MACHINERY INSURANCE POLICY WORDING

LIBERTY INSURANCE LIMITED Kumho Asiana Plaza, 15th floor 39 Le Duan Street, District 1 Ho Chi Minh City, Vietnam Tel: (84-8) 8 125 125 Fax: (84-8) 8 1...
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LIBERTY INSURANCE LIMITED Kumho Asiana Plaza, 15th floor 39 Le Duan Street, District 1 Ho Chi Minh City, Vietnam Tel: (84-8) 8 125 125 Fax: (84-8) 8 125 018

MACHINERY INSURANCE POLICY WORDING WHEREAS the Insured named in the Schedule hereto has made to LIBERTY INSURANCE LIMITED (hereinafter called the Company) a written proposal by completing a questionnaire which, together with any other statements made in writing by the Insured for the purpose of this Policy, is deemed to be incorporated herein; NOW THIS POLICY WITNESSES that, subject to the Insured having paid or agreed to pay to the Company the Premium mentioned in the Schedule and subject to the terms, exclusions, provisions and conditions contained herein or endorsed hereon; THE COMPANY HEREBY AGREES with the Insured that, if at any time during the Period of Insurance stated in the Schedule, the items (or any part thereof) entered in the Schedule, whilst on the Premises mentioned therein, suffer any unforeseen sudden and physical loss or damage from causes such as defects in casting and material, faulty design, faults at workshop or in erection, bad workmanship, lack of skill, carelessness, shortage of water in boilers, physical explosion, tearing apart on account of centrifugal force, short circuit, storm, or from any other cause not specifically excluded hereinafter, in a manner necessitating repair or replacement; THE COMPANY WILL INDEMNIFY the Insured in respect of such loss or damage, as hereinafter provided, by payment in cash, replacement or repair (at the Company’s option) up to an amount not exceeding in any one year of insurance in respect of each of the items specified in the Schedule the sum set opposite thereto and not exceeding in all the total sum expressed in the Schedule as insured hereby. This Policy shall apply to the insured items after successful completion of their performance acceptance tests whether they are at work or at rest, or being dismantled for the purpose of cleaning or overhauling, or in the course of the aforesaid operations themselves, or when being shifted within the Premises, or during subsequent re-erection.

EXCLUSIONS The Company shall not be liable for: 1.

the deductible stated in the Schedule to be borne by the Insured in any one occurrence; if more than one item is lost or damaged in one occurrence, the Insured shall not, however, be called upon to bear more than the highest single deductible applicable to such items;

2.

loss of or damage to exchangeable tools, e.g. dies, moulds, engraved cylinders, parts which by their use and/or nature suffer a high rate of wear or depreciation, e.g. refractory linings, crushing hammers, objects made of glass, belts, ropes, wires, rubber tyres, operating media, e.g. lubricants, fuels, catalysts;

3.

loss or damage due to fire, direct lightning, chemical explosion (except flue gas explosions in boilers), extinguishing of a fire or subsequent demolition, aircraft or other aerial devices or articles dropped therefrom, theft, burglary or attempts thereat, collapse of buildings, flood, inundation, earthquake, subsidence, landslide, avalanche, hurricane, cyclone, volcanic eruption or similar natural catastrophes;

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4.

loss or damage for which a supplier, contractor or repairer is responsible either by law or under contract;

5.

loss or damage caused by any faults or defects existing at the time of commencement of this Policy within the knowledge of the Insured or his representatives, whether such faults or defects were known to the Company or not;

6.

loss or damage arising our of the wilful act or gross negligence of the Insured or his representatives;

7.

