Who Is Insured 2. Coverage 2. Attachment And Termination 3. Automatic Extensions Of Coverage 3. Optional Extensions Of Coverage 5

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1 Contract Table Of Contents Section Page No. Who Is Insured 2 O C E A N C A R G O Coverage 2 Attachment And Termination 3 Automatic Extensions Of Coverage 3 Optional Extensions Of Coverage 5 C O N T R A C T Additional Coverages 10 Exclusions 13 Duration Of Insurance 16 Limits Of Insurance 18 Deductible 19 Loss Payment Basis 20 Loss Payment Basis Exceptions 23 Loss Payment Limitations Specified Perils Only 23 O C E A N C A R G O Conditions 23 Definitions 24 Form (Ed. 2-06) Contract Page 1 of 27

2 ÄäÄãÄèÄíÃàÃáÃàÃàÂêÀàÀàÀàÀçÀàÀàÀëÈêÀïÀåÃçÃäÃãÃæÄáÅàÀà ÄäÄãÄèÄíÃàÃáÃàÃàÂêÀàÀàÀàÀàÀàÀàÀàÀàÀïÀæ Ocean Cargo Contract Words and phrases that appear in bold print have special meaning and are defined in the Definitions section of this contract. Throughout this contract the words you and your refer to the Named Insured shown in the Declarations of this policy, and any other person or organization qualifying as a Named Insured under this contract. The words we, us and our refer to the company providing this insurance. Who Is An Insured The Named Insured shown in the Declarations is an Insured under this policy. The following organizations also qualify as Named Insureds: a subsidiary organization of the first Named Insured shown in the Declarations of which, at the beginning of the policy period and at the time of loss, such first Named Insured controls, either directly or indirectly, more than fifty (50) percent of the interest entitled to vote generally in the election of the governing body of such organization; or a subsidiary organization of the first Named Insured shown in the Declarations that such first Named Insured acquires or forms during the policy period, if at the time of loss such first Named Insured controls, either directly or indirectly, more than fifty (50) percent of the interests entitled to vote generally in the election of the governing body of such organization. Coverage Merchandise In Transit (All Risk) We will pay for direct physical loss or damage to merchandise in transit: A. matching the description shown under Merchandise Insured in the Declarations; B. sufficiently packed to withstand the intended voyage; and C. meeting any applicable special packing requirements shown in the Declarations, caused by or resulting from a covered peril, not to exceed the applicable Limit Of Insurance for Any One Conveyance shown in the Declarations. Subject to Paragraphs A., B. and C. above, this Merchandise In Transit (All Risk) Coverage includes merchandise in transit shipped on a barge as a principal conveyance if: 1. the barge, tug, towing arrangement, loading and stowage have been approved by a surveyor appointed by us; or 2. the barge is operating as a common carrier; and 3. a Barge Limit Of Insurance is shown in the Declarations. This Merchandise In Transit (All Risk) Coverage does not apply to loss or damage insured under the Merchandise In Transit (Specified Peril) Coverage. Form (Ed. 2-06) Contract Page 2 of 27

3 Coverage Merchandise In Transit (Specified Perils) We will pay for direct physical loss or damage to merchandise in transit: A. which is not: 1. described under Merchandise Insured in the Declarations; 2. sufficiently packed to withstand the intended voyage; or 3. packed in accordance with any applicable special packing requirements shown in the Declarations; B. shipped on barges, except for barges described in the Merchandise In Transit (All Risk) Coverage; C. shipped subject to an on deck Bill of Lading and not in a container; or D. described under Merchandise Insured in the Declarations if Specified Perils Only is shown as applicable to such merchandise, caused by or resulting from a specified peril not to exceed the applicable Limit Of Insurance for Any One Conveyance shown in the Declarations. Paragraph B. applies only if a Barge Limit Of Insurance is shown in the Declarations. Attachment And Termination Subject to the Duration Of Insurance section, this policy applies to shipments of merchandise made on or after the Effective Date shown in the Declarations and remains in force, unless cancelled. Automatic Extensions Of Coverage Both To Blame Collision The following Automatic Extensions Of Coverage apply and are subject to the applicable Limit Of Insurance for Any One Conveyance shown in the Declarations. We will pay costs you become legally obligated to pay shipowners due to liability assumed by you under the Both to Blame Collision clause (or its equivalent) contained in a Bill of Lading issued to you. Such liability must be the direct result of direct physical loss or damage to merchandise in transit caused by or resulting from a covered peril. In the event that such liability is asserted, you agree to notify us in writing, and we shall have the right (but not the duty) at our cost and expense, to defend you against such claim and make any settlement we deem appropriate. If we exercise this right, you agree to cooperate with us in the investigation, defense or settlement of such claim. Concealed Damage In the event of reasonable delay in opening packages or containers of merchandise in transit at the final insured destination, any direct physical loss or damage to such merchandise discovered upon opening which can reasonably be determined to have occurred during the insured voyage shall be adjusted in accordance with the terms and conditions of this policy. Form (Ed. 2-06) Contract Page 3 of 27

