ALL RISK OIL AND GAS WELL DRILLING TOOL FLOATER FORM (LAND)

 

ALL RISK

OIL AND GAS WELL DRILLING TOOL FLOATER FORM (LAND)

 

 

 

1.             PERILS INSURED

 

This Policy Insures against all risks of direct physical loss of or damage to the insured property from any external cause, except as hereinafter excluded.

 

2.             PROPERTY INSURED

 

Except as hereinafter excluded, this Policy insures oil or gas-well drilling, servicing, work-over or specialty equipment as set out in the attached Schedule, the property of the Insured, or for which the Insured may be legally liable including but not limited to: tools, portable buildings and their contents, machinery, materials, appurtenances, derricks, substructures, drill pipe, drill collars, and other equipment constituting a part thereof, either while being assembled or while assembled and rigged up for drilling operations or dismantled and separated for transportation, overhaul, maintenance, repair, adjusting, servicing, and other purposes and including whilst in transit. Each item or rig shall be deemed a separate insurance ; however, permission is granted the insured to interchange equipment between items or units scheduled hereunder.

 

3.             AUTOMATIC COVERAGE

 

This policy subject to its terms and conditions, is extended to cover additional drilling and/or workover rigs or other items as defined above which the insured may acquire subsequent to the effective date of this policy. In consideration of this extension, the Insured specifically agrees to report such acquisition to the Insurers within 30 days and pay pro rata additional premium from date acquired if not reported within the required period.

 

In no event shall the Insurers be liable for more than the maximum scheduled value any one rig or item under the terms of this extension.

 

It is understood and agreed this policy shall include property as above described (except as hereinafter excluded), being either their own, or property sold but not removed, also, on their interest in or on their legal liability for similar property rented or leased or held on joint account with others, or being repaired, all while located as described above; as schedule herein.

 

4.             DEDUCTIBLE CLAUSE

 

In respect of each claim for loss or damage, the Insurers shall be liable for their due proportion of the loss or damage to the Insured property as set forth by the terms and conditions of this policy, after deducting US$ 100,000.00 each and every loss.

 

5.             DEBRIS REMOVAL EXTENSION

 

This Policy also covers expenses incurred in the removal of debris of the property covered hereunder which may be destroyed or damage, by a peril insured against. In no event shall the insurers liability exceed an additional 10% (ten percent) over the amount scheduled herein for that item. The cost of removal of debris shall not be considered in determination of the valuation of the property covered.

6.             THIS POLICY DOES NOT INSURE AGAINST

 

a.       Wear and tear and/or gradual deterioration;

b.       Loss or damage caused by or resulting from:

 

(1)      War, Hostile or warlike action in time of peace, or war, including action in hindering, combating or defending against an actual impending or expected attack, (a) by any government or sovereign power (de jure or the facto) , or by any authority maintaining or using military, naval or air forces,; or (b) by military, naval or air forces; or (c) by an agent of any such government, power, authority or forces.

(2)      Any weapon of war employing atomic fission or radioactive force whether in time of peace or war.

(3)      Insurrection, rebellion, revolution, civil war, usurped power, or action taken by government authority in hindering, combating, or defending against such an occurrence, seizure or destruction under quarantine or customs regulation, confiscation by order of any government or public authority, or risk of contraband or illegal transportation or trade.

c.        Loss or damage occasioned by or resulting from the explosion of steam engines, steam or hot water boilers, steam pipes, water heaters or their connection caused by internal steam or water pressure; nor for loss occasioned by the explosion of internal combustion engines, flywheels, pulleys, abrasive wheels or moving or rotating parts of machines, unless fire ensues and then for loss or damage by fire only;

d.       Loss or damage caused by the neglect of the Insured to use all reasonable means to save and preserve the property at and after any disaster insured against; or when the property is endangered by fire in neighbouring premises;

e.       Loss of damage to electrical appliances or devices of any kind, including wiring, arising from electrical injury disturbance to said electrical appliances or devices or wiring from artificial causes, unless fire ensues and then only for direct loss or damage caused by such ensuing fire;

f.        Loss or damage while the property is situated or installed on vessels or barges (except while being transported on a regular ferry line) or on artificial island(s) above water, or during any operation offshore except when agreed by insured in advance at additional premium to be charged;

g.       Loss or damage to servicing or workover rigs or derrick while being moved by skidding while in a fully or partially assembled state, other than the state in which they are intended to be moved;

h.       Loss of or damage to drills bits, drilling mud , acid, cement or chemicals;