loss or damage, cost or expenses directly or indirectly caused by resulting from or in connection with any of the following regardless of any other cause or event contributing concurrently or in any other sequence to the loss or damage, cost or expenses: war, invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, mutiny, riot, strike, lock-out, civil commotion, military or usurped power, acts of a group of malicious persons or persons acting on behalf of or in connection with any political organization, acts of terrorism, conspiracy, confiscation, commandeering, requisition or destruction of or damage to property by order of any government de jure or de facto or by any public authority; For the purpose of this Policy, "terrorism" means an act, including but not limited to the use of force or violence and/or threat thereof, of any person or group(s) of persons, whether acting alone or on behalf of or in connection with any organisation(s) or government(s), committed for political, religious, ideological or similar purposes including the intention to influence any government and/or to put the public or any section of the public in fear; This exclusion also applies to loss or damage, cost or expenses of whatever nature directly or indirectly caused by, resulting from or in connection with any action taken in controlling, preventing, suppressing or in any way relating to the above. In any action, suit or other proceeding where the Company alleges that by reason of the provisions above any loss or damage, cost or expenses is not covered by this insurance the burden of proving that such loss or damage, cost or expenses is covered shall be upon the Insured. In the event any portion of this exclusion is found to be invalid or unenforceable, the remainder shall remain in full force and effect.

8.

Loss or damage, cost or expenses directly or indirectly caused by or arising from or in consequence of or contributed to by: (a)

nuclear weapons material;

(b)

(i)

ionising radiation or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel. Solely for the purpose of this Exclusion 8(b) combustion shall include any self-sustaining process of nuclear fission.

(ii)

the radioactive, explosive or other hazardous properties of any explosive nuclear component thereof.

9.

loss or damage as direct consequence of the continual influence of operation (e.g. wear and tear, cavitation, erosion, corrosion, rust, boiler scale);

10.

consequential loss or liability of any kind or description, any payments over and above the indemnity for material damage as provided herein.

11.

Electronic Data (a)

Notwithstanding any provision to the contrary within the Policy or any endorsement thereto, it is understood and agreed as follows:

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(i)

This Policy does not insure loss, damage, destruction, distortion, erasure, corruption or alteration of Electronic Data from any cause whatsoever (including but not limited to Computer Virus) or loss of use, reduction in functionality, cost, expense of whatsoever nature resulting therefrom, regardless of any other cause or event contributing concurrently or in any other sequence to the loss. Electronic Data means facts, concepts and information converted to a form useable for communications, interpretation or processing by electronic and electromechanical data processing or electronically controlled equipment and includes programs, software and other coded instructions for the processing and manipulation of data or the direction and manipulation of such equipment. Computer Virus means a set of corrupting, harmful or otherwise unauthorised instructions or code including a set of maliciously introduced unauthorised instructions or code, programmatic or otherwise, that propagate themselves through a computer system or network of whatsoever nature. Computer Virus includes but is not limited to “Trojan Horses”, “worms” and “time or logic bombs”.

(ii)

However, in the event that a peril listed below results from any of the matters described in paragraph (i) above, this Policy, subject to all its terms, conditions and exclusions, will cover physical damage occurring during the Policy period to Property Insured by this Policy directly caused by such listed peril. Listed Perils: Fire, Explosion

(b)

Electronic Data Processing Media Valuation Notwithstanding any provision to the contrary within the Policy or any endorsement thereto, it is understood and agreed as follows: Should electronic data processing media insured by this Policy suffer physical loss or damage insured by this Policy, then the basis of valuation shall be the cost of the blank media plus the costs of copying the Electronic Data from back-up or from originals of a previous generation. These costs will not include research and engineering nor any costs of recreating, gathering or assembling such Electronic Data. If the media is not repaired, replaced or restored the basis of valuation shall be the cost of the blank media. However this Policy does not insure any amount pertaining to the value of such Electronic Data to the Insured or any other party, even if such Electronic Data cannot be recreated, gathered or assembled.

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SPECIAL EXCLUSIONS

1.

NUCLEAR ENERGY RISKS EXCLUSION CLAUSE (1994) (WORLDWIDE EXCLUDING U.S.A. AND CANADA) - NMA 1975(A) This Agreement shall exclude Nuclear Energy Risks whether such risks are written directly and/or by way of insurance and/or via Pools and/or Associations. For all purposes of this Agreement Nuclear Energy Risks shall mean all first party and/or third party insurances (other than workers' compensation and/or employers' liability) in respect of:(I)

All Property on the site of a nuclear power station. Nuclear Reactors, reactor buildings and plant and equipment therein on any site other than a nuclear power station.

(II)

All Property, on any site (including but not limited to the sites referred to in (I) above) used or having been used for:(a) (b)

The generation of nuclear energy; or The Production, Use or Storage of Nuclear Material.