4 Automatic Extensions Of Coverage Concealed Damage This Automatic Extension Of Coverage does not apply if the delay in opening is more than 90 days from the date the merchandise arrived at the final insured destination. It is a condition of this Automatic Extension Of Coverage that containers or packages showing evidence of direct physical loss or damage at the time of arrival at the final insured destination be opened immediately and inspected for loss or damage. Customs Damage We will pay for direct physical loss or damage to merchandise in transit directly caused by or resulting from the legal actions of Customs inspectors or other authorized government agencies during the course of their inspections, provided such direct physical loss or damage would otherwise be insured by this policy in the absence of the Free Of Capture And Seizure (F.C.& S.) Exclusion. Deliberate Damage/Pollution Hazard We will pay for direct physical loss or damage to merchandise in transit on board a waterborne conveyance directly caused by or resulting from action of governmental authority to prevent or mitigate a pollution hazard or threat thereof, provided the pollution hazard or threat thereof is the direct result of a covered peril. Discharge At Port Of Refuge Or Distress We will pay for direct physical loss or damage to merchandise in transit: while discharged at a point of refuge or distress; and caused by or resulting from a covered peril. Fraud Or Deceit We will pay for loss due to fraud or deceit by any person or persons who may represent themselves to be the proper party or parties to accept merchandise in transit for shipment or for delivery, provided: theft of such merchandise is not excluded; the merchandise is sufficiently packed to withstand the intended voyage; and the merchandise is packed in accordance with any applicable special packing requirements shown in the Declarations. Fumigation We will pay for direct physical loss or damage to merchandise in transit caused by or resulting from fumigation of the vessel, dock or wharf, provided such merchandise in transit was aboard such vessel or on such dock or wharf where such fumigation was taking place. General Average Contributions We will pay general average contributions and salvage charges payable according to the York- Antwerp Rules and, where applicable, United States laws and usage. Form (Ed. 2-06) Contract Page 4 of 27

5 Automatic Extensions Of Coverage Landing, Warehousing, And Forwarding Charges We will pay landing, warehousing, forwarding and special charges incurred for merchandise in transit caused by or resulting from: a covered peril; or the insolvency or financial default of the owner, charterer, manager or operator of the vessel. Shortage From Containers We will pay for the unexplained disappearance of merchandise in transit from overseas containers, whether the containers arrive at the final insured destination with original seals intact or not, provided: theft of such merchandise is not excluded; the merchandise is sufficiently packed to withstand the intended voyage; and the merchandise is packed in accordance with any applicable special packing requirements shown in the Declarations. It is a condition of this Automatic Extension Of Coverage that you: assist us in subrogating against any party legally responsible for such unexplained disappearance; and not disclose the existence of the insurance provided by this Automatic Extension Of Coverage to anyone outside of your organization. Sue And Labor We will reimburse you or your assignee for charges reasonably incurred pursuant to the Duty Of The Insured Common Policy Condition of this policy, whether the efforts are successful or not. While Ashore If Merchandise In Transit (Specified Perils) Coverage applies, we will pay for direct physical loss or damage to merchandise in transit while ashore, caused by or resulting from leakage from fire protection equipment, earthquake, hurricane or other cyclone, collapse of docks or wharves, or the rising of navigable waters. Optional Extensions Of Coverage Difference in Conditions/Guarantee Collectibility The following Optional Extensions Of Coverage: apply if shown as included under Optional Extensions Of Coverage in the Declarations; and are subject to the applicable Limit Of Insurance for Any One Conveyance shown in the Declarations. We will pay for your interest in shipments of lawful merchandise which you have purchased on terms of sale which require the seller to provide ocean marine insurance on the intended voyage, if such merchandise suffers direct physical loss or damage caused by or resulting from a covered peril; and Form (Ed. 2-06) Contract Page 5 of 27

6 Optional Extensions Of Coverage Difference in Conditions/Guarantee Collectibility such loss or damage (to which this insurance applies) is payable but uncollectible for a period of more than 60 days under the insurance provided by the seller; or the insurance provided by the seller does not apply to such loss or damage because such other insurance contains terms or conditions that exclude or limit insurance for such loss or damage. In no event shall this insurance apply to an amount greater than it would have applied if there was no insurance provided by the seller. It is a condition of this Optional Extension Of Coverage that you first make every reasonable effort to collect from the seller or the seller s insurance before submitting a claim under this policy. Merchandise to which this Optional Extension Of Coverage applies is valued in the same manner as provided in the insurance provided by the seller, except that we will not pay more than we would otherwise pay if there was no insurance provided by the seller. Upon payment of any claim under this Optional Extension Of Coverage, we will be entitled to all your rights of subrogation, and you agree to remit to us any recovery you may eventually receive from the seller or the seller s insurance not to exceed, however, the amount paid by us. Export Contingency We will pay for your interest as unpaid vendor of export shipments of lawful merchandise: sold by you on terms of sale which do not obligate you to furnish ocean marine insurance on the intended voyage; sold by you on terms which do not obligate you to deliver the merchandise to or within the country of final destination; and not secured by a confirmed irrevocable letter of credit in your favor, when such merchandise suffers direct physical loss or damage caused by or resulting from a covered peril. Merchandise to which this Optional Extension Of Coverage applies is valued in accordance with the Selling Price Loss Payment Basis provision of this policy. It is a condition of this Optional Extension Of Coverage that you: vigorously pursue your rights against the buyer of the merchandise for payment of the purchase price and return to us all payments received from the consignee or any other insurer, not to exceed the amount paid by us; report to us, at least as frequently as the Reporting Frequency shown on the Premium Statement, all merchandise to which this Optional Extension Of Coverage applies and pay premium thereon at the rate(s) shown in the Schedule Of Rates, unless otherwise agreed; and not disclose the existence of the insurance provided by this Optional Extension Of Coverage to anyone outside of your organization. Form (Ed. 2-06) Contract Page 6 of 27