i.         loss or damage caused by open flames methods used to pre-heat engine combustion chambers or thaw fuel lines and the like;

j.        Loss or damage to foam solutions or other fire extinguishing materials lost, expended or destroyed in fire fighting, or for any other expenses incidental to fighting fire, controlling or attempting to control blowout or cratering;

k.       Delay or loss of use, whether resulting from a peril insured against or otherwise;

l.         Theft if due to infidelity of employees or the conversion, embezzlement or secretion by any person in lawful possessions of the property or failure of such persons to return property loaned, rented or used by them;

m.      Unexplained loss; mysterious disappearance; nor loss or shortage disclosed upon taking inventory;

n.       Any repairing, adjusting, servicing or maintenance operation unless fire or explosion ensues and than only for loss or damage by such ensuing fire or explosion.

7.             PROPERTY NOT INSURED

 

a.       This policy does not insure, MOTOR VEHICLES, (except such trucks, carriers or trailers on which equipment is permanently attached as part of an item or unit herein described or trailers used as quarters for crews), aircraft, railroad rolling stock, cement, mud, drilling, compounds, chemical, casing, roadways, causeways, earthen pits, blueprints, plans, specifications, record, property while in permanent storage in any warehouse or yard owned, leased or controlled by Insured unless specifically scheduled herein.

b.       Insured property situated below the earth’s surface for which the well owner or operator has contractually assumed liability.

c.       Insured property situated below the earth’s surface unless loss or damage is caused by:

 

1.     Fire, lightning, tornado, windstorm, flood, theft, vandalism, malicious mischief, sabotage, strikes, riots, civil commotion or aircraft,

2.     Explosion above the surface of the ground, blowout or cratering as defined herein,

 

3.     Raising, lowering, pull-in or collapse of derricks or masts,

 

4.     Total loss of the rig.

d.       Insured property used to drill a relief well to control or to attempt to control blowout, crater or fire in any oil or gas well unless approval is obtained from Insurers, or held covered at a premium to be agreed.

e.       Property consisting of a complete units or parts thereof, leased, loaned or rented to others or operated by others, unless prior notice has been given to Insurers and policy is extended to cover such property in use by others.

f.        Nuclear reaction or nuclear radiation or radioactive contamination, all whether such loss be direct or indirect, proximate or remote, or be in whole or in part caused by, contributed to or aggravated by the peril(s) insured against in this policy, direct loss be fire resulting from nuclear reaction or nuclear radiation or radioactive contamination is insured against by this policy.

 

 

8.             WARRANTIES

 

BLOWOUT PREVENTER WARRANTY

 

The Insured warrant and agrees that blowout preventer of standard make will be set on the surfaces casing, same to be installed and tested in accordance with the usual practice (this warranty not applicable to cable tool rigs and spudders) but this warranty shall not apply at such times when the fitting of side blowout preventer interferes with or prevents the Insured from carrying out his servicing or workover program in accordance with normal practice.

 

9.             BLOWOUT AND CRATERING CLAUSE

 

The Term “Blowout” shall be taken as the sudden expulsion of drilling fluid (mud, water, and sometimes oil) above the surface of the ground (above the earth’s surface) followed by the continuous uncontrolled flow of oil, gas or water from the well that occurs when the pressure of oil, gas or water entering the well at same deep below the surface is greater than the pressure exerted by the column of drilling fluid in the well and resulting in the well getting completely out of control.

 

The Term “Crater” shall be defined as a basin like opening in the earth’s surface surrounding a well caused by the erosion and eruptive action of Gas and/or Oil and/or Water flowing without restriction.

10.          SALVAGE EXPENSES, OR SUE AND LABOUR

 

It is agreed that in the event of salvaging expenses or sue and labour charges, (not herein excluded) being incurred in consequence of a peril insured against, than Insurers shall be liable for no greater proportion of such expense than the value of the drill stem below the surface of the ground at the time the loss occurs bears to the aggregate value of the hole (at the time of the loss) plus the value of the said drill stem, but in no event shall the liability of Insurers for salvage expenses and/or sue and labour charges exceed that cash value of the drill stem below the surface of the ground at the time of the loss.

 

11.          WAIVER OF INVENTORY OR APPRAISEMENT

 

In the event the aggregate claim for loss does not exceed ten percent (10%) of the total amount of insurance each item upon property damaged insured hereunder at the time such loss occurs, no special inventory or appraisement of the undamaged property shall be required. If this policy be divided into two or more items, the foregoing condition shall apply to each item separately.

