1132]]
308.540 Premiums.
308.541 Issuance.
308.542 Warranty re thirty-day shipments.
308.543 Cancellation.
308.544 Facultative binder, Form MA-315.
308.545 Facultative cargo policy, Form MA-316.
308.546 Standard optional endorsement No. 1-A, Form MA-316-A.
308.547 Application for return premium, Form MA-317.
IV--General
308.548 Standard form of underwriting agency agreement for cargo,
Form MA-318.
308.549 Application for appointment of Cargo Underwriting Agent,
Form MA-319.
308.550 Certificate, Form MA-320.
308.551 War Risk insurance clearing agency agreement for cargo.
308.552 Effective date.
Subpart G--Records Retention
308.600 Records retention requirement.
Authority: Secs. 204, 1202, 1203, 1209, Merchant Marine Act of
1936, as amended (46 App. U.S.C. 1114, 1282, 1283, 1289; 49 CFR
1.66).
Subpart A--General
Sec. 308.1 Eligibility for vessel insurance.
Any vessel within one of the following categories shall be eligible
for insurance, but shall remain eligible only while meeting the
qualifications criteria in one of said categories. An eligible vessel
is not insured unless and until an application is submitted as required
in subpart B, C, or D of this Part 308 and the Maritime Administrator,
Department of Transportation, (Maritime Administrator) Maritime
Administration (MARAD), approves said application.
(a) A vessel registered, enrolled, or licensed under the laws of
the United States of America (United States); any undocumented vessel
owned or chartered by or made available to the United States or any
department or agency thereof; any tug or barge or other watercraft
(documented under the laws of the United States, or undocumented) owned
by a citizen of the United States and used in essential water
transportation; and United States citizen-owned watercraft used in the
fishing trade or industry, except when used exclusively in or for sport
fishing.
(b) Any vessel, other than a vessel described in paragraph (a) of
this section determined by the Maritime Administrator to be engaged in
the national defense or the national economy of the United States and
subject to an unqualified Contract of Commitment with the United States
in a form required by the Maritime Administrator, and which is:
(1) Owned by a United States corporation, or a foreign corporation
in which a majority of the stock is owned and controlled by a citizen
or citizens of the United States, whether direct or through intervening
corporations, foreign or domestic. Where such intervening corporations
are foreign, the ultimate majority ownership and control of the stock
of such corporations must be vested in a citizen or citizens of the
United States as defined in section 1201(d), Merchant Marine Act, 1936,
as amended (46 App. U.S.C. 1281(d));
(2) Owned by a foreign corporation which is not directly or
beneficially owned by a citizen or citizens of the United States, but
which vessel is under a long-term charter or other long-term contract
covering the use of the vessel on terms deemed by the Maritime
Administrator to subject the vessel to United States control in the
event of an emergency. The charterer of such vessel must be either a
citizen or citizens of the United States or a foreign corporation in
which a majority of the stock is owned and controlled by a citizen or
citizens of the United States, whether direct or indirect through
intervening corporations, foreign or domestic. Where such intervening
corporations are foreign, ultimate majority ownership and control of
the stock of such corporations must be vested in a citizen or citizens
of the United States, as defined in 46 App. U.S.C. 1281(d).
(c) Any other vessel, at the sole discretion of the Maritime
Administrator, but only while engaged in a service which has been
determined by the Maritime Administrator to be in the interest of the
national defense or the national economy of the United States. Vessels
in this category are not eligible for war risk insurance interim
binders.
Sec. 308.2 Requirements for eligible vessels.
(a) Restrictions--foreign-flag vessels. Interim insurance is
available on any vessel described in Sec. 308.1 (a) and (b) of this
part, provided application for interim insurance is submitted as
required in subparts B, C, or D of this part 308, and the Maritime
Administrator approves said application: Provided, That only vessels of
Panamanian, Honduran, Bahamian, Republic of the Marshall Islands or
Liberian registry not more than 20 years old will be considered
eligible under Sec. 308.1 (b) of this part for interim insurance,
subject at all times to the determination specified in paragraph (b) of
this section.
(b) Special rules--foreign-flag vessels. For the purpose of
providing interim insurance on vessels described in Sec. 308.1(b), the
Maritime Administrator shall consider the characteristics, employment,
and general management of the vessel. The Maritime Administrator
formally determines that the following vessels are engaged in a service
in the interest of the national defense or the national economy of the
United States and qualify for an interim binder:
(1) Vessels substantially engaged in the foreign commerce of the
United States or which would be required in the event of war or
national emergency;
(2) Tankers of not less than 2,000 deadweight tons;
(3) Dry cargo vessels, including containerships, breakbulk, and dry
bulk vessels;
(4) Heavy lift vessels;
(5) Refrigerated vessels and other classes of ships in short supply
in the United States-flag fleet;
(6) Passenger vessels; and
(7) Other vessels with special capabilities, as determined by the
Maritime Administrator.
(c) Vessel Position Reports. All vessels for which war risk
insurance interim binders have been issued shall file a Vessel Position
Report. The purpose of this report is to inform cognizant U.S. agencies
of vessel arrivals, departures and at-sea locations. Failure to make
required regular reports will cause MARAD to issue a one-time notice of
default. If failure to report continues, MARAD shall cancel the interim
binder for the subject vessel and any insurance attaching thereunder.
MARAD will issue reporting instructions and formats with the binders.
(d) Notice of change in status of vessel after binder issued. Any
breach of the warranty prescribed hereunder as to vessels in all
categories with respect to Department of Commerce Transportation Orders
T-1 and T-2 (44 CFR Parts 401, 402 and 403), as well as the additional
warranties as to vessels in categories (b)(1) and (b)(2) of this
section, with respect to maintenance of eligibility for insurance and
availability of the insured vessels to the U.S. Government in time of
emergency, shall terminate the binders and any insurance attaching
thereunder. In the event of the sale, demise charter, requisition,
confiscation, change of flag, total loss, or any other change in status
which, by the terms of the binder causes the binder to terminate,
prompt notice shall be given in writing to the American War Risk
Agency, 14 Wall Street, New York, N.Y. 10005.
(e) Nature of change in status of other vessels. It is the
intention of the parties that any breach of the warranty as to
operation in the approved service of
[[Page 1133]]
vessels described in Sec. 308.1(c) shall terminate the insurance. In
the event of the sale, demise charter, requisition, confiscation,
change of flag, total loss, any other change in status or change in
operation of the vessel in the approved service prompt notice shall be
given to the American War Risk Agency, 14 Wall Street, New York, N.Y.
10005.
Sec. 308.3 Applications for insurance; warranties; supporting
documents; payment of binder fees.
(a) Application, binder forms. A single application for War Risk
Insurance shall be filed on Form MA-528, specifying the types of
insurance coverages for which the applicant is applying. A single
application may be submitted for several vessels, if the application
identifies each vessel to be insured and the coverage(s) required, by
completing appendices A and B to that form. An interim binder for war
risk insurance coverage, of the types described in subparts B, C and D
of this part, shall be on Form MA-942, which may be obtained from the
American War Risk Agency or from the Office of Subsidy and Insurance.
(b) Warranties--(1) In general. Applications for war risk hull and
protection and indemnity insurance in any eligible category of this
Part 308 shall include a warranty that, at all times during the
effective period of the binder and any insurance attaching thereunder,
the insured vessel, regardless of its nation of registry, will comply
with Department of Commerce Transportation Orders T-1 and T-2 (44 CFR
parts 401, 402, and 403), or any modifications thereof so long as they
remain in force and that the vessel will not be chartered, unless in
accordance with the provisions of Sec. 221.11 and 221.13 of this
chapter, which requirement is applicable to any charter in existence at
the time the applicant applies for insurance.
(2) Vessels described in Sec. 308.1(a). Applications for war risk
insurance on a vessel described in Sec. 308.1(a) shall contain the
warranty that at, and from the date of issuance of the interim binder,
and for and during the term of any insurance attaching thereunder, such
vessel will remain eligible within its category.
(3) Vessels described in Sec. 308.1(b). Applications for war risk
insurance on a vessel described in Sec. 308.1(b) shall contain the
warranties that at all times the vessel will remain eligible within its
applicable category; that the vessel will be made available for use by
the United States pursuant to the signed Contract of Commitment
submitted with the insurance applications, as required by the Maritime
Administration; that the vessel will remain in the approved service;
and that no controlling interest in the vessel shall be transferred by
a subsequent sale or long-term charter, except on the condition that
the successor in interest agrees to be bound by the terms of the
applicant's Contract of Commitment. All instruments transferring any
controlling interest in the vessel, including long-term charter or
merger agreements, shall be submitted to the Maritime Administration
for prior approval.
(4) Vessels described in Sec. 308.1(c). Applications for war risk
insurance on a vessel described in Sec. 308.1(c) shall contain
warranties that the vessel will remain in the approved service and that
any change in flag or service will be reported in advance to the
Maritime Administration for a new determination as to whether the
vessel's service is in the interest of the national defense or the
national economy of the United States. Vessels in this category are not
eligible for war risk insurance interim binders.