(III)

Any other Property eligible for insurance by the relevant local Nuclear Insurance Pool and/or Association but only to the extent of the requirements of that local Pool and/or Association.

(IV)

The supply of goods and services to any of the sites, described in (I) to (III) above, unless such insurances shall exclude the perils of irradiation and contamination by Nuclear Material.

Except as under-noted, Nuclear Energy Risks shall not include:(i)

Any insurance in respect of the construction or erection or installation or replacement or repair or maintenance or decommissioning of property as described in (I) to (III) above (including contractors' plant and equipment);

(ii)

Any Machinery Breakdown or other Engineering insurance not coming within the scope of (i) above;

Provided always that such insurance shall exclude the perils of irradiation and contamination by Nuclear Material. However, the above exemption shall not extend to:(1)

The provision of any insurance whatsoever in respect of:(a) Nuclear Material: (b) Any Property in the High Radioactivity Zone or Area of any Nuclear Installation as from the introduction of Nuclear Material or - for reactor installations - as from fuel loading or first criticality where so agreed with the relevant local Nuclear Insurance Pool and/or Association.

(2)

The provision of any insurance for the under-noted perils:Fire, lightning, explosion; Earthquake; Aircraft and other aerial devices or articles dropped therefrom; Irradiation and radioactive contamination; Any other peril insured by the relevant local Nuclear Insurance Pool and/or Association; in respect of any other Property not specified in (1) above which directly involves the Production, Use or Storage of Nuclear Material as from the introduction of Nuclear Material into such Property.

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Definitions "Nuclear Material" means:i)

Nuclear fuel, other than natural uranium and depleted uranium, capable of producing energy by a self sustaining chain process of nuclear fission outside a Nuclear Reactor, either alone or in combination with some other material; and

(ii)

Radioactive Products or Waste. "Radioactive Products or Waste" means any radioactive material produced in, or any material made radioactive by exposure to the radiation incidental to the production or utilisation of nuclear fuel, but does not include radioisotopes which have reached the final stage of fabrication so as to be usable for any scientific, medical, agricultural, commercial or industrial purpose.

"Nuclear Installation" means:(i)

Any Nuclear Reactor;

(ii)

Any factory using nuclear fuel for the production of Nuclear Material, or any factory for the processing of Nuclear Material, including any factory for the reprocessing of irradiated nuclear fuel; and

(iii)

Any facility where Nuclear Material is stored, other than storage incidental to the carriage of such material.

"Nuclear Reactor" means any structure containing nuclear fuel in such an arrangement that a self sustaining chain process of nuclear fission can occur therein without an additional source of neutrons. "Production, Use or Storage of Nuclear Material" means the production, manufacture, enrichment, conditioning, processing, reprocessing, use, storage, handling and disposal of Nuclear Material. "Property" shall mean all land, buildings, structures, plant, equipment, vehicles, contents (including but not limited to liquids and gases) and all materials of whatever description whether fixed or not. "High Radioactivity Zone or Area" means:-

2.

(i)

For nuclear power stations and Nuclear Reactors, the vessel or structure which immediately contains the core (including its supports and shrouding) and all the contents thereof, the fuel elements, the control rods and the irradiated fuel store; and

(ii)

For non-reactor Nuclear Installations, any area where the level of radioactivity requires the provision of a biological shield.

NUCLEAR EXCLUSION (SR 482) This Agreement shall not apply to nuclear energy risks in accordance with the Nuclear Energy Risks Exclusion Clause NMA 1975a and any other liability, loss, cost or expense of whatsoever nature directly or indirectly caused by, resulting from, arising out of or in connection with nuclear reaction, nuclear radiation or radioactive contamination regardless of any other cause contributing concurrently or in any other sequence to the loss, save where such liability, loss, cost or expense is expressly exempted from NMA 1975a.

3.

NUCLEAR ENERGY RISKS EXCLUSION CLAUSE 1.

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This contract excludes nuclear energy risks whether written directly or by way of insurance or via pools or associations. Under this contract the term “nuclear energy

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risks” means any first or third party insurance (other than workers’ compensation or employers’ liability) in respect of: 1.1

nuclear reactors and nuclear power stations or plant;

1.2

any other premises or facilities concerned with 1.2.1 the production of nuclear energy or 1.2.2 the production or storage or handling of nuclear fuels or nuclear waste;

2.