 

12.          OTHER INSURANCE

 

If at the happening of any casualty the Insured has any other insurance identical with or similar to the terms of this policy, whether prior or subsequent in date, or simultaneous with this insurance, than the insurers shall not be liable under this policy for a greater proportion of any loss on the property insured hereunder than the amount hereby insured shall bear to the whole insurance affected, whether valid or not.

 

13.          BAILEE

 

This Insurance shall in no way inure directly or indirectly to the benefit of any carrier or other bailee.

 

14.          SUBROGATION

 

In the event of any payment under this policy the insurers shall be subrogated to all the insured’s rights of recovery therefor against any person or organization and the Insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights. The Insured shall do nothing after loss to prejudice rights.

 

15.          WAIVER OF SUBROGATION

 

The Insured may without prejudice to this insurance enter into agreements or contracts for work involving the use of the property insured hereunder which contain provisions relieving the order party to such  agreement or contracts of liability for loss or damage to such property while in use in the performance of the work under such agreements or contracts. This waiver of subrogation shall not apply to Sub Contractors of the Insured.

 

16.          NOTICE OF LOSS

 

The Insured shall as soon as possible report to insurers or their agent every loss or damage which may become a claim under this policy and shall also file with Insurers or their Representative within ninety (90) days from date a loss a detailed sworn proof of loss. Failure by the Insured to report the said loss or damage and to file such sworn proof of loss as herein before provided shall invalidate any claim under this policy for such loss.

17.          EXAMINATION UNDER OATH

 

The Insured shall submit, and so far as is within his or her power shall cause all other persons interested in the property and members of the household and employees to submit, to examinations under oath by any person named by the Underwriters, relative to any and all matters in connection with a claim and subscribe to the same; and shall produce for examination all books of account, bills, invoices and other vouchers or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by the Underwriters or they representative, and shall permit extracts and copies thereof to be made.

 

18.          PAYMENT OF LOSS

 

All adjusted claims shall be paid of made good to the Assured or any mortgagee stated in schedule attaching hereto within thirty (30) days after presentation and acceptance of satisfactory proof of interest and loss at the office of Underwriters authorized representatives. No loss shall be paid hereunder if the Assured has collected the same from others.

 

19.          BASIS OF INDEMNITY

 

It is understood and agreed that in the event of loss or damage under this policy (not hereinafter excluded) the basis of Indemnity shall be as follows:

a)         In cases where damage to the property Insured can be repaired the Insurers will pay expenses necessarily incurred to restore the damaged machine to its former state of service ability plus the cost of dismantling and re-erection incurred for the purpose of effecting the repairs as well as ordinary freight to and from a repair-shop, custom duties if any. If the repairs are executed at the workshop owned by the Insured, the Insurers will pay the cost of materials and wages incurred for the purpose of the repairs  plus a reasonable percentage to cover overhead charges.

 

Deduction shall be made for depreciation in respect of parts replaced and the value of any salvages will be taken into account. If the cost of repairs as detailed herein above equals or exceeds the actual value of the property insured immediately prior to the occurrence of the damage, the settlement shall be made on basis provided for in (b) below.

 

b)        In cases where the property insured is destroyed to the Insurers will pay the Actual Market Value of the destroyed item subject to the sum insured for that item being the maximum indemnity provided and subject also to item c) below. The value of any salvage shall be taken into account.

 

c)         It is expressly understood and agreed between the Insured and Insurers and made a condition of this policy, that the Insured shall maintain contributing insurance on each item of property Insured as stated in the schedule of not less than 90% of the actual market value thereof and that failing to do so, the Insured shall be an Insurer to the extent of such deficit and bear such proportionate part of any loss or damage (whether partial or total) on each item. If the property Insured as stated in the schedule consist if more than one item then this condition shall apply to each item separately.

 

20.          ASSIGNMENT

 

Assignment of interest under this policy shall not be made by the Insured without the written consent of Underwriters.

21.          AUTOMATIC REINSTATEMENT

 

It is a condition of this insurance that the amount of any insured loss shall by automatically reinstated for the value of repairs and replacements made as they are made, but such reinstatements shall not exceed the amount of loss or damage paid under this certificate. Said reinstatement is made without further premium charges.

 

22.          MISREPRESENTATION AND FRAUD

 

This policy shall be void if the Insured has concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof or in case of any fraud, attempted fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss.