(5) Vessel locator filing requirements. Applications for insurance
on vessels in all categories, except tugs and barges and vessels used
exclusively in the fishing trade or industry, described in
Sec. 308.1(a), shall contain a warranty that at all times the vessel
will file reports as required under the U.S. Merchant Vessel Locator
Filing System (USMER) as prescribed in Sec. 308.2(c) of this section.
(c) Filing applications for insurance. All applications for
insurance on a vessel shall be made to the American War Risk Agency, 14
Wall Street, New York, New York 10005, underwriting agent for the
Maritime Administration.
(d) Required submissions with--(1) In general. An application for
insurance on a vessel described in Sec. 308.1(b) shall be accompanied
by:
(i) A contract of commitment, in the form prescribed in Sec. 308.5
of this part. In the event the vessel is determined to be ineligible
under the terms of this part 308, the applicant will be so advised and
the executed contract of commitment and any official foreign government
action or approval will be returned to the applicant by the Maritime
Administration.
(ii) An executed agreement contained in the application for
insurance that any charter or other contract covering the use of the
vessel during the period of the binder or any insurance attaching
thereunder shall be subject to termination or suspension without notice
in the event the United States requires the use of the vessel under the
voluntary contract of commitment submitted by the applicant.
(2) Certification of citizenship. An application for insurance on
such a vessel shall be supported by execution of the citizenship
certification, in the format set out in appendix C to Form MA-528, as
described in paragraph (a) of this section. That certification shall be
required to establish the U.S. citizenship of the majority ownership
and control of the vessel-owning corporation, whether that ownership is
direct or through intervening corporations.
(3) Existing long-term charters. An application for a vessel in
this category which is at the time of application under long-term
charter or other long-term contract, either to the applicant or from
the applicant to a third party, shall be jointly submitted by the owner
and the charterer, and in addition to the other materials required
under this paragraph, shall be accompanied by a copy of the long-term
contract covering the use of the vessel and all addenda thereto,
certified to be full and complete copies (except as to rate of hire or
freight) and a completed appendix C to Form MA-528, establishing the
U.S. citizenship of the majority of the shareholders and control of the
charterer. The charterer shall also furnish to MARAD a certified copy
of any amendment to such charter which may be issued subsequent to the
issuance of any binder of insurance under this Part 308.
(4) Foreign government action or approval. An application for a
vessel in this category also shall be accompanied by a certified copy
of the evidence of any official action or approval required by the
government of the country of registry as a prerequisite to the
execution of a contract of commitment with the United States.
(5) Additional materials. With respect to a vessel in this
category, the applicant shall submit the following additional
materials:
(i) A statement describing the service in which the vessel is
engaged, including a listing of the vessel's voyages and ports of call
during the immediately preceding six (6) month period, indicating the
tonnage and type of cargo carried on such voyages and the reasons why
such service should be deemed to be in the interest of the national
defense or the national economy of the United States;
(ii) Material demonstrating the management and financial
capabilities of the applicant; and
(iii) In the case of a new vessel or a vessel which has not for the
six (6) months immediately prior to the date of
[[Page 1134]]
the application been engaged in the foreign commerce of the United
States, a statement, signed by a responsible company official,
certifying the extent to which the vessel will be engaged in the
foreign commerce of the United States for the six (6) months
immediately following the issuance of any interim binder of insurance
under this part 308.
(e) Requests for changes in binders. All requests for changes in
binders and inquiries relative to the insurance after the interim
binders have been issued shall be directed to the American War Risk
Agency, 14 Wall Street, New York, NY 10005.
(f) Fees. A check payable in U.S. funds to the ``Maritime
Administration, Department of Transportation'' for the total amount of
all binder fees payable by such applicant shall accompany each
application. Binder fees are not returnable.
(g) Availability of Application Forms. Form MA-528 may be obtained
from either the American War Risk Agency (Underwriting Agent), at the
address in paragraph (e) of this section, or the Maritime
Administration, Attention: Director, Office of Subsidy and Insurance,
400 Seventh Street, SW., Washington, DC 20590.
(Approved by the Office of Management and Budget under control
number 2133-0011)
Sec. 308.4 [Reserved]
Sec. 308.5 Voluntary contract of commitment.
Applications for insurance on vessels described in Sec. 308.1(b)
shall be accompanied by a contract of commitment, in triplicate
originals, executed by the owner (or by the owner and the charterer
where required by Sec. 308.3). Contracts of commitment to make the
vessel available to the United States during any period in which
vessels may be requisitioned under section 902 of the Act (46 App.
U.S.C. 1242) shall be submitted on standard contract form which may be
obtained from the American War Risk Agency or MARAD. The effective date
of the contract of commitment will be the effective date of the binder
and will be inserted in the contract of commitment by MARAD.
Sec. 308.6 Period of interim binders, updating application
information and new applications.
(a) All existing interim binders remain in full force and effect
without the necessity of re-application or the payment of additional
fees so long as the Secretary of Transportation's authority to provide
such insurance has been extended and is continuous.
(b) Assureds under interim binders are required to notify the
American War Risk Agency annually, by June 30th, of any change in the
information provided in their original binder applications including,
but not limited to, change of address, vessel name or vessel
characteristics.
(c) New applications for interim binders on U.S.-flag vessels, with
necessary attachments (as specified in S 308.3), as well as checks for
the binder fees prescribed made payable to ``Maritime Administration,
Department of Transportation,'' shall be filed with the American War
Risk Agency, 14 Wall Street, New York, New York 10005. All interim
binders on U.S.-flag vessels shall become effective as of the date of
determination of eligibility by the Maritime Administration.
(d) New applications for interim binders on U.S. citizen-owned or
controlled foreign-flag vessels, with necessary attachments (as
specified in Sec. 308.3), as well as checks for the binder fees
prescribed made payable to ``Maritime Administration, Department of
Transportation,'' shall be filed for review in accordance with
eligibility requirements specified in Sec. 308.2, and mailed to the
American War Risk Agency, 14 Wall Street, New York, New York 10005. All
interim binders on foreign-flag vessels will become effective on the
date the owner's contract of commitment is executed by the Maritime
Administration.
(Approved by the Office of Management and Budget under control
number 2133-0011)
Sec. 308.7 Premiums and payment thereof.
Rate to be fixed promptly upon the happening of the event causing
the American Institute Hull War Risks and Strikes Clauses dated
December 1, 1977 (including Automatic Termination and Cancellation
Provisions) for attachment to American Institute Hull Clauses dated
June 2, 1977 of any war risk policies to become operative and premium
shall be payable within ten days after receipt of notice of the amount
thereof by the assured. Premiums shall be paid to the Underwriting
Agent that issued the binders by check payable to the order of
``Maritime Administration, Department of Transportation.'' In the event
that it is subsequently determined that insurance under interim binders
did not attach, premiums paid will be refunded by the Maritime
Administrator.
Sec. 308.8 War risk insurance underwriting agency agreement.
Standard form MA-355 of underwriting agency agreement applicable
shall be executed by the Maritime Administrator and domestic insurance
companies or groups of domestic insurance companies authorized to do a
marine insurance business in any States of the United States,
appointing such companies or groups of companies as Underwriting Agents
to issue binders and policies covering hull, protection and indemnity,
and Second Seamen's war risk insurance under subparts B, C, and D of
this part. It shall contain provisions including, but not limited to
the appointment of the agent, duties of the agent, books and records,
compensation, standard of performance, indemnification effective date,
amendment and termination, and nondiscrimination.
Subpart B--War Risk Hull and Disbursements Insurance
Sec. 308.100 Insured Amounts.
An applicant for war risk hull insurance shall state the amount of
insurance desired but any payment of claim for damage to or actual or
constructive total loss of the vessel insured shall be made as provided
in Sec. 308.103(a). An applicant desiring disbursements insurance may
at his option obtain such additional insurance but any claim for loss
of disbursements as a consequence of the actual or constructive total
loss of the vessel insured shall be made as provided in
Sec. 308.103(c).
Sec. 308.101 [Reserved]
Sec. 308.102 Issuance of interim binders; terms and conditions; fees.
Upon acceptance of an application, an interim binder in the form
set forth in Sec. 308.106, will be issued and there shall be deemed to
be incorporated therein by references all the terms, conditions, and
warranties contained in the application for war risk hull and
disbursements insurance and the standard war risk hull insurance policy
(set forth in Sec. 308.107), to the same extent as if such application
and policy were made a part of the binder. The binder fee (not
refundable) for U.S.-flag vessels shall be $25 per application for
vessels under 500 gross tons; $100 per application for vessels 500
gross tons or over; and $100 per LASH or similar type barge
application. The binder fee (not refundable) for foreign-flag vessels
shall be $50 per application for vessels under 500 gross tons; $200 per
application for vessels 500 tons or over; and $200 per LASH or similar
type barge application. All fees are payable in U.S. funds by check to
order of the ``Maritime Administration, Department of Transportation.''
[[Page 1135]]
Sec. 308.103 Insured amounts under interim binder.