7 Optional Extensions Of Coverage Free On Board (FOB), Free Alongside (FAS), Free Carrier-Named Place (FCA), & Cost Of Freight-Named Port Of Destination (CFR) We will pay for your interest in export shipments of lawful merchandise sold by you on terms of sale which do not obligate you to: furnish ocean marine insurance; or deliver the merchandise to or within the country of final destination, when such merchandise suffers direct physical loss or damage caused by or resulting from a covered peril. This insurance attaches at the commencement of loading of merchandise onto an overseas conveyance at the point of origin and continues until the first of the following occurs: the shipment is delivered to any place of storage other than storage in the ordinary course of transit; the risk of loss or damage to the merchandise passes to the consignee; or 30 days pass from the date the shipment arrives at the place where it is to be loaded aboard an overseas conveyance. Merchandise to which this Optional Extension Of Coverage applies is valued in accordance with the Selling Price Loss Payment Basis provision of your policy. Import Duty We will pay for customs duties for which you are responsible on international shipments of lost or damaged merchandise in transit to which this insurance applies. In case of partial loss or damage to merchandise in transit caused by or resulting from a covered peril, we will pay that portion of the customs duties equal to the percentage that the value of the lost or damaged merchandise bears to the total value of the merchandise subject to the duty. It is a condition of this Optional Extension Of Coverage that: when reporting merchandise values, you must include a separate amount to account for customs duties and pay premium thereon at the rate(s) shown on the applicable Schedule Of Rates; you make all reasonable efforts to reduce, abate or obtain a refund of duties incurred or paid for the lost or damaged merchandise in transit; and in case of total loss or damage to merchandise in transit, you promptly surrender such merchandise to customs authorities when instructed by us to do so. Any reduction or abatement you obtain shall first reduce the amount we pay under this Optional Extension Of Coverage. Any refund you receive must be returned to us, up to the amount we previously paid under this Optional Extension Of Coverage. This Optional Extension Of Coverage does not apply to lost or damaged merchandise in transit if the Loss Payment Basis applicable to such merchandise includes customs duties. Form (Ed. 2-06) Contract Page 7 of 27

8 Optional Extensions Of Coverage Increased Value In the event of covered direct physical loss or damage to merchandise purchased by you on Cost, Insurance & Freight (C.I.F.) or other terms that include insurance on the intended voyage, we will pay for the difference, if any, between: the value of the lost or damaged merchandise determined in accordance with the applicable Loss Payment Basis shown in the Declarations; and the amount of insurance provided by the seller. This Optional Extension Of Coverage does not apply if the amount of insurance provided by the seller exceeds the value of the lost or damaged merchandise as determined in accordance with the applicable Loss Payment Basis shown in the Declarations. It is a condition of this Optional Extension Of Coverage that you report to us, at least as frequently as the Reporting Frequency shown on the Premium Statement, all merchandise to which this Optional Extension Of Coverage applies and pay premium at rate(s) shown on the Schedule Of Rates. Strikes, Riots And Civil Commotion (S.R. & C.C.) We will pay for direct physical loss or damage to merchandise directly caused by or resulting from: A. strikers or locked-out workmen; B. persons taking part in labor disturbances or riots or civil commotions; C. vandalism, sabotage or other malicious acts; and D. the act or acts of one or more persons, whether or not agents of a sovereign power, carried out for political, terroristic or ideological purposes, regardless of whether any loss, damage or expense resulting therefrom is accidental or intentional. Paragraph D. does not apply if the loss or damage is excluded by the Free Of Capture And Seizure (F.C. & S.) Exclusion of this policy. Paragraph D. applies only if the merchandise is in the ordinary course of transit at the time of loss or damage. The Optional Extension Of Coverage for Paragraph D. terminates at the first of the following: at the moment indicated in the Warehouse to Warehouse Transit Duration of Insurance provision or any other term or condition of this policy relating to duration of transit; on delivery of the merchandise to the consignee s warehouse or other final warehouse or place of storage at the final insured destination; on delivery to any warehouse or place of storage, whether prior to or at the final insured destination, which you elect to use either for storage (other than in the ordinary course of transit) or for allocation or distribution; Form (Ed. 2-06) Contract Page 8 of 27