 

23.          TERRORIST CLAUSE

 

Notwithstanding exclusion 7(b) the perils insured hereunder specifically cover within the Indonesian, loss of or damage to the subject matters insured or expense resulting therefrom, caused by or resulting from or incurred directly or indirectly as a consequence of any act for political or terrorist purposes of any person or persons, whether or not Agents of a sovereign power, and whether or not the loss, damage or expenses resulting therefrom is accidental or intentional, coverage provided by this clause is subject to 30 days notice of cancellation by Insurers.

 

24.          POLLUTION HAZARD

 

In consideration of the premium charged subject to the terms and conditions of this policy, it is understood and agreed that this insurance covers loss of or damage to the property insured directly caused by any governmental authority acting under the powers vasted in them to prevent or mitigate a pollution hazard or threat  thereof, resulting directly from damage to the property insured for which the Insurers are liable under this policy, provided such act of governmental authority has not resulted from want of due diligence by the insured, the Owners or Managers of the property insured or any of them to prevent or mitigate such hazard or threats.

 

25.          CANCELLATION

 

This policy may be cancelled by the Insured by mailing to the Insurers written notice stating when thereafter such cancellation shall be effective . This policy may be cancelled by the Insurers by mailing to the Insured at the address shown in the policy or last known address written notice stating when not less than thirty (30) days thereafter such cancellation shall be effective. The mailing of notice as aforesaid shall be sufficient proof of notice and the effective date of cancellation stated in the notice shall become the end of the policy period. Delivery of such written notice either by the Insured or by the Insurers shall be equivalent to mailing. In event, however, of non- payment of premium on the part of the Insured, the Insurers my cancel by giving 10 (ten) days written notice to the Insured. If the Insured cancel, earned premiums shall be computed in accordance with the customary short tare table and procedure. If the Insurers cancel, earned premiums shall be computed pro rata. Premium adjustment may be made at the time cancellation is effected and if not made then shall be made as soon as practicable after cancellation become effective. The Insurers cheque, or the cheque of the Insurers’ representative mailed or delivered as aforesaid shall be sufficient tender of any refund of premium due to the Insured.

26.          STACKED CLAUSE

 

An adjustment in Premium shall be made for any stacked period provided each such stacked period is advised to Insurers within 30 days of the stacked period commencing and that there are no claims during the Period of Insurance hereunder.

 

27.          DEFINITION OF STACKED TIME

 

Stacked time shall be that time during which the unit or item Insured is idle and removed from drilling or operation site, unless such well is plugged and abandoned, with the derrick or mast dismantled or lowered.

Stacked time shall cease when loading, unloading transporting, rigging up or dismantling operations o the unit are in progress.

Unless the complete unit or item is stacked in accordance with the above definition at all during anyone day for a period of 15 (fifteen) consecutive days, the unit shall be considered as operating.

 

28.          ELECTRONIC DATE RECOGNITION CLAUSE EDRC (B)

 

Section 1

This insurance does not cover any loss, damage, cost, claim or expense, whether preventative, remedial or otherwise, directly or indirectly arising out of or relating to:

a)                        the calculation, comparison, differentiation, sequencing or processing of data involving the date change to the year 2000, or any other date change, including leap year calculations, by any computer system, hardware, programme or software and/or any microchip, integrated circuit or similar device in computer equipment or non-computer equipment, whether the property of the insured or not; or

b)                        any change, alteration or modification involving the date change to the year 2000 or any other date change, including leap year calculations, to any such computer system, hardware, programme or software or any microchip, integrated circuit or similar device in computer equipment or non-computer equipment, whether the property of the insured or not.

 

This clause applies regardless of any other cause or event that contributes concurrently or in any sequence to the loss, damage, cost, claim or expense.

 

However this section shall not apply in respect of physical damage occurring at the insured’s premises arising out of the perils of fire, lightning, explosion, aircraft or vehicle impact, falling objects, windstorm, hail, tornado, hurricane, cyclone, riot, strike, civil commotion, vandalism, malicious mischief, earthquake, volcano, tsunami, freeze or weight of snow.

 

Section 2

 

Notwithstanding Section 1 above, this insurance does not cover any cost and expenses, whether preventative, remedial or otherwise, arising out of or relating to change, alteration or modification of any computer system,

 

hardware, programme or software or any microchip, integrated circuit or similar device in computer or non- computer equipment, whether the property of the insured or not.

 

Section 3

 

The date change to the year 2000, or any other date change, including leap year calculations, shall not in and of itself be regarded as an event for the purpose of this insurance.