1.3

any other premises or facilities eligible for insurance by any local nuclear pool or association but only to the extent of the requirements of the local pool or association;

1.4

nuclear or radioactive fuel, or nuclear or radioactive waste.

However, this exclusion shall not apply 2.1

to any insurance in respect of the construction, erection or installation of buildings, plant and other property (including contractor’s plant and equipment used in connection therewith): 2.1.1 for the storage of nuclear fuel – prior the commencement of storage 2.1.2 as regards reactor installations – prior to the commencement of loading of nuclear fuel into the reactor, or prior to the initial criticality, depending on the commencement of the insurance of the relevant local nuclear pool or association;

4.

2.2

to any machinery breakdown or other engineering insurance not coming within the scope of 3.1. above, nor affording coverage in the “high radioactivity” zone;

2.3

to any insurance in respect of the hulls of ships, aircraft or other conveyances;

2.4

to any insurance in respect of loss of or damage to (including any expenses incurred therewith) nuclear or radioactive fuel or nuclear or radioactive waste while in transit or storage as cargo, other than while being processed or while in storage at the reactor installation or any other final destination concerned with production, storage or handling of nuclear fuel or nuclear waste.

PROPERTY DAMAGE CLARIFICATION CLAUSE Property damage covered under this Agreement shall mean physical damage to the substance of property. Physical damage to the substance of property shall not include damage to data or software, in particular any detrimental change in data, software or computer programs that is caused by a deletion, a corruption or a deformation of the original structure. Consequently the following are excluded from this Agreement: A.

Loss of or damage to data or software, in particular any detrimental change in data, software or computer programs that is caused by a deletion, a corruption or a deformation of the original structure, and any business interruption losses resulting from such loss or damage. Notwithstanding this exclusion, loss of or damage to data or software which is the direct consequence of insured physical damage to the substance of property shall be covered.

B.

Loss or damage resulting from an impairment in the function, availability, range of use or accessibility of data, software or computer programs, and any business interruption losses resulting from such loss or damage.

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5.

SEEPAGE, POLLUTION AND CONTAMINATION EXCLUSION CLAUSE NMA 1685 This Agreement does not cover any liability in respect of: 1.

Loss of, damage to, or loss of use of property directly or indirectly caused by seepage, pollution or contamination, provided always that this paragraph shall not apply to loss of or physical damage to or destruction of tangible property, or loss of use of such property damaged or destroyed, where such seepage, pollution or contamination is a consequence of an otherwise under this agreement indemnifiable sudden, unintended and unexpected happening.

2.

The cost of removing, nullifying or cleaning-up seeping, polluting or contaminating substances unless the seepage, pollution or contamination is a consequence of an otherwise under this agreement indemnifiable sudden, unintended or unexpected happening.

3.

Fines, penalties, punitive or exemplary damages. Furthermore it is agreed that the Insurer is only liable for such claims which have been reported to the Insured within twelve months from the occurrence of the otherwise indemnifiable happening.

6.

SANCTION LIMITATION EXCLUSION Liberty shall not provide cover and shall not be liable to pay any claim or provide any benefit hereunder to the extent that the provision of such cover, payment of such claim or provision of such benefit would expose Liberty to any sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United State of America

PROVISIONS Memo 1 - Sum Insured It shall be a requirement of this Policy that the sum insured is equal to the cost of replacement of the insured machinery by new machinery of the same kind and capacity, which means its cost of replacement including, e.g. freight, dues and customs duties, if any, and cost of erection. If the sum insured is less than the amount required to be insured, the Company shall pay only in such proportion as the sum insured bears to the amount required to be insured. Every object and cost item if more than one shall be subject to this condition separately. Memo 2 - Basis of Indemnity (a)

In cases where damage to an insured item can be repaired - the Company shall pay expenses necessarily incurred to restore the damaged machine to its former state of serviceability 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, customs duties and dues, if any, to the extent such expenses have been included in the sum insured. If the repairs are executed at a workshop owned by the Insured, the Company shall pay the cost of materials and wages incurred for the purpose of the repairs plus a reasonable percentage to cover overhead charges. No deduction shall be made for depreciation in respect of parts replaced, but the value of any salvage shall be taken into account. If the cost of repairs as detailed hereinabove equals or exceeds the actual value of the machinery insured immediately before the occurrence of the damage, the item shall be regarded as destroyed and settlement shall be made on the basis provided for in (b) below.