(a) Valuation. The valuation in the policy for damage to, or actual
or constructive total loss of the vessel insured shall be a stated
valuation (exclusive of National Defense features paid for by the
Government) determined by the Secretary of Transportation which shall
not exceed the amount that would be payable if the vessel had been
requisitioned for title under section 902(a) of the Merchant Marine
Act, 1936, as amended (46 App. U.S.C. 1242(a)) at the time of the
attachment of the insurance under said policy: Provided, however, That
in the case of a construction subsidized vessel, for the period of
insurance prior to requisition for title or use, the valuation so
determined shall be reduced by such proportion as the amount of
construction subsidy paid with respect to the vessel bears to the
entire construction cost and capital improvements thereof (excluding
the cost of national defense features), and for the period of insurance
after requisition for use the valuation so determined shall not exceed
the amount which would be payable under 46 App. U.S.C. 1242(a) in the
case of requisition for title or use: Provided, further, that the
insured shall have the right within sixty days after the attachment of
the insurance under said policy, or within sixty days after
determination of such valuation by the Secretary of Transportation,
whichever is later, to reject such valuation, and shall pay, at the
rate provided for in said policy, premiums upon such asserted valuation
as the insured shall specify at the time of rejection, but such
asserted valuation shall not operate to the prejudice of the Government
in any subsequent action on the policy. In the event of the actual or
constructive total loss of the vessel, if the insured has not rejected
such valuation the amount of any claim therefor which is adjusted,
compromised, settled, adjudged, or paid shall not exceed such stated
amount, but if the insured has so rejected such valuation, the insured
shall be paid as a tentative advance only, 75 per centum of such
valuation so determined by the Secretary of Transportation and shall be
entitled to sue the United States in a court having jurisdiction of
such claims to recover such valuation as would be equal to the just
compensation which such court determines would have been payable if the
vessel had been requisitioned for title under 46 App. U.S.C. 1242(a) at
the time of the attachment of the insurance under said policy:
Provided, however, That in the case of a construction-subsidized
vessel, the valuation determined by the court as such just compensation
for any period of insurance prior to actual requisition for title or
use of the vessel shall be reduced by such proportion as the amount of
construction subsidy paid with respect to the vessel bears to the
entire construction cost and capital improvements thereof (excluding
the cost of national defense features), and for any period of insurance
after actual requisition for use, the valuation determined by the court
shall be the amount which would have been payable under 46 App. U.S.C.
1212 in the case of requisition for title: And provided further, that
in the event of an election by the insured to reject the stated
valuation fixed by the Secretary of Transportation and to sue in the
courts, the amount of the judgment will be payable without regard to
any limitations provided by statute, although the excess of any amounts
advanced on account of just compensation that is over the amount of the
court judgment shall be required to be refunded by the insured. In the
event of such court determination, premiums under the policy shall be
adjusted on the basis of the valuation as finally determined and of the
rate provided for in said policy. The ``stated valuation'' of the
vessel insured refers to the vessel as described in Sec. 309.5 of this
chapter.
(b) Insurance risks. Insurance risks covered by the terms of the
standard form of war risk hull insurance policy (Sec. 308.107), except
damage to or actual or constructive total loss of the vessel insured as
set forth in paragraph (a) of this section and loss of disbursements
(limited to consumable and subsistence stores, slop chests, bar stock
and bunker fuel lost as a consequence of the actual or constructive
total loss of the vessel insured) as set forth in paragraph (c) of this
section and identified as disbursements, shall be insured for an amount
not in excess of the ``sum insured'' as referred to in said policy.
(c) Disbursements. Disbursements shall be insured as authorized
under section 1203(c), Title XII, Merchant Marine Act, 1936, as
amended, (46 App. U.S.C. 1283(c)) and shall be limited to consumable
and subsistence stores, slop chests, bar stock and bunker fuel.
Disbursements insurance shall be optional and is insurance additional
to the war risk hull insurance provided under this subpart, and payment
of claim shall be limited to the actual value of the disbursements lost
as a consequence of the actual or constructive total loss of the vessel
insured.
Sec. 308.104 Additional war risk insurance.
Owners or charterers may obtain, on an excess basis, additional war
risk insurance in such amounts as desired and such insurance shall not
inure to the benefit of the Maritime Administrator as underwriter.
Sec. 308.105 Reporting casualties and filing claims.
All casualties occurring after insurance under a binder has
attached shall be reported promptly to the Underwriting Agent that
issued the binder and all claim documents shall likewise be filed with
such Underwriting Agent, but payment of the amounts due in settlement
of claims will be made by the Maritime Administrator.
Sec. 308.106 [Reserved]
Sec. 308.107 War risk hull insurance policy.
Standard Form MA-240, issued by the Maritime Administrator, acting
for the United States, through authority delegated by the Secretary of
Transportation, may be obtained from the American War Risk Agency or
MARAD.
Subpart C--War Risk Protection and Indemnity Insurance
Sec. 308.200 Insured amount--Application.
An applicant for war risk protection and indemnity insurance shall
state the amount of insurance desired but such amount shall not exceed
$750 per gross ton of the Vessel.
Sec. 308.201 [Reserved]
Sec. 308.202 Issuance of interim binder; terms and conditions.
Upon acceptance of an application, an interim binder in form as set
forth in Sec. 308.3 will be issued and there shall be deemed to be
incorporated therein by reference all the terms, conditions, and
warranties contained in the application for war risk protection and
indemnity insurance (set forth in Sec. 308.3) and the standard war risk
protection and indemnity insurance policy (set forth in Sec. 308.207)
to the same extent as if such application and policy were made a part
of the binder. The binder fee (not refundable) shall be $100 per
application for U.S.-flag LASH or similar type barges; $25 per
application for all other U.S.-flag vessels; $200 per application for
foreign-flag LASH or similar type barges; and $50 per application for
all other foreign-flag vessels. All fees are payable in U.S. funds by
check to the order of ``Maritime Administration, Department of
Transportation.''
[[Page 1136]]
Sec. 308.203 Amount insured under interim binder.
The amount insured shall be the amount stated in the application,
but not in excess of $750 per gross ton of the vessel.
Sec. 308.204 Additional war risk protection and indemnity insurance.
Owners or charterers may obtain, on an excess basis, additional war
risk protection and indemnity insurance in such amounts as desired and
such insurance shall not inure to the benefit of the Maritime
Administrator, as underwriter.
Sec. 308.205 Reporting casualties and filing claims.
All casualties occurring after insurance under a binder has
attached shall be reported promptly to, and all claim documents filed
with the Office of Subsidy and Insurance, Maritime Administration,
Department of Transportation, Washington, DC, 20590.
Sec. 308.206 [Reserved]
Sec. 308.207 War risk protection and indemnity insurance policy.
The standard form of war risk protection and indemnity insurance
policy, Form MA-241, may be obtained from the American War Risk Agency
or MARAD.
Subpart D--Second Seamen's War Risk Insurance
Sec. 308.300 Insured amount--application.
An applicant for Second Seamen's war risk insurance shall not state
the amount of insurance desired, which shall be as provided in
Sec. 308.303.
Sec. 308.301 [Reserved]
Sec. 308.302 Issuance of interim binder; terms and conditions.
Upon acceptance of an application, an interim binder in form as set
forth in Sec. 308.3 will be issued and there shall be deemed to be
incorporated therein by reference all the terms, conditions, and
warranties contained in the application for Second Seamen's war risk
insurance (set forth in Sec. 308.3) and the Second Seamen's War Risk
Policy (1955) (set forth in Sec. 308.306) to the same extent as if such
application and policy were made a part of the binder. The binder fee
(not refundable) shall be $75 per application for U.S.-flag vessels and
$150 per application for foreign-flag vessels. All fees are payable in
U.S. funds by check to the order of ``Maritime Administration,
Department of Transportation.''
Sec. 308.303 Amounts insured under interim binder.
The amounts insured are the amounts specified in the Second
Seamen's War Risk Policy (1955) or as modified by shipping articles,
collective bargaining agreements or other applicable employment
agreements which are in effect as of the date of a casualty involving
the subject vessel. Upon the attachment of this binder, the number of
crew members and modified benefits payable as of that date shall be
declared immediately to the Underwriting Agent that issued the binder.
Any subsequent changes shall be likewise declared.
Sec. 308.304 Reporting casualties and filing claims.
All casualties occurring after insurance under a binder has
attached shall be reported promptly to, and all claim documents filed
with, the Maritime Administration, Attention: Director, Office of
Subsidy and Insurance, Washington, DC 20590.
Sec. 308.305 [Reserved]
Sec. 308.306 Second Seamen's War Risk Policy, Form MA-242.
(a) The standard form of Second Seamen's War Risk Policy Form MA-
242, may be obtained from the American War Risk Agency or MARAD.
Subpart E--War Risk Builder's Risk Insurance
Sec. 308.400 Authority.
The Secretary of Transportation has delegated authority to the
Maritime Administrator to perform the functions vested in the Secretary
of Transportation by Title XII of the Merchant Marine Act, 1936, as
amended. The Maritime Administrator, pursuant to a finding by the
Secretary under section 1202(a) of the Act authorized, (46 App. U.S.C.
1982(a)) has authorized the issuance of war risk insurance on American
vessels under construction in shipyards in the United States.
Sec. 308.401 Eligibility for insurance.
A vessel is eligible for insurance if it is an American vessel as
defined in section 1201(a), Title XII of Merchant Marine Act, 1936, as
amended, (46 App. U.S.C. 1281) being constructed in a shipyard within
the United States.
