AP Area cover explained
Ships entered with the UK War Risks Club are insured on a worldwide trading basis. However, certain maritime regions of the world are designated “AP Areas”. These areas are considered much more likely to be affected by war risks and so represent a significantly greater risk to ships that visit them.
The Club’s insurance cover is suspended for any ship that enters or “breaches” the geographical limits of any of these AP Areas. However, a bespoke short term cover can be obtained for the duration of the ship’s visit in that area upon application to the Club’s underwriting team.
The risk in such regions is often volatile. The Club may well determine a region is an AP Area during the course of an existing insurance entry, in which case it will provide seven days’ notice of the impending exclusion by way of a formal circular to Members and their brokers.
Extent of cover
The AP Area system is a reinstatement of standard Club cover albeit subject to additional terms and conditions, most usually a limited time period and an additional premium payable for that period. Further terms may enshrine precautionary measures for which premium discounts have been provided into the terms of cover.
Club underwriters can explain fully the information needed to offer cover on any specific AP Area. However, the basic information needed would be the anticipated times of entering and leaving the AP Area and confirmation of the total insured values for the ship.
Cover is quoted as a percentage of the insured value of the ship for a given time period. The premium generated by such a percentage usually represents the minimum payable, even if the ship departs the area before the cover period expires. Alternatively, such percentage rating can be agreed to apply pro rata for incremental extensions of the insured period.
Dealing with volatile situations
The volatility of these designated regions makes it difficult to give long term indications of terms of cover. The terms are usually confirmed no more than 48 hours ahead of the ship’s “breach” of the geographic limit. The period of cover is also limited usually to seven or fourteen days.
However, the Club appreciates that many operators have to undertake sustained operations in these difficult areas of the world. Therefore longer term covers can be arranged with the Club to maintain cover through the course of such operations or trades. Equally, covers for multiple voyages can be organised as a “block” of cover.
Do you need additional cover for a high risk area?