There is a growing trend for owners and their hull and machinery (H-M) insurers to enter into agreements (known several times as “accessory letters,” prepayment agreements and ancillary agreements) that take place in parallel with LOF and SCOPIC to manage H-M insurers and the owner`s exposure to LOF costs covered by Section 13. In some cases, these ancillary restrictions have a direct or indirect impact on the operation of the SCOPIC clause and therefore have an impact on I.P. insurance. An alternative to the LOF contract, which has increased in recent years, was the use of an LOF with some of the modified conditions or an incidental agreement. The amendments may include the agreement of a cap, which is the highest compensation that salary can be required for recovery operations. Members should always have contracts that could undermine the liability of managers. Members are also reminded that, although the club supports the inclusion of the SCOPIC clause, it should consult with the club when a subsidiary agreement of the LOF is proposed. The club will be able to assess the impact of the ancillary agreement on SCOPIC and explain to members if it contains anything that could affect the P-I coverage. Members are encouraged to contact the club as soon as discussions take place on the ancillary agreements, so that the club can make its contribution at an early stage. The Lloyd`s Free Form Recovery Agreement (LOF) is based on the principle of “no cure, no payment” compensation to Salvor (s) is the type of salvage contract most commonly used for more than 100 years. The Special Compensation P-I Club Clause (SCOPIC) was designed and implemented nearly 20 years ago to encourage recovery in situations where Salvor`s prospects of achieving “healing” and thus “remuneration” were uncertain; Nevertheless, the fact that rescue operations have been carried out could be beneficial to the owner, insurers and society as a whole. Gard P-I is a strong supporter of recovery under standard LOF conditions, including scopic.
The aid is reflected in the Gard rules for ships and MOUs (see Rule 42 and Rule 25 respectively) for which liability applies: this clause has been extensively revised and the “old” LSSA clauses 13, 14 and 15 have been merged into a new clause.