Sec. 308.402 Insurance during vessel construction period.
(a) Prelaunching period. This period is from the date and time the
first material destined for inclusion as part of the vessel becomes at
risk at the shipyard of the builder to the date and time the vessel
first becomes water-borne after launching.
(b) Postlaunching period. This period is from the date and time the
vessel first becomes water-borne after launching to the date and time
of delivery of the vessel by the builder.
(c) Portions of periods. A vessel may be insured for a portion of
either period as cited in paragraph (a) or (b) of this section at the
sole discretion of the Maritime Administrator.
Sec. 308.403 Insured amounts.
(a) Prelaunching period. The amount insured during this period will
be the cost of material destined for inclusion as a part of the vessel
at risk at the shipyard of the builder, plus the cost of labor, other
direct charges, overhead, and profit not exceeding 10 percent, all as
determined from the builder's records.
(b) Postlaunching period. The amount insured during this period
will be: (1) An amount not in excess of the difference in amount
between the total amount of war risk insurance obtainable from
companies authorized to do an insurance business in a State of the
United States and the contract price of the vessel plus the cost of the
materials and equipment furnished by the owner and not included in such
contract price, or (2) an amount not in excess of the contract price of
the vessel plus the cost of materials and equipment furnished by the
owner and not included in the contract price: Provided, That no war
risk insurance is obtainable from companies authorized to do an
insurance business in a State of the United States.
(c) Maximum liability. The amount of any claim for damage to or the
total or constructive total loss of the vessel adjusted, compromised,
settled, adjudged or paid shall not exceed the amount insured:
Provided, That the amount payable hereunder shall not exceed the
maximum sum which the Maritime Administrator, as Underwriter, is
authorized to pay under any applicable Acts of Congress: Provided,
further, That where MARAD is an Excess Underwriter, the amount payable
under this insurance for damage to or the total or constructive total
loss of the vessel, after all sums due and payable under primary and
excess insurance written by commercial Underwriters have been
exhausted, shall be the balance, if any, of said claims.
Sec. 308.404 Application for insurance.
Application for insurance shall be made to the Maritime
Administration, Attention: Director, Office of Subsidy
[[Page 1137]]
and Insurance, Washington, DC 20590. The applications shall be signed
by all parties to be named as assureds, unless they have filed with the
Director, Office of Subsidy and Insurance, written designations of a
broker or brokers to act for them, in which case the applications may
be signed by such broker or brokers.
Sec. 308.405 Form of application.
Applications shall be submitted in duplicate and may be obtained
from the American War Risk Agency or MARAD.
Sec. 308.406. Issuance of policies; terms and conditions.
Upon acceptance of an application, a policy in the form specified
in Sec. 308.409 will be issued with endorsements MA-283(A) and MA-
283(D), or MA-283(B) and MA-283(D), or MA-283(C), and MA-283(D), as
appropriate.
Sec. 308.407 Premiums and payment.
For the prelaunching period premium will be charged on the average
value at risk during each calendar month or the daily pro rata part
thereof for periods of less than one calendar month. For the
postlaunching period premium will be charged on the amount insured for
the full period. Premiums shall be due and payable within thirty days
after receipt by the Assured of notice of the amount thereof and if not
paid within that period the insurance shall become null and void and of
no effect from the beginning of the period for which the premium charge
is made unless the Maritime Administrator agrees otherwise. Payment
shall be made to the Maritime Administration, Department of
Transportation, Washington, DC 20590, by check payable to the order of
``Maritime Administration, Department of Transportation.''
Sec. 308.408 Right of Maritime Administrator to change rate of
premium.
The Maritime Administrator, acting for the Secretary of
Transportation, shall have the right to change the rate of premium at
any time, and unless the revised rate of premium is accepted in writing
by the Assured within fifteen days after receipt by the Assured of
notice of the revised rate, the policy shall become null and void and
of no effect as of midnight, Standard Time, at the location of the
shipyard on the fifteenth day after receipt of said notice. Premium at
the revised rate shall be payable for the fifteen-day period during
which the insurance remained in force unless the Assured, within such
period, dispatches notice to the Maritime Administration by telegraph
of his refusal to accept such revised rate of premium, in which event
premium at the revised rate shall be payable for that portion of the
fifteen-day period prior to dispatch of such notice. Upon the dispatch
of such notice of non-acceptance the insurance shall terminate.
Sec. 308.409 Standard form of War Risk Builder's Risk Insurance
Policy, Form MA-283.
The standard form of War Risk Builder's Risk Insurance Policy, Form
MA-283 may be obtained from the American War Risk Agency or MARAD.
Sec. 308.410 Reporting casualties and filing claims.
Casualties shall be reported promptly to, and all claims documents
filed with MARAD, Attention, Director, Office of Subsidy and Insurance,
Washington, D.C. 20590.
Subpart F--War Risk Cargo Insurance
I--INTRODUCTION
Sec. 308.500 Authority.
The Secretary of Transportation has delegated authority to the
Maritime Administrator to perform the functions vested in the Secretary
by Title XII of the Merchant Marine Act, 1936, as amended, which
authority includes the insurance set forth in this Subpart, as provided
under section 1203(b) of the Act (46 App. U.S.C. 1283(b)). For the
purposes of this Subpart F--War Risk Cargo Insurance, the terms
``cargo'' and ``cargoes'' as used herein shall include loaded or empty
containers located aboard U.S.-flag and foreign-flag vessels insured
under Title XII, Merchant Marine Act, 1936, as amended. Cargo war risk
insurance will be written under either an open policy or a facultative
policy in accordance with the provisions of this subpart.
Sec. 308.501 Cargoes on which coverage is available.
The Maritime Administrator will be prepared to provide marine
insurance against loss or damage by the risks of war under approved
clauses on shipments of cargoes coming within one or more of the
following categories:
(a) Shipped or to be shipped on any American vessel, as defined in
section 1201(a) of the Merchant Marine Act, 1936, as amended (46 App.
U.S.C. 1281(a));
(b) Shipped or to be shipped on any foreign flag vessels owned by
citizens of the United States;
(c) Owned by citizens or residents of the United States, its
Territories or possessions;
(d) Imported to, or exported from, the United States, its
Territories or possessions, under contracts of sale or purchase by the
terms of which the risk of loss by war risks or the obligation to
provide insurance against such risks is assumed by or falls upon a
citizen or resident of the United States, its Territories or
possessions;
(e) Sold or purchased by citizens or residents of the United
States, its Territories or possessions, under contracts of sale or
purchase by the terms of which the risk of loss by war risks or the
obligation to provide insurance against such risks is assumed by or
falls upon a citizen or resident of the United States, its Territories
or possessions;
(f) Shipped between ports in the United States, or between ports in
the United States and its Territories and possessions, or between ports
in such Territories or possessions; and
(g) Shipped or to be shipped on any foreign flag vessels, whether
or not owned by citizens of the United States, if such vessels are
engaged in transportation in the water-borne commerce of the United
States or in such other transportation by water or such other services
as may be deemed by the Maritime Administrator to be in the interest of
the national defense or the national economy of the United States, when
so engaged.
Sec. 308.502 Additional insurance.
The assured may place increased value or additional insurance in
other markets beyond the amount of insurance provided by the Maritime
Administrator, but such insurance must be non-participating with the
Maritime Administrator's coverage, and without benefit of salvage or
right of contribution.
Sec. 308.503 Rate schedules.
Rate schedules published by the Maritime Administrator may be
obtained from an underwriting agent. All rate schedules are subject to
change by the Maritime Administrator at any time without notice. If no
rate is published for a voyage on which war risk coverage is available,
the Maritime Administrator will name a rate through an underwriting
agent upon application.
Sec. 308.504 Definition of territories and possessions.
Whenever reference is made to the territories and possessions of
the United States in this subpart or in any supplement thereto or any
policy of insurance issued pursuant to the provisions thereof, said
territories and possessions shall be deemed to include only the Virgin
Islands of the United States, the Commonwealth of Puerto
[[Page 1138]]
Rico, American Samoa, Guam, Wake Island, Midway Islands, and the Panama
Canal Zone.
II--OPEN POLICY WAR RISK CARGO INSURANCE
Sec. 308.505 General.
The Maritime Administrator is prepared to provide an open cargo war
risk insurance policy covering any cargoes described in Sec. 308.501.
The policy will be in the standard form of War Risk Open Cargo Policy,
Form MA-300, prescribed in Sec. 308.517. All policies will be issued by
underwriting agents appointed by the Maritime Administrator. All
underwriting agents will be domestic insurance companies authorized to
do a marine insurance business in a State of the United States.
Sec. 308.506 Application for an open cargo policy.
Application for an Open Cargo Policy shall be made by filing Form
MA-301, prescribed in Sec. 308.521, with an underwriting agent of the
Maritime Administration. The application shall state the applicant's
name and address; the person or persons to whom loss shall be payable;
the nature and geographic scope of the shipments to be covered under
the policy which shall not be broader than the coverage authorized in
Sec. 308.501; the requested effective date, which shall not be earlier
than the date of the completion of the requirements for the issuance of
the policy; and the basis of valuation to be incorporated in the
policy. An applicant may specify one basis of valuation for imports and
another for exports, and he may specify different bases of valuation
for different commodities or voyages, provided that each basis of
valuation specified by the applicant shall define the value by the use
of facts which existed prior to the date of the shipment and which are
readily ascertainable by either party after the safe arrival or loss of
the shipment.