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(b)

In cases where an insured item is destroyed - the Company shall pay the actual value of the item immediately before the occurrence of the loss, including charges for ordinary freight, cost of erection and customs duties, if any, provided such expenses have been included in the sum insured, such actual value to be calculated by deducting proper depreciation from the replacement value of the item. The Company shall also pay any normal charges for the dismounting of the machinery destroyed, but the salvage shall be taken into account. Any extra charges incurred for overtime, night work, work on public holidays, and express freight shall be covered by this Policy only if especially agreed in writing. The cost of any alterations, additions, improvements or overhauls shall not be recoverable under this Policy. The cost of any provisional repairs shall be borne by the Company if such repairs constitute part of the final repairs and do not increase the total cost of repair. The Company shall make payments only after being satisfied by production of the necessary bills and documents that the repairs have been effected or replacement has taken place, as the case may be.

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CONDITIONS 1.

The due observance and fulfillment of the terms of the Policy, in so far as they relate to anything to be done or complied with by the Insured, and the truth of the statements and answers in the questionnaire and proposal made by the Insured shall be a condition precedent to any liability of the Company.

2.

This Policy incorporates the Schedule, Specification and Endorsements which shall be read together as one contract. Words and expressions to which specific meanings have been attached in any part of this Policy or of the Schedule, Specification and Endorsements shall bear such specific meanings wherever they shall appear.

3.

The Insured shall at his own expense take all reasonable precautions to prevent loss destruction or damage and comply with statutory requirements and manufacturers’ recommendations and all reasonable recommendations of the Company.

4.

(a)

Representatives of the Company shall at any reasonable time have the right to inspect and examine the risk and the Insured shall provide the representatives of the Company with all details and information necessary for the assessment of the risk.

(b)

The Insured shall immediately notify the Company by telephone and confirm in writing of any material change in the risk and cause at his own expense such additional precautions to be taken as circumstances may require to ensure safe operation of the insured items, and the scope of cover and/or premium shall, if necessary, be adjusted accordingly. No material alteration shall be made or admitted by the Insured whereby the risk is increased, unless the continuance of the insurance is confirmed in writing by the Company.

5.

In the event of any occurrence which might give rise to a claim under this Policy, the Insured shall: (a)

immediately notify the Company by telephone and confirm in writing, giving an indication as to the nature and extent of the loss or damage;

(b)

take all reasonable steps within his power to minimize the extent of the loss or damage;

(c)

preserve the parts affected and make them available for inspection by a representative or surveyor of the Company;

(d)

furnish all such information and documentary evidence as the Company may require.

The Company shall on no account be liable for loss or damage of which no notice has been received by the Company within 14 days of its occurrence. Upon notification being given to the Company under this Condition, the Insured may carry out repairs of any minor damage or replace items which have sustained any minor damage; in all other cases a representative of the Company shall have the opportunity of inspecting the loss or damage before any repairs or alterations are effected. If a representative of the Company does not carry out the inspection within a period of time which could be considered adequate under the circumstances, the Insured shall be entitled to proceed with the repairs or replacement. The liability of the Company under this Policy in respect of any insured item shall cease if said item is kept in operation after a claim without being repaired to the satisfaction of the Company, or if temporary repairs are carried out without the Company’s consent. 6.

The Insured shall at the expense of the Company do and concur in doing and permit to be done all such acts and things as may be necessary or required by the Company in the interest of any rights or remedies, or of obtaining relief or indemnity from parties (other than those insured under this Policy) to which the Company is or would become entitled or which is or would be subrogated to them upon its paying for or making good any loss or damage under

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this Policy, whether such acts and things are or become necessary or required before or after the Insured’s indemnification by the Company. 7.

If any difference arises as to the amount to be paid under this Policy (liability otherwise admitted) such difference shall be referred to an arbitrator to be appointed by the parties in accordance with statutory provisions. Where any difference is by this condition to be referred to arbitration the making of an award shall be a condition precedent to any right of action against the Company.