9 Optional Extensions Of Coverage Strikes, Riots And Civil Commotion (S.R. & C.C.) for waterborne shipments, on expiration of 60 days after the date of completion of discharge of the merchandise overside of the vessel at the port of discharge; or for airborne shipments, on expiration of 30 days after the date of unloading the merchandise from the aircraft at the point of discharge. We will also pay for direct physical loss or damage to merchandise in the ordinary course of transit: located in the United States of America, the Commonwealth of Puerto Rico, the U.S. Virgin Islands or Canada; and if such loss or damage is directly caused by or resulting from acts committed by an agent of any government, party or faction engaged in war, hostilities or other warlike operations, provided such agent is acting secretly and not in connection with any operation of any naval, military or air force. This Optional Extension Of Coverage does not apply to loss or damage directly or indirectly caused by or resulting from any of the following, regardless of any other cause or event that contributes concurrently or in any sequence to such loss or damage, even if such other cause or event would otherwise be covered: change in temperature or humidity; the absence, shortage, or withholding of power, fuel, or labor during any strike, lockout, labor disturbance, riot or civil commotion; delay or loss of market; damage or deterioration arising from delay; hostilities, warlike operations, civil war, revolution, rebellion or insurrection, or civil strife arising therefrom, except acts of the agents described above; or nuclear reaction, radiation or radioactive contamination. This Optional Extension Of Coverage may be canceled by either you or us upon 48 hours advanced written notice to the other party. Such cancellation shall not apply to merchandise to which this insurance applies, in accordance with the Attachment And Termination provision of this policy, prior to such cancellation. Form (Ed. 2-06) Contract Page 9 of 27

10 Additional Coverages Consolidation The following Additional Coverages apply only if a Limit Of Insurance for such Additional Coverages is shown in the Declarations. We will pay for direct physical loss or damage to merchandise in transit caused by or resulting from a covered peril while such merchandise is temporarily stopped subsequent to leaving the point of origin for commencement of transit for consolidation. This Additional Coverage applies for a period not exceeding 45 days from the date the merchandise arrived at the consolidation point. We will not pay more than the Consolidation Limit Of Insurance shown under Additional Coverages in the Declarations. Temporary stops in excess of 45 days are insured, provided that you give us prompt written notice as soon as you become aware of the delay and pay any additional premium we require. Exhibition We will pay for your interest in lawful merchandise which suffers direct physical loss or damage caused by or resulting from a covered peril, not to exceed the applicable Exhibition Limit Of Insurance shown under Additional Coverages in the Declarations, while such merchandise is: on exhibition; or in storage for the purposes of being on exhibition. This Additional Coverage does not apply to: A. loss, damage or expense caused by or resulting from: 1. insects or vermin; 2. breakage of glass or articles of a fragile or brittle nature, unless caused by a specified peril; 3. mechanical breakdown, blow-out, short circuit or other electrical disturbance within any electrically equipped merchandise; 4. any dishonest or fraudulent act or acts committed alone or in collusion with others by any proprietor, partner, director, trustee or elected officer of any proprietorship, partnership, corporation or association (other than a common carrier) engaged by you to render any service or perform any act in connection with the lost or damaged merchandise; or 5. repair, restoration, renovation or retouching of merchandise; or B. loss, damage, (including the costs of correcting or making good) or expense caused by or resulting from any faulty, inadequate, erroneous or defective: 1. altering; 2. calibrating; 3. constructing; 4. developing; Form (Ed. 2-06) Contract Page 10 of 27

11 Additional Coverages Exhibition 5. distributing; 6. installing; 7. manufacturing; 8. maintaining; 9. processing; 10. repairing; 11. researching; or 12. testing, of part or all of any merchandise wherever located. Paragraph A.3. does not apply to ensuing loss or damage caused by or resulting from fire. Paragraph A.5. does not apply to ensuing loss or damage caused by or resulting from a specified peril. Paragraph B. does not apply to ensuing loss or damage caused by or resulting from a covered peril. This Additional Coverages applies to merchandise, beginning when it arrives at the exhibition site (or the storage site for the exhibition) and ending at the earlier of: 90 days after the date of arrival at the exhibition or storage site; 15 days after date of sale at the exhibition site; the time of commencement of transit away from the exhibition site; or the effective date of cancellation of this policy, regardless of the number of occurrences. The Exhibition Limit Of Insurance shown under Additional Coverages in the Declarations is the most we will pay for loss, damage or expense at any one exhibition (including storage). Extra Expenses We will pay for the reasonable: additional freight expense; container demurrage expense; customs release expense; debris removal expense; expediting expense; expense to replace packages; fumigation expense; repacking expense; and Form (Ed. 2-06) Contract Page 11 of 27

12 Additional Coverages Extra Expenses sorting expense, you incur with respect to merchandise in transit, not to exceed the lesser of: 25% of the covered value of the merchandise in transit for which you incurred such expense; or the applicable Extra Expense Limit Of Insurance shown under Additional Coverages in the Declarations. Salespersons Samples We will pay for your interest in: lawful merchandise; or cases and containers used to hold such merchandise, that suffers direct physical loss or damage caused by or resulting from a covered peril, not to exceed the applicable Salespersons Samples Limit Of Insurance shown under Additional Coverages in the Declarations, while such merchandise is being: used as a sales sample; or displayed for sales purposes, and is in the custody of a salesperson you employ anywhere in the world. This Additional Coverage does not apply to: A. merchandise at a premises: 1. you own or operate; or 2. used by your salesperson as their regular sales room or office; B. loss, damage or expense caused by or resulting from: 1. insects or vermin; 2. breakage of glass or articles of a fragile or brittle nature, unless caused by a specified peril; 3. mechanical breakdown, blow-out, short circuit or other electrical disturbance within any electrically equipped merchandise; or 4. repair, restoration, renovation or retouching of merchandise; or C. loss, damage (including the costs of correcting or making good) or expense caused by or resulting from any faulty, inadequate, erroneous or defective: 1. altering; 2. calibrating; 3. constructing; 4. developing; 5. distributing; 6. installing; Form (Ed. 2-06) Contract Page 12 of 27