Sec. 308.507 Security for payment of premiums.
Clause 21 of the policy requires the assured to maintain with the
Maritime Administrator a collateral deposit fund or a surety bond, to
secure the payment of the premiums, in an amount which shall at all
times exceed the unpaid premiums on all risks which have attached under
the policy. The minimum amount of the fund or of the surety bond shall
be $1,000. Clause 21 also provides that, within seven (7) days from the
time knowledge comes to the assured that the amount of the deposit or
the surety bond is insufficient to meet the requirements of Clause 21,
the assured shall deposit additional collateral or increase the surety
bond in an amount not less than double the amount of such
insufficiency, and for a sum which shall be a multiple of $500. If the
assured fails to increase the deposit or the surety bond within the
seven (7) day period, the policy automatically becomes void at the end
of the seven (7) day period except as to risks which have attached
prior to that date. The procedure for establishing a collateral deposit
fund is prescribed in Sec. 308.509, and the procedure for posting and
maintaining a surety bond is prescribed in Sec. 308.510. An application
for the issuance of an open cargo policy shall be ineffective unless a
collateral deposit fund is established and maintained, or a surety bond
is posted and maintained, in accordance with the provisions of this
section and Secs. 308.509 and 308.510.
Sec. 308.508 Issuance of an open cargo policy.
(a) Time. The underwriting agent will issue an Open Cargo Policy
within (15) days after the completion by the applicant of the
requirements set forth in Secs. 308.506 and 308.507 unless the time for
issuance is extended by the Maritime Administrator in writing. The
underwriting agent may not make any Open Cargo Policy effective with
respect to shipments attaching on a date earlier than the date when the
application was completed, but he may make it effective on the date of
the completion of the application or any date thereafter requested by
the applicant.
(b) Numbering. Each Open Cargo Policy supplied to the underwriting
agent by the Maritime Administrator shall be numbered by the Maritime
Administration before it is supplied to the underwriting agent. No two
numbers shall be the same. The underwriting agent when issuing the
policy shall add at the end of the policy number the agency number
assigned to that underwriting agent, and where policies are issued by
more than one office of an underwriting agent, the issuing office shall
also be identified in the policy number. For example, policies issued
by an office in New York will be designated by ``NY'' and policies
issued in San Francisco will be designated by ``SF'' prefixed to the
underwriting agent's agency number.
Sec. 308.509 Collateral deposit fund.
(a) Requirements. An assured electing to use a cash collateral
deposit fund pursuant to Sec. 308.507 shall comply with the provisions
of this section and Clause 21 of the Open Cargo Policy, Form MA-300,
prescribed in Sec. 308.517.
(b) Cash or Government bonds. To establish a collateral deposit
fund the applicant shall deposit with the underwriting agent a check
payable to the order of the ``Maritime Administration, Department of
Transportation'' for the amount of the fund, or United States
Government bonds having a par value at the time of deposit of the
amount of the fund, which shall be a multiple of $500 but not less than
$1,000, together with a letter of transmittal executed by the applicant
on Form MA-302, prescribed in Sec. 308.522. Upon receipt of the
deposit, the underwriting agent shall assign it a serial number and
transmit it to the Maritime Administration, Attention: Director, Office
of Financial Management, Washington, DC 20590. It is the responsibility
of the assured to make sure that this deposit fund is sufficient at all
times to cover the premiums payable on all risks which have attached
under the policy, so as to prevent the termination of the insurance
under the provisions of Clause 21.
(c) Overdue premiums. Pursuant to Clause 20, if the assured fails
to pay any premium when it becomes due and payable, he thereby breaches
the policy and it automatically ceases to insure any shipments which
would otherwise have attached after the expiration of fifteen (15) days
following the due date of the premium, unless within the fifteen (15)
day period the premium has been paid and the assured has otherwise
complied with the requirements of the policy, including the filing of
the closing report required by Clause 19 and the payment of the
reinstatement fee of $25 required by Clause 20. If the assured fails to
pay the premium within the fifteen (15) day period, the Maritime
Administrator may deduct from the assured's collateral deposit fund all
amounts due.
(d) Increase in amount of collateral as required by Clause 21. If
the assured fails to deposit additional collateral in the fund within
seven (7) days from the time knowledge comes to the assured that the
amount of collateral is insufficient to meet the requirements of Clause
21, the policy shall be void except as to risks which have attached
prior to the expiration of the seven (7) day period.
(e) Changes in amount of collateral. The assured may increase or
decrease the amount of the collateral deposit fund by amounts of not
less than $500 or multiples thereof, provided that the amount of the
fund shall not be less than the amount required by Clause 21, or the
required minimum of $1,000, whichever is greater. The effect of any
change in the amount of the collateral deposit shall be the sole
responsibility
[[Page 1139]]
of the assured, and the permission granted by this paragraph to change
the amount of collateral in the fund shall in no manner relieve the
assured of the responsibility imposed by Clause 21.
(f) Increase of collateral. To increase the amount of the
collateral on deposit in the fund, the assured shall transmit to the
underwriting agent on Form MA-302, prescribed in Sec. 308.522, a check
payable to the order of the ``Maritime Administration, Department of
Transportation'' or United States Government bonds having a par value
at the time of deposit of not less than the amount of the requested
increase. The increase shall become effective upon the date of the
receipt of the application and check or bonds by the underwriting
agent, as shown on Form MA-302.
(g) Decrease of collateral. To decrease the collateral deposit
fund, the assured shall file with the underwriting agent an application
on Form MA-305, prescribed in Sec. 308.525. The decrease shall become
effective upon the date of the receipt of the application by the
underwriting agent as shown on Form MA-305.
(h) Refund of collateral. Whenever the assured becomes entitled to
a refund of the collateral deposit, in whole or in part, by reason of a
request for a partial return of such collateral, or the cancellation of
the policy and the payment in full of all premiums then or thereafter
due, or the waiver by the Maritime Administrator of the requirements of
maintaining the collateral deposit fund because the assured is a
department or agency of the United States or is acting on behalf of
such a department or agency, or the substitution of a surety bond in
the place and stead of the collateral deposit fund, as provided in
Sec. 308.510(j), the Maritime Administrator will refund to the assured
the amount of the collateral deposit to which the assured is entitled;
provided, however, that the repayment of such collateral shall not be
made by the Maritime Administrator until the assured has filed a
closing report and paid in full all premiums with respect to all
shipments which had attached at the time of the receipt by the
underwriting agent of the application for the refund, Form MA-305, and
a certificate executed in duplicate on Form MA-306, prescribed in
Sec. 308.526, and, in the event of the substitution of a surety bond
for the collateral deposit fund, the receipt by the underwriting agent
of the surety bond properly executed, in accordance with Sec. 308.510.
Sec. 308.510 Surety bond.
(a) Requirements. An assured electing to post a surety bond
pursuant to Sec. 308.507 shall comply with the provisions of this
section and Clause 21 of the Open Cargo Policy, Form MA-300, prescribed
in Sec. 308.517.
(b) Amount of bond. An applicant who wishes to post a surety bond
shall deliver to the underwriting agent a surety bond on Form MA-308,
prescribed in Sec. 308.528, executed by the assured as principal, and
by the surety, in such amount as the assured determines to be necessary
to comply with Clause 21. Such amount shall be a multiple of $500 but
shall not be less than $1,000. Upon receipt of the surety bond, the
underwriting agent shall assign a serial number to it and transmit it
to the Maritime Administration, Attention: Director, Office of
Financial Approvals, Washington, DC 20590. It shall be the
responsibility of the assured to provide that the amount of the bond is
sufficient at all times to cover the premium payable on all risks which
have attached under the policy, so as to prevent the termination of the
insurance under the provisions of Clause 21.
(c) Surety. The sufficiency of the surety executing the bond shall
be subject to approval by the Maritime Administrator. The underwriting
agent may accept on behalf of the Maritime Administrator a surety bond
executed by a surety named on the United States Treasury Department's
approved list of sureties whose bonds are acceptable to the United
States Treasury Department to secure obligations due the United States,
provided the bond is within the maximum amount for which the surety is
so authorized to write bonds as shown by the approved list.
(d) Overdue premiums. Pursuant to Clause 20, if the assured fails
to pay any premium when it becomes due and payable, he thereby breaches
the policy and it automatically ceases to insure any shipments which
would otherwise have attached after the expiration of fifteen (15) days
following the due date of the premium, unless within the fifteen (15)
day period the premium has been paid and the assured has otherwise
complied with the requirements of the policy, including the filing of
the closing report required by Clause 19 and the payment of the
reinstatement fee of $25 required by Clause 20. If the assured fails to
pay the premium within the fifteen (15) day period, all amounts due
shall become a liability collectible under the surety bond and from the
assured.
(e) Increase in amount of bond as required by Clause 21. If the
assured fails to increase the amount of the surety bond within seven
(7) days from the time knowledge comes to the assured that the amount
of the bond is insufficient to meet the requirements of Clause 21, the
policy shall be void except as to risks which have attached prior to
the expiration of the seven (7) day period.
(f) Changes in amount of bond. The assured may increase or decrease
the amount of the surety bond by amounts of not less than $500 or
multiples thereof, provided that the amount of the bond shall not be
less than the amount required by Clause 21, or the required minimum of
$1,000, whichever is greater. The effect of any change in the amount of
the bond shall be the sole responsibility of the assured, and the
permission granted by this paragraph to change the amount of the bond
shall in no manner relieve the assured of the responsibility imposed by
Clause 21.
(g) Increase in amount of bond. To increase the surety bond the
assured shall transmit to the underwriting agent, on Form MA-310,
prescribed in Sec. 308.530, an endorsement duly executed by the assured
and the surety company on Form MA-311, prescribed in Sec. 308.531. The
increase shall become effective upon the date of the receipt of the
endorsement by the underwriting agent as shown on Form MA-311.
(h) Decrease in amount of bond. To decrease the amount of the bond,
the assured shall transmit to the underwriting agent, on Form MA-310,
prescribed in Sec. 308.530, an endorsement duly executed by the assured
and the surety on Form MA-311, prescribed in Sec. 308.531. The decrease
shall become effective upon the date of the receipt of the endorsement
by the underwriting agent as shown on Form MA-311, except as to
shipments which on that date are known or reported to the assured to be
in transit and which have attached under the policy and upon which
premium has not been paid in full.
(i) Termination of bond. Whenever the assured becomes entitled to a
termination of a surety bond by reason of the cancellation of the
policy and the payment in full of all premiums then or thereafter due,
or the waiver by the Maritime Administrator of the requirements of
maintaining the surety bond by an assured which is a department or
agency of the United States or is acting on behalf of such a department
or agency, or the substitution of a collateral deposit fund in the
place or stead of the surety bond, the underwriting agent shall execute
a release on Form MA-312, prescribed in Sec. 308.532. The release shall
be made effective as of:
(1) The effective date of the cancellation of the policy when the
bond is terminated for that reason, or
[[Page 1140]]
(2) The date of the Maritime Administrator's directive waiving the
requirement of a surety bond when the bond is terminated for that
reason, or
(3) The effective date of the establishment of a collateral deposit
fund when the bond is terminated for that reason.
(j) Substitution of bond for collateral deposit. An assured may
substitute a surety bond for a collateral deposit fund by delivering to
the underwriting agent a surety bond on Form MA-309, prescribed in
Sec. 308.529, executed by the assured as principal, and by the surety,
in such amount as the assured determines to be necessary to comply with
Clause 21. Such amount shall be a multiple of $500, but shall not be
less than $1,000. The collateral deposit fund will be refunded to the
assured after the bond has been posted, in accordance with the
provisions of Sec. 308.509(h).
Sec. 308.511 Cancellation of Open Cargo Policy.
An assured may cancel an Open Cargo Policy by delivering to the
underwriting agent, at least fifteen (15) days prior to the requested
date of cancellation, an application for cancellation executed by the
assured on Form MA-304, prescribed in Sec. 308.524, together with the
original policy. The policy shall be cancelled as of the effective date
requested in the application, which, unless otherwise agreed by the
Maritime Administrator in writing, shall not be a date earlier than
fifteen (15) days following the date of the receipt of the application
as acknowledged by the underwriting agent on Form MA-304, with respect
to all risks that have not attached prior to said effective date. Such
cancellation shall not relieve the assured of the obligation to file
closing reports with respect to all risks which attached prior to the
effective date of the cancellation and to pay all unpaid premiums.
Within four (4) months of the effective date of cancellation, unless
otherwise agreed by the Maritime Administrator in writing, the assured
must file a closing report in duplicate on Form MA-313, prescribed in
Sec. 308.533, of all shipments covered by the policy for which closing
reports have not been previously filed. The assured shall mark this
closing report ``Final Closing Report on Cancellation of Policy'', and
file a certificate on Form MA-313-B, prescribed in Sec. 308.535,
executed by the assured in duplicate. Thereafter, when all unpaid
premiums have been paid, the assured will become entitled to a refund
of the collateral deposit, or cancellation of the surety bond in
accordance with Secs. 308.509 and 308.510. If the assured has lost or
mislaid the original policy and is unable to produce it for
cancellation, the assured shall execute a letter of indemnity and such
other documents as may be required by the Maritime Administrator.
Sec. 308.512 Declaration of shipments under open cargo policy.
(a) Closing report. (1) The assured shall file with the
underwriting agent, not later than the twenty-fifth day of each month,
a closing report for all inward shipments and a closing report for all
outward shipments, and pay the premium and fees, for all shipments
covered during the preceding calendar month, as required by Clause 19.
Each closing report shall be filed in duplicate on Form MA-313,
prescribed in Sec. 308.533, supported by a certificate executed by the
assured on Form MA-313-A, prescribed in Sec. 308.534. If the assured
has no shipments to report during any calendar month, the closing
report, Form MA-313, shall, nevertheless, be filed with one or both of
the following statements, depending upon their applicability, noted
thereon certifying that:
(i) No inward shipment coming within the scope of this policy
arrived at destination during the preceding calendar month, and that
during the preceding calendar month no knowledge has come to the
assured of an inward shipment covered under the terms of the policy
which will not arrive by reason of loss, frustration or other similar
cause,
(ii) No outward shipment coming within the scope of this policy was
made during the preceding calendar month, and
(iii) Whenever a sea passage is made with respect to cargo covered
under the policy by a barge or sailing vessel the assured shall note
that fact upon the closing report, unless the Maritime Administrator
otherwise agrees.
(2) An assured reporting for one calendar month shall not include
therein a report of a shipment due to be reported in the report for the
next succeeding calendar month. Thus, the report of January closing
shipments filed in February does not include February closings.
(b) Inward shipments. The closing report covering inward shipments
shall include:
(1) All such shipments which have arrived at the port of
destination during the preceding calendar month, and
(2) All such shipments with respect to which inability to so arrive
by reason of loss, frustration, or other similar causes has come to the
knowledge of the assured during the preceding calendar month.
(c) Outward shipments. The closing report covering outward
shipments shall include all such shipments which attached under the
policy during the preceding calendar month.
(d) Definition of inward and outward shipments. A shipment will be
classified as an inward shipment or as an outward shipment by reference
to the geographical location of the assured with respect to the
movement of the shipment. The address of the assured as stated in the
application filed by him for the policy shall be deemed to be the
assured's geographical location for the purpose of determining whether
the shipment is inward or outward. To illustrate, if an assured has
stated in his application that his address is in Hawaii, the assured's
shipments of goods from the United States to Hawaii would be classified
as inward, and his shipments from Hawaii to the United States would be
classified as outward. Any shipments that cannot be classified as
inward or outward under this definition shall be treated as inward
shipments for the purposes of the declaration.
(e) Supplemental closing report. If an assured files a closing
report and thereafter discovers that one or more additional shipments
should have been included in the report, then, even though the assured
has executed the certificate on Form MA-313-A, prescribed in
Sec. 308.534, or Form MA-313-B, prescribed in Sec. 308.535, in
connection with the closing report, the assured must nevertheless amend
the closing report by filing a supplemental closing report supported by
an appropriate certificate. The supplemental closing report must be
accompanied by a statement in writing signed by the assured giving the
reasons for the omission of such shipments from the original closing
report. If the Maritime Administrator finds that the failure to file
the complete closing report was either inadvertent or unintentional or
arose by reason of causes beyond the control of the assured, the
otherwise automatic termination of the policy by reason of a breach of
the warranty embodied in Clause 20 shall be avoided pursuant to the
provisions of Clause 23.
Sec. 308.513 Payment of premiums and fees.
The assured shall pay the premium, when his closing report is
filed, for all shipments shown on his closing report for the preceding
month, at the rates prescribed by the Maritime Administrator and in
effect on the date of the ocean bill of lading, or if an ocean
[[Page 1141]]
bill of lading was not issued, on the date of the equivalent shipping
document, or if no ocean bill of lading or equivalent shipping document
was issued, or if such documents were undated, on the date the goods
were laden on the overseas vessel, as required by Clause 19. All
payments of premium or fees must be made by check or money order
payable to the order of the ``Maritime Administration, Department of
Transportation.''
Sec. 308.514 Return premium.
No premium will be returned to the assured with respect to a
shipment of goods that attached under the policy except where there was
a declaration of value at variance with Clause 8, or an error in the
application of a rate or in the computation of a premium, or the
insured goods were short-shipped. An application for the return of a
premium shall be made on Form MA-307, prescribed in Sec. 308.527, filed
in duplicate with the Underwriting Agent who will transmit it to the
Maritime Administrator for payment.
Sec. 308.515 Payment in event of loss.
All claims for losses shall be filed by the assured with the
Underwriting Agent who issued the policy. Such claims must be supported
by the customary documents required in connection with war risk
insurance claims, together with appropriate declarations as required by
Clause 9, and such further data as may now or hereafter be required by
the Maritime Administrator.
Sec. 308.516 Failure to comply with Clause 21.