8.

The Company shall be entitled to withhold indemnification:

9.

(a)

if there are doubts regarding the Insured’s right to received the indemnity, pending receipt by the Company of the necessary proof;

(b)

if in connection with the claim an examination by the Police or an inquiry under criminal law has been instituted against the Insured, pending completion of such examination or inquiry;

(a)

All benefit under the Policy shall be forfeited if any claim made is in any respect fraudulent or if any fraudulent means or devices are used by the Insured or any one acting on his behalf to obtain benefit under this Policy or if any loss or damage is caused by the willful act or with the connivance of the Insured;

(b)

Benefit under the Policy shall also be forfeited in respect of any claim: (i) or (ii)

made and rejected if an action or suit be not commenced within twelve months after such rejection; where arbitration takes place in pursuance of Condition 7 of this Policy and an action or suit be not commenced within twelve months after the arbitrators shall have made their award.

10.

If at the time any claim arises under this Policy there is any other insurance covering the same loss or damage, the Company shall not be liable to pay or contribute more than their rateable proportion of any claim for such loss or damage.

11.

The Company may cancel this Policy by giving 30 days’ notice by registered letter to the Insured at his last known address and in which case the Company will be liable to repay on demand a rateable proportion of the premium for the unexpired term from the date of cancellation. This Policy may be cancelled by the Insured at any time by giving written notice to the Company and in which case the Company will retain the customary short-period rate for the time this Policy has been in force. Short Period Rates: Period

Premium

Up to 3 months Between 3 to 6 months Between 6 to 9 months Over 9 months

30% of Annual Premium 60% of Annual Premium 90% of Annual Premium 100% of Annual Premium

In both cases, the Company will deduct any reasonable inspection charges the Company may have incurred. 12.

The Company shall not be liable to pay interest other than interest for default.

13.

This insurance is subject to Vietnamese law and practice.

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PREMIUM WARRANTY 1.

Notwithstanding anything herein contained to the contrary, and subject only and without prejudice to clause 2 hereinafter set out, it is hereby declared and agreed that it is a condition precedent to liability under this Policy, Renewal Certificate, Endorsement or Cover Note that any premium due must be paid and actually received in full by the Company, the registered broker or registered agent through whom this Policy was effected: (a)

(b)

where the period of insurance is more than 30 (thirty) days, within 30 (thirty) days from the: (i)

INCEPTION date of the cover under the Policy, Renewal Certificate or Cover Note; or

(ii)

EFFECTIVE date of the cover stated on each Endorsement, if any, issued under the Policy, Renewal Certificate or Cover Note; or

(iii)

where the ISSUANCE date of the Policy or the Endorsement, if any, issued under the Policy, Renewal Certificate or Cover Note is more than 30 (thirty) days from the inception date or effective date, the premium must be paid upon presentation of the Debit Note(s); or

where the Company has allowed payment of that premium by installments (i)

within 15 days from INCEPTION date of the cover under the Policy, Renewal Certificate or Cover Note for the first installment and thereafter from the agreed dates on which the subsequent installments become payable; or

(ii)

Any Endorsement, if any, issued under the Policy, Renewal Certificate or Cover Note, the premium must be paid on the due date of latest installment and before the expiry date of the Policy

(iii)

where the period of insurance is less than 30 (thirty) days, the premium must be paid upon presentation of the Debit Note(s).

2.

In the event any of the abovementioned premium is not paid in full to the Company, registered broker or registered agent as described above in the manner and within the time stipulated above (the "premium warranty period"), the cover under this Policy, Renewal Certificate, Endorsement or Cover Note shall be deemed to have terminated automatically from the expiry of the premium warranty period and the Company shall be discharged from all liability therefrom but without prejudice to any liability incurred before that date and the Company shall be entitled to a pro-rata time on risk premium subject to a minimum of US$100.

3.

In case of claim, all the outstanding premiums will be paid immediately to the Company.

IMPORTANT NOTICE We would remind that you must disclose to us, fully and faithfully, the facts you know or ought to know, otherwise you may not receive any benefit from your Policy.

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