AIMU Updates Pollution Exclusion Clause, Buy-Back Endorsement

July 12, 2011

An amended pollution exclusion clause and buy-back endorsement which retains original coverage while modernizing and clarifying wording has been developed by the American Institute of Marine Underwriters (AIMU). The updated pollution exclusion clause (P&I) and buy-back endorsement A clauses provide coverage for  bodily injury arising from a pollution event, along with loss or damage to cargoes, whether on an insured vessel or on another vessel, and while cargoes are ashore or due to contamination from pumping.

The AIMU decided to revise the original forms, created in 1976, to make them more consistent with modern usage.  For example, the redraft revises the original 1976 description of pollutants which essentially described petroleum and related chemical products and included the concluding phrase “… and all other substances of any kind or nature whatsoever.”

The new language expands the description of pollutants to coincide with the current conception of what constitutes pollution.  The language “all other substances” in the original form was replaced with “other similar substances’” in the new clause  This change was made as industry experts noted that the all-inclusive nature of the original concluding phrase could potentially render the intent of the pollution wording less clear.  In addition, the AIMU kept the general form and design of the buy-back endorsement and retained much of the original wordings. Among the changes, the new endorsement substitutes the word “cargo” wherever the term “cargo or property” appears, clarifying the scope of coverage.

The endorsement still provides coordinated coverage when combined with a specialty watercraft pollution policy. As with all policy forms and clauses developed by AIMU, the new pollution and buy-back clauses are advisory in nature with individual companies making their own decisions as to their use.

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