13 Additional Coverages Salespersons Samples 7. manufacturing; 8. maintaining; 9. processing; 10. repairing; 11. researching; or 12. testing, of part or all of any merchandise wherever located. Paragraph B.3. does not apply to ensuing loss or damage caused by or resulting from fire. Paragraph B.4. does not apply to ensuing loss or damage caused by or resulting from a specified peril. Paragraph C. does not apply to ensuing loss or damage caused by or resulting from a covered peril. Merchandise to which this Additional Coverage applies is valued at the cost to repair or replace at the time of loss or damage, including customs duties and freight costs incurred, but not more than you actually spend to repair or replace the merchandise for the same use. We will pay for such loss or damage in excess of the applicable Salespersons Samples Deductible shown in the Declarations. Exclusions Atmospheric Or Climatic Conditions This insurance does not apply to loss, damage or expense caused by or resulting from atmospheric or climatic conditions. This exclusion does not apply: if the merchandise in transit has been packed and shipped in such a manner so as to protect it against the atmospheric and climatic conditions which can be reasonably expected during the intended voyage; or to loss or damage caused by or resulting from a specified peril. Biological, Chemical This insurance does not apply to loss, damage, or expense directly or indirectly caused by or resulting from any actual or threatened act involving a chemical, biological, bio-chemical or electromagnetic weapon, device, agent or material when used in an intentionally hostile manner, regardless of any other cause or event that directly or indirectly contributes concurrently or in any sequence to such loss, damage or expense even if such other cause or event would otherwise be covered. This exclusion shall be paramount and override anything contained in, or endorsed onto, this policy, unless such provision or endorsement expressly states that it overrides the terms of this exclusion. Form (Ed. 2-06) Contract Page 13 of 27

14 Exclusions Breakage, Leakage This insurance does not apply to breakage, leakage or loss of weight or contents. This exclusion does not apply to: breakage, leakage or loss of weight or contents caused by or resulting from fire, collision, stranding or explosion; or Merchandise In Transit (All Risk) Coverage. Dampness, Change Of Flavor This insurance does not apply to dampness, change of flavor, discoloration, mustiness or mold unless caused by or resulting from actual contact with seawater caused by or resulting from a specified peril. This exclusion does not apply to: dampness, change of flavor, discoloration, mustiness or mold caused by or resulting from actual contact between merchandise and seawater caused by or resulting from a specified peril; or Merchandise In Transit (All Risk) Coverage. Delay This insurance does not apply to loss of market or loss of use or loss, damage or expense caused by or resulting from delay, regardless of any other cause or event that contributes concurrently or in any sequence to such loss, damage or expense, even if such other cause or event would otherwise be covered. This exclusion shall be paramount and override anything contained in, or endorsed onto this policy unless such provision or endorsement expressly states that it overrides the terms of this exclusion. Free Of Capture And Seizure (F.C. & S.) This insurance does not apply to loss, damage or expense, whether in time of peace or war, caused by or resulting from: A. capture, seizure, arrest, restraint, detainment, confiscation, preemption, requisition or nationalization; or the consequences thereof or any attempt thereat, whether lawful or otherwise; B. any weapon of war employing atomic or nuclear reaction or radioactive force or matter; C. any mine or torpedo; D. all consequences of hostilities or warlike operations (whether there be a declaration of war or not), by a hostile act by or against any belligerent, naval, military or air forces power; or E. all consequences of civil war, revolution, rebellion, insurrection, or civil strife arising therefrom; or from the consequences of the imposition of martial law, military or usurped power; or piracy. This exclusion shall be paramount and override anything contained in this policy, or endorsed on to this policy unless such provision or endorsement expressly states that it overrides the terms of this exclusion. This exclusion does not apply to the Customs Damage Automatic Extensions Of Coverage. Form (Ed. 2-06) Contract Page 14 of 27