(a) If the assured willfully fails to maintain a collateral deposit
fund or a surety bond in an amount sufficient to meet the requirements
of Clause 21, the policy becomes void from the date the fund or bond
was first insufficient, but, if the assured's failure was inadvertent,
the policy may be reinstated when the assured complies with Clause 21,
and shows to the satisfaction of the Maritime Administrator that his
failure was inadvertent and not willful. If the failure was in fact
inadvertent, the assured shall file a declaration on Form MA-314,
prescribed in Sec. 308.536, executed in duplicate, with the
Underwriting Agent within seven (7) days from the time knowledge comes
to the assured of the insufficiency of the collateral deposit fund or
surety bond unless the time for filing such declaration is extended by
permission of the Maritime Administrator. If the space provided in the
declaration, Form MA-314, for an explanation of the circumstances
whereby the assured first had knowledge that the collateral was not
sufficient, the assured shall attach to the declaration a detailed
statement and include the same by reference in the declaration.
(b) If any policy becomes void by reason of the failure of the
assured to deposit additional collateral or increase the amount of its
surety bond under the provisions of Clause 21, the Maritime
Administrator reserves the right to refuse to issue another policy to
such assured for a period of 90 days.
Sec. 308.517 Open cargo policy, Form MA-300.
The standard form of War Risk Open Cargo, Form MA-300, may be
obtained from the American War Risk Agency or MARAD.
Sec. 308.518 Standard optional endorsement No. 1, Form MA-300-A.
Standard Optional Endorsement No. 1, which may be obtained from the
American War Risk Agency or MARAD, limits the amount payable for the
loss of goods to the actual bona fide pecuniary loss to the Assured,
exclusive of any allowance for anticipated or accrued profit arising
out of the insured venture. An Assured may elect to have his Open Cargo
Policy endorsed with Standard Optional Endorsement No. 1 applicable on
all shipments, or on all outward shipments, or on all inward shipments,
or on named commodities except goods sold by the Assured prior to
loading on board the overseas vessel and shipped for the account and at
the risk of third persons other than a branch subsidiary or affiliate
of the Assured. When an Assured has elected to have Standard Optional
Endorsement No. 1 made applicable to certain named commodities he may
not change to a different basis of valuation for those commodities
until after he has given ninety (90) days written notice to the
Maritime Administrator through the Underwriting Agent of his election
to make the change. Application for Standard Optional Endorsement No. 1
may be made to the Underwriting Agent which is authorized to issue the
endorsement without prior approval of the Maritime Administrator.
Sec. 308.519 Standard optional endorsement No. 2, Form MA-300-B.
Standard Optional Endorsement No. 2, which may be obtained from the
American War Risk Agency or MARAD, amends the policy to cover shipments
made to the Assured or shipped by the Assured as agent for the account
and risk of a principal. Application for Standard Optional Endorsement
No. 2 may be made to the Underwriting Agent, which is authorized to
issue the endorsement without prior approval of the Maritime
Administrator.
Sec. 308.520 Standard optional endorsement No. 3, Form MA-300-C.
Standard Optional Endorsement No. 3, which may be obtained from the
American War Risk Agency or MARAD, amends the policy to include
shipments of diamonds for industrial purposes, or rubies or sapphires,
natural or synthetic, used for instruments or watch jewels imported to
the Continental United States (excluding Alaska). Application for
Standard Optional Endorsement No. 3 may be made to the Underwriting
Agent, which shall transmit it to the Maritime Administrator for
approval or disapproval of the issuance of the endorsement.
Sec. 308.521 Application for open cargo policy, Form MA-301.
The standard form of application for a War Risk Open Cargo Policy
may be obtained from the American War Risk Agency or MARAD.
Sec. 308.522 Collateral deposit fund, letter of transmittal, Form MA-
302.
The standard form of letter of transmittal for use in establishing
a collateral deposit fund, may be obtained from the American War Risk
Agency or MARAD.
Sec. 308.523 Application for revision of open cargo policy, Form MA-
303.
An application for the revision of an Open Cargo Policy shall be
filed in duplicate with the Underwriting Agent on a form which may be
obtained from the American War Risk Agency or MARAD.
Sec. 308.524 Application for cancellation of open cargo policy, Form
MA-304.
The standard form of application for cancellation of an Open Cargo
Policy Form MA-304 may be obtained from the American War Risk Agency or
MARAD.
Sec. 308.525 Application for decrease in amount of cash collateral
fund, Form MA-305.
Application for decrease in the amount of the cash collateral
deposit fund shall be made on Form MA-305, which may be obtained from
the American War Risk Agency or MARAD.
Sec. 308.526 Certificate for repayment of decrease of collateral
deposit fund, Form MA-306.
The standard form of certificate for repayment of the amount of the
decrease of the collateral deposit fund, Form MA-306, may be obtained
from the American War Risk Agency or MARAD.
[[Page 1142]]
Sec. 308.527 Application for return premium, Form MA-307.
An application for the return of premium, which may be obtained
from the American War Risk Agency or MARAD, shall be filed in duplicate
with the Underwriting Agent on Form MA-307.
Sec. 308.528 Surety Bond A, Form MA-308.
The Standard Form of Surety Bond A, Form MA-308, which may be
obtained from the American War Risk Agency or MARAD, shall be used by
an Assured who elects to post a surety bond as security for payment of
the premiums pursuant to Clause 21 of the policy:
Sec. 308.529 Surety Bond B, Form MA-309.
An Assured who elects to substitute a surety bond for a collateral
deposit fund shall submit Form MA-309, which may be obtained form the
American War Risk Agency or MARAD.
Sec. 308.530 Letter requesting increase or decrease in amount of
surety bond, Form MA-310.
An endorsement increasing or decreasing the amount of the surety
bond, Form MA-310, shall be transmitted to the underwriting agent and
may be obtained from the American War Risk Agency or MARAD.
Sec. 308.531 Endorsement of surety bond increasing or decreasing
amount of coverage, Form MA-311.
The Standard Form of Endorsement which shall be used in increasing
or decreasing the amount of a surety bond, Form MA-311, may be obtained
from the American War Risk Agency or MARAD.
Sec. 308.532 Release of surety bond, Form MA-312.
The Standard Form of Release of Surety bond, Form MA-312, may be
obtained from the American War Risk Agency or MARAD.
Sec. 308.533 Closing report, Form MA-313.
This form, which may be obtained from the American War Risk Agency
or MARAD, shall be filed in duplicate with the Underwriting Agent not
later than the 25th day of each month.
Sec. 308.534 Certificate to be attached to closing report, Form MA-
313-A.
The standard form of Certificate to be attached to the closing
report, Form MA-313-A, may be obtained from the American War Risk
Agency or MARAD and shall be filed each month.
Sec. 308.535 Certificate to be attached to final closing report, Form
MA-313-B.
The Standard Form of Certificate, Form MA-313-B, shall be attached
to the final closing report after cancellation of the policy, and may
be obtained from the American War Risk Agency or MARAD.
Sec. 308.536 Declaration where failure to comply with Clause 21 was
inadvertent, Form MA-314.
An Assured that fails inadvertently to maintain a collateral
deposit fund or surety bond in an amount sufficient to meet the
requirements of Clause 21 of the Policy shall file this Declaration,
Form MA-314, which may be obtained from the American War Risk Agency or
MARAD.
III--FACULTATIVE WAR RISK CARGO INSURANCE
Sec. 308.538 General.
The Maritime Administrator is prepared to provide facultative war
risk insurance policies covering any cargoes described in Sec. 308.501
which are designated by an applicant prior to the attachment of risks,
if the applicant does not have an Open Cargo Policy issued by the
Maritime Administrator, or if he has a shipment which is not covered by
his Open Cargo Policy. However, a person with regular shipments is
urged to avail himself of the advantages of the automatic coverage of
an Open Cargo Policy. The Maritime Administrator reserves the right to
decline to quote rates or bind insurance on shipments of cargo that
could be covered by an Open Cargo Policy unless the applicant can show
to the satisfaction of the Maritime Administrator that the risk is not
one of a series of similar risks forming part of a continual flow of
business for the applicant. The policy will be in the standard form of
War Risk Facultative Cargo Policy, Form MA-316, prescribed in
Sec. 308.545. All policies shall be issued by Underwriting Agents
appointed by the Maritime Administrator. All Underwriting Agents shall
be domestic insurance companies authorized to do a marine insurance
business in a State of the United States.
Sec. 308.539 Application.
(a) Preliminary request. Application for a Facultative Cargo Policy
shall be made by filing a preliminary request in writing (including
telegram) with an Underwriting Agent of the Maritime Administration,
setting forth the following information:
(1) The name and address of the applicant;
(2) The amount of insurance requested;
(3) The commodity and quantity to be insured;
(4) The voyage to be covered;
(5) The name of the vessel upon which the cargo will be shipped, if
known, the name of the steamship line, if known, and the date of
shipment, if the applicant is submitting the request to bind war risk
in writing; for security reasons, if the applicant is submitting the
order to bind war risk insurance by telefax, neither the name of the
vessel nor the name of the steamship line nor the anticipated date of
sailing, should be mentioned. Mentioning such information in a telefax
may result in a denial of insurance to the applicant. Any envelope
transmitting a letter containing such information shall be marked
``confidential.''
(b) Binder. Before the insurance can be bound, the applicant shall
provide the Underwriting Agent with a properly prepared binder on Form
MA-315 prescribed in Sec. 308.544. The binder must be submitted in
duplicate, accompanied by check or Money Order payable to the order of
the Maritime Administration, Department of Transportation'' for the
full amount of the premium computed on the amount to be insured at the
rate set by the Maritime Administrator. Any application for facultative
cargo war risk insurance received by an Underwriting Agent later than 4
p.m. (Local War Time) shall be considered the next day's business.
(c) Optional loss limits clause. Clause 9 of the standard form of
facultative cargo policy, Form MA-316, prescribed in Sec. 308.545,
limits the amount payable for loss to the fair market value at the
place and approximate time of the attachment of risk, plus the cost of
marine insurance, transportation and expenses incident thereto, and war
risk insurance with respect to the lost or damaged goods, or if it is
impossible to determine the fair market value at place and time of
attachment of risk, the fair market value at the designated port of
arrival on the date of the attachment of the risk, plus the cost of
marine insurance, transportation and expenses incidental thereto, and
war risk insurance with respect to the lost or damaged goods, or if the
goods had been purchased prior to loading, the actual amount paid or
payable to the seller for the goods less all discounts, plus the cost
of marine insurance, transportation and expenses incidental thereto,
and war risk insurance with respect to the lost or damaged goods. In
lieu of these loss limits, the Assured by so specifying in his
application, and the binder may have attached to the policy when issued
Standard Optional Endorsement No. 1-A, Form MA-316, prescribed in
Sec. 308.546, which limits the amount payable for loss to the actual
bona fide
[[Page 1143]]
pecuniary loss to the Assured, exclusive of any allowance for
anticipated or accrued profits arising out of the insured venture.
Sec. 308.540 Premiums.
(a) Rates. Rate Schedules for war risk facultative cargo insurance
will be published by the Maritime Administrator from time to time, and
may be obtained from an Underwriting Agent. All Rate Schedules are
subject to change by the Maritime Administrator without notice. If no
rate is published for a voyage on which war risk facultative cargo
insurance is available, the Maritime Administrator will name a rate
through an Underwriting Agent upon application. Whenever an applicant
for war risk facultative cargo insurance receives a definite rate
quotation and desires to bind insurance at the quoted rate, an order to
bind the insurance in accordance with the procedure set forth in this
subpart should be submitted within two business days following the day
of quotation accompanied by check or Money Order payable to the order
of ``Maritime Administration, Department of Transportation'' for the
full amount of the premium thereon computed on the amount to be insured
at the rate set by the Maritime Administrator, or the quotation will
expire.
(b) Return premium. Where goods are short-shipped, the amount of
insurance may be reduced by an amount computed by applying to the
original amount of insurance the proportion which the quantity of
merchandise short-shipped (i.e., bales, barrels, tons, and other
designations of quantity) bears to the total quantity of merchandise
originally declared for insurance. Where more than one class of
merchandise is insured under one policy (e.g., fuel, oil and gasoline)
the reduced amount of insurance must be computed separately on each
item. Where the amount of insurance is reduced, the Maritime
Administrator will give consideration to requests for proportionate
returns of premium. An application for the return of a premium must be
submitted to the Underwriting Agent in quadruplicate on Form MA-317,
prescribed in Sec. 308.547.
Sec. 308.541 Issuance.
(a) Binder. The Underwriting Agent is authorized to issue a
facultative policy in Form MA-316, prescribed in Sec. 308.545, when
there has been presented to him a properly prepared binder on Form MA-
315, prescribed in Sec. 308.544, together with the payment of the
premium as required, and such policy shall be issued as soon as
possible after the binder form has been presented to the Underwriting
Agent. Prior to the issuance of the policy, the Underwriting Agent is
authorized to accept the risk on behalf of the Maritime Administrator
by signing the binder. The Maritime Administrator will provide each
Underwriting Agent with a supply of facultative policies which shall
not be valid until countersigned by the Underwriting Agent. The
Underwriting Agent shall keep a permanent record of all such policies
and the Assured to whom the policy is issued.
(b) Numbering. Each Facultative Cargo Policy supplied to the
Underwriting Agent by the Maritime Administrator shall be numbered by
the Maritime Administration before it is supplied to the Underwriting
Agent. No two numbers shall be the same. The Underwriting Agent when
issuing the policy shall add at the end of the Policy number the agency
number assigned to that Underwriting Agent, and where policies are
issued by more than one office of an Underwriting Agent the issuing
office shall also be identified in the policy number. For example, the
policies issued by an office in New York will be designated ``NY'' and
policies issued in San Francisco will be designated by ``SF'' prefixed
to the Underwriting Agent's agency number.
Sec. 308.542 Warranty re thirty-day shipments.
If, after an effective binding of war risk insurance on a shipment
of cargo, the assured believes that it will be impossible to comply
with the warranty requiring the goods to be shipped and in transit
within thirty days from the effective date of binding, such an assured
may apply to the Maritime Administrator, through the Underwriting
Agent, to modify the warranty. If the Maritime Administrator is
satisfied that an extension of time within which the goods are
warranted to be shipped and in transit should be granted, he will do
so, but additional premium may be charged in the discretion of the
Maritime Administrator.
Sec. 308.543 Cancellation.
Facultative war risk insurance is not subject to cancellation by
the Assured unless the goods are not shipped within thirty days
following the effective date of binding, and then only if the policy is
returned for cancellation.
Sec. 308.544 Facultative binder, Form MA-315.
The standard form of War Risk Facultative Cargo Binder, which may
be obtained from the American War Risk Agency of MARAD, shall be
completed by the applicant and submitted, in duplicate, to an
Underwriting Agent before the insurance can be bound.
Sec. 308.545 Facultative cargo policy, Form MA-316.
The standard form of War Risk Facultative Cargo Policy, Form MA-
316, may be obtained from the American War Risk Agency or MARAD.
Sec. 308.546 Standard optional endorsement No. 1-A, Form MA-316-A.
Standard Optional Endorsement No. 1-A limits the amount payable for
the loss of goods to the actual bona fide pecuniary loss to the
Assured, exclusive of any allowance for anticipated or accrued profit
arising out of the insured venture. (Similar provisions for Open Cargo
Policies are contained in Standard Optional Endorsement No. 1, Form MA-
300-A, prescribed in Sec. 308.518.) Application for Standard Optional
Endorsement No. 1-A shall be made to the Underwriting Agent at the time
application is made for the policy. The Underwriting Agent is
authorized to issue the endorsement without prior approval of the
Maritime Administrator. This form may be obtained from the American War
Risk Agency or MARAD.
Sec. 308.547 Application for return premium, Form MA-317.
An application for the return of premium must be filed in duplicate
with the Underwriting Agent on Form MA-317, which may be obtained from
the American War Risk Agency or MARAD.
IV--GENERAL
Sec. 308.548 Standard form of underwriting agency agreement for cargo,
Form MA-318.
This form, which may be obtained from the American War Risk Agency
or MARAD, is the standard form of underwriting agency agreement
applicable with respect to agreements executed by the Maritime
Administrator and domestic insurance companies authorized to do a
marine insurance business in any State of the United States, appointing
such companies as Underwriting Agents to issue war risk cargo policies
in accordance with the provision of the agreement and this subpart.
Sec. 308.549 Application for appointment of Cargo Underwriting Agent,
Form MA-319
Any domestic insurance company authorized to do a marine insurance
business in any State of the United States may apply for appointment as
a Cargo Underwriting Agent by submitting to the Maritime
[[Page 1144]]
Administrator a letter and Form MA-399, which may be obtained from the
American War Risk Agency or MARAD.
Sec. 308.550 Certificate, Form MA-320.
Wherever any provision of this subpart, or any amendment thereto,
requires the Assured to make a declaration or certification under the
penalties of perjury, and the form of the declaration or certificate is
not prescribed, the Assured may execute a certificate on Form MA-320-A
for an individual, on Form MA-320-B for a partnership, or on Form MA-
320-C for a corporation, which forms may be obtained from the American
War Risk Agency or MARAD.
Sec. 308.551 War Risk insurance clearing agency agreement for cargo,
Form MA-321.
The standard form of clearing agency agreement, Form MA-321, shall
be executed by the Maritime Administrator and domestic insurance
companies, or groups of domestic insurance companies authorized to do a
marine insurance business in any State of the United States, appointing
such companies or groups of companies as clearing agents, which form
may be obtained from the American War Risk Agency or MARAD.
Sec. 308.552 Effective date.
This subpart shall be effective as and when the Maritime
Administrator finds that war risk cargo insurance adequate for the
needs of the waterborne commerce of the United States cannot be
obtained on reasonable terms and conditions from companies authorized
to do an insurance business in a State of the United States.
Subpart G--Records Retention
Sec. 308.600 Records retention requirement.
The records specified in Secs. 308.8, 308.517, and 308.548 of this
part shall be retained until a release is granted by the MARAD, at
which time MARAD will take custody of the records.
Dated: January 4, 1996.
By Order of the Maritime Administration.
Joel Richard,
Secretary, Maritime Administration.
[FR Doc. 96-292 Filed 1-11-96; 2:00 pm]
BILLING CODE 4910-81-P