15 Exclusions) Free Of Capture And Seizure (F.C. & S.) Paragraph D. does not apply to loss, damage or expense caused by or resulting from: collision or contact with aircraft, rockets or other missiles, unless being used as a weapon of war; collision or contact with any fixed or floating object, other than a mine or torpedo; stranding of a vessel; heavy weather; or fire or explosion, unless such fire or explosion is directly caused by or results from a hostile act by or against any belligerent, naval, military or air force power. Inherent Vice This insurance does not apply to loss, damage or expense caused by or resulting from the inherent vice or nature of the merchandise in transit or other merchandise. Nuclear Hazard This insurance does not apply to loss, damage or expense directly or indirectly caused by or resulting from: ionising radiation from, or contamination by, radioactivity from any nuclear fuel or from any nuclear waste or from the combustion of nuclear fuel; the radioactive, toxic, explosive or other hazardous or contaminating properties of any nuclear installation, reactor or other nuclear assembly or nuclear component thereof; any weapon or other device employing atomic or nuclear fission or fusion or other like reaction or radioactive force or matter; or the radioactive, toxic, explosive or other hazardous or contaminating properties of any radioactive matter, regardless of any other cause or event that contributes concurrently or in any sequence to such loss, damage or expense, even if such other cause or event would otherwise be covered. If this policy insures against loss or damage caused by or resulting from fire, then this exclusion does not apply to direct physical loss or damage to merchandise in transit located within the United States of America, or any territory of the United States of America, or Puerto Rico, caused by or resulting from fire directly caused by or resulting from nuclear reaction, radiation, or radioactive contamination, provided: such nuclear reaction, radiation, or radioactive contamination is not excluded by the Free Of Capture And Seizure (F. C. & S.) Exclusion of this policy; and there is a law in effect in the jurisdiction where the loss or damage occurs that expressly prohibits us from excluding such ensuing loss or damage. This exclusion does not apply to loss, damage or expense caused by or resulting from radioactive isotopes, other than nuclear fuel, when such isotopes are being prepared, carried, stored, or used for commercial, agricultural, medical, scientific or other similar peaceful purposes. This exclusion shall be paramount and override anything contained in, or endorsed onto this policy unless such provision or endorsement expressly states that it overrides the terms of this exclusion. Form (Ed. 2-06) Contract Page 15 of 27

16 Exclusions Strikes, Riots And Civil Commotions (S.R. & C.C.) This insurance does not apply to loss, damage or expense caused by or resulting from: strikes, lockouts, labor disturbances, riots, civil commotions, or the acts of any person or persons taking part in any of the foregoing; vandalism, sabotage or other malicious act; or the act or acts of one or more persons, whether or not agents of a sovereign power, carried out for political, terroristic or ideological purposes, regardless of whether such loss, damage or expense is accidental or intentional, regardless of any other cause or event which contributes concurrently or in any sequence to such loss, damage or expense, even if such other cause or event would otherwise be covered. This exclusion shall be paramount and override anything contained in this policy, or endorsed onto this policy unless such provision or endorsement expressly states that it overrides the terms of this exclusion. Wear And Tear This insurance does not apply to wear and tear or gradual deterioration. Willful Misconduct This insurance does not apply to loss, damage or expense caused by or resulting from willful misconduct, fraud or deceit by you, your partners, officers or employees or their assignee; or willful misconduct, fraud or deceit by other parties involved in the sale or purchase of merchandise regardless of whether or not such misconduct, fraud or deceit be perpetrated during working hours. Duration Of Insurance Warehouse To Warehouse Transit Subject to the terms of sale or terms of purchase, or to written instructions you agreed to, prior to shipment of merchandise in transit from point of origin, this insurance applies to shipments of merchandise in transit beginning at the time loading of such merchandise in transit onto the conveyance (including stowage within an overseas container) at the place of origin begins. This insurance continues until the first of the following occurs: A. the merchandise in transit is unloaded from the delivering conveyance at the intended warehouse or other place of storage at the final insured destination; B. the merchandise in transit is unloaded from the delivering conveyance at any other point, whether prior to or at the final insured destination, which you or any shipper, assignee or consignee, elect to use for storage, distribution, allocation or other lawful activity; or C. 24 hours pass from the date the receiver of the merchandise becomes aware that the delivering conveyance has arrived (or left a container) at either of the destinations described in A. or B. above, but in no event will this insurance continue to apply for more than 72 hours after the time the delivering conveyance actually arrived (or left a container) at either such destination. Form (Ed. 2-06) Contract Page 16 of 27

17 Duration Of Insurance Warehouse To Warehouse Transit In the event commencement of transit from the point of origin is delayed for a period in excess of 24 hours from the time of loading, this insurance will not apply for any period in excess of such 24 hours. This insurance will resume upon commencement of transit and continue as outlined in this provision. If by the terms of sale or terms of purchase, you are responsible for loss or damage to merchandise in transit at the point of origin prior to the time this insurance would otherwise begin to apply, then this insurance will apply beginning at the time the risk of loss or damage passes to you, but in no event will this insurance apply for more than 72 hours prior to the time loading of the merchandise was scheduled to begin pursuant to the terms of sale or terms of purchase or sale or the written instructions. It is a condition of this insurance that there be no interruption or suspension of transit, unless due to circumstances beyond your (or your shipper s, assignee s or consignee s) control and that you take reasonable action to reduce or prevent such interruption or suspension. This insurance also applies to any additional time attributable to reasonable deviations, delays, forced discharges, re-shipments, transshipments and any other variation of the intended voyage arising from the exercise of a liberty granted to the shipowner or charterer under the contract of affreightment or other written agreement. If the exercise of such liberty results in termination of the contract or agreement at a point other than the final insured destination, this insurance will continue to apply until the first of the following occurs: the merchandise in transit is sold and delivered to the buyer or the buyer s shipper, consignee or assignee at such point; or if the merchandise in transit is not sold and is instead forwarded to the final insured destination or to any other destination, the merchandise in transit is delivered to the warehouse or place of storage as provided in A., B. or C. above. If on the day discharge of the merchandise in transit overside of the overseas vessel at the final port of discharge is completed, the merchandise in transit is re-sold and is forwarded to a destination other than the final insured destination, this insurance will continue to apply while the merchandise is at such port of discharge until: A. the earlier of: 1. the time transit resumes; or days from 12:01 am local time on the day discharge of the merchandise in transit overside of the overseas vessel at the final port of discharge is completed; or B. if the merchandise is sold after expiration of such 15 day period, the time of such sale. Contingent Interest/Policy Proof Of Interest Notwithstanding the terms of sale or terms of purchase and provided you are responsible for insuring the voyage, we will acknowledge your interest in such merchandise during the entire transit as outlined in the Warehouse To Warehouse Transit Duration Of Insurance provision of this policy. In the event a claim arises to which this provision applies, you agree to use all reasonable means to first recover the full amount of loss or damage from the buyer or seller, or their insurers, in accordance with the terms of sale or purchase. In the event of a claim under this provision, you agree to transfer to us all rights of recovery against the buyer or seller, or their insurers, or other responsible party and to provide all reasonable assistance to us in pursuing these rights. Form (Ed. 2-06) Contract Page 17 of 27

18 Duration Of Insurance Return Shipments In the event you or your assignee refuse to accept delivery of merchandise in transit, this policy will apply to any reasonable additional period from the time of refusal to: the time of acceptance; the time the merchandise is returned to the other party; or the time the merchandise is otherwise disposed of, provided you report the facts of such situations as soon as you have knowledge of them and pay additional premium, if required. Sight Draft Shipments Notwithstanding the Warehouse To Warehouse Transit Duration Of Insurance provision of this policy, this insurance applies to your interest in shipments of merchandise in transit to which this insurance applies if such merchandise is subject to Sight Draft, Time Draft or Open Account and temporarily delayed in the country of destination pending payment of the purchase price to you, until the first of the following occurs: 60 days pass from the time the delay began; payment to you of the purchase price; or arrival of the merchandise at the final insured destination. Limits Of Insurance The most we will pay in any occurrence is the amount of loss, damage or expense, not to exceed the applicable Limit Of Insurance for Any One Conveyance shown in the Declarations, unless otherwise stated. Subject to the applicable Limit Of Insurance for Any One Conveyance, the most we will pay in any occurrence for merchandise being shipped: A. on deck, subject to an on deck Bill of Lading, is the On Deck Bill of Lading Limit Of Insurance shown in the Declarations; B. by mail or parcel post in any one package, is the applicable Mail or Parcel Post Limit Of Insurance shown in the Declarations; C. by messenger as a connecting conveyance, is the applicable Messenger Limit Of Insurance shown in the Declarations; or D. aboard any one barge or any one tow as a principal conveyance, is the applicable Barge Limit Of Insurance shown in the Declarations. Any payments we make will reduce the applicable Limit Of Insurance for Any One Conveyance shown in the Declarations. If the applicable Any One Conveyance Limit Of Insurance has been reduced to an amount that is less than the applicable Limits Of Insurance described in A., B., C. or D. above, the remaining amount of the Any One Conveyance Limit Of Insurance is the most that will be available for any other payment. The most we will pay in any occurrence under the: A. Consolidation Additional Coverage is the applicable Limit Of Insurance for Consolidation shown under Additional Coverages in the Declarations; Form (Ed. 2-06) Contract Page 18 of 27

19 Limits Of Insurance B. Exhibition Additional Coverage is the applicable Limit Of Insurance for Exhibition shown under Additional Coverages in the Declarations; C. Extra Expense Additional Coverage is the applicable Limit Of Insurance for Extra Expense shown under Additional Coverages in the Declarations; or D. Salespersons Samples Additional Coverage is the applicable Limit Of Insurance for Salespersons Samples shown under Additional Coverages in the Declarations. For the purposes of this policy, any one conveyance means: any one aircraft, vessel or connecting conveyance; or any one location at the time of loss or damage, if merchandise is not on an aircraft, vessel or connecting conveyance. Deductible Subject to the applicable Limit Of Insurance, we will pay the amount of loss, damage or expense: in excess of the applicable Deductible Amount; and in accordance with the applicable Deductible Type described below; both as shown in the Declarations or by endorsement. If the applicable Deductible Type shown in the Declarations or by endorsement is: A. None, then this policy is not subject to a deductible. B. Flat, we will pay the amount of loss, damage or expense in excess of the Deductible Amount shown. C. Franchise, we will pay: 1. the amount of loss, damage or expense if it is greater than the Deductible amount shown; or 2. nothing if the amount of loss, damage or expense is less than or equal to the Deductible Amount shown. D. Percentage, we will pay the amount of loss, damage or expense less the greater of: 1. the applicable percentage (shown as Deductible Percentage) applied to the total covered value of the merchandise; or 2. the applicable Deductible Amount shown. Regardless of the Deductible Type shown, the Deductible applies to all loss, damage or expense, except for: general average and salvage charges; loss, damage or expense caused by or resulting from a specified peril; or total loss or damage or constructive total loss or damage as provided under the Constructive Total Loss provision in the Loss Payment Basis section of this policy. Unless otherwise stated, the Deductible shall apply separately to each bill of lading. Form (Ed. 2-06) Contract Page 19 of 27

20 Loss Payment Basis Invoice Freight And Advance The following Loss Payment Basis provisions apply to all coverages contained within this policy, unless otherwise stated. Subject to the applicable Limit Of Insurance shown in the Declarations: covered property is valued in accordance with the applicable Loss Payment Basis shown under Merchandise Insured in the Declarations and described below; or as otherwise stated under Loss Payment Basis Exceptions. In the event that you are able to obtain a refund of any prepaid, advanced or guaranteed ocean or air freight, the amount of your claim shall be reduced accordingly. You may insure covered property in foreign currencies. If you do, we will pay for loss or damage in the U.S. dollar equivalent of such currency using the free rate of exchange as published by the Wall Street Journal: on the date of invoice; or if the merchandise is not subject to an invoice, on the date this insurance attaches to such merchandise. When the Loss Payment Basis shown in the Declarations is Invoice, Freight and Advance, lost or damaged merchandise will be valued at the amount shown in the invoice (including all charges) plus any prepaid, advanced or guaranteed ocean or air freight not included in the invoice, plus the applicable Advance percentage shown in the Declarations. Pre-Sold Selling Price When the Loss Payment Basis shown in the Declarations is Pre-Sold Selling Price, lost or damaged merchandise will be valued as follows: when the merchandise has been sold by you prior to shipment from the point of origin, it will be valued at your selling price, as established by documented sales invoices, less unincurred expenses or charges at the time of loss or damage; or when the merchandise to which this insurance applies has not been sold by you prior to shipment it will be valued at the amount of invoice (including all charges), plus any prepaid, advanced or guaranteed ocean or air freight not included in the invoice, plus the applicable Advance percentage shown in the Declarations. Selling Price When the Loss Payment Basis shown in the Declarations is Selling Price, lost or damaged merchandise will be valued as follows: when the merchandise has been sold by you prior to shipment from the point of origin, it will be valued at your selling price, as established by documented sales invoices, less unincurred expenses or charges at the time of loss or damage; or when the merchandise has not been sold prior to shipment it will be valued at your selling price as established in price catalogs or similar listings you published prior to the date of shipment from the point of origin, less any normal discounts, unincurred expenses or charges. Form (Ed. 2-06) Contract Page 20 of 27

21 Loss Payment Basis Market Value When the Loss Payment Basis shown in the Declarations is Market Value, lost or damaged merchandise will be valued at the highest market value, as determined by the spot market in New York, New York, for the same type of merchandise during the period between: in the case of arrival of the vessel, the date of arrival at the final insured destination and the seventh business day (Saturdays, Sundays and Holidays excluded) following the completion of discharge from the overseas vessel; or in the case of non arrival of the vessel, the due date of arrival of the vessel at the intended final insured destination and the fourteenth business day (Saturdays, Sundays and Holidays excluded) after the due date of arrival. Actual Cash Value When the Loss Payment Basis shown in the Declarations is Actual Cash Value, lost or damaged merchandise will be valued at the actual cash value at final insured destination on the date of loss or damage plus any prepaid, advance or guaranteed freight, less any unincurred expenses or charges. Other When the Loss Payment Basis shown in the Declarations is Other, lost or damaged merchandise will be valued: at the amount of invoice, including all charges plus any prepaid, advanced or guaranteed ocean or air freight not included in the invoice, plus the applicable Advance percentage shown in the Declarations; at, if not shipped subject to an invoice (including inter-company shipments), the actual cash value at point of destination on the date of loss or damage plus any prepaid, advanced or guaranteed freight, less any unincurred expenses or charges; or as shown in an endorsement attached to this policy. Brands And Trademarks In the event of loss or damage to merchandise, you have two options when: you do not want to sell your lost or damaged merchandise under your brand, label or trademark; or the owner of any lost or damaged merchandise for which you have agreed to provide insurance of the type provided by this policy does not want to sell the lost or damaged merchandise under the owner s brand, label or trademark, even though the lost or damaged merchandise has salvage value. You may: remove the brand, label or trademark and then relabel the lost or damaged merchandise to comply with the law; or label the lost or damaged merchandise as salvage but, in doing so, cause no further loss or damage to the merchandise. In either case, valuation of such merchandise will include the difference between: the salvage value of the lost or damaged merchandise with the brand, label or trademark attached; and the salvage value of the lost or damaged merchandise with the brand, label or trademark removed. Form (Ed. 2-06) Contract Page 21 of 27

22 Loss Payment Basis Constructive Total Loss In the event lost or damaged merchandise is reasonably abandoned because: actual total loss reasonably appears to be unavoidable; or the merchandise cannot be preserved from actual total loss without a reasonable expenditure which would exceed its value if the expenditure had been incurred, we will pay the covered value of such merchandise. Labels In case of covered loss or damage affecting labels, capsules, wrappers, or packaging, we will pay: the amount reasonably incurred to replace such labels, capsules, wrappers or packaging; and the cost of reconditioning the merchandise. In no event will we pay for more than the lesser of: the covered value of the lost or damaged merchandise; or the applicable Limit Of Insurance shown in the Declarations. Machinery In case of partial loss or damage to a part of merchandise: ready for sale or use at the time of loss or damage; and which is a machine or manufactured product consisting of several parts, we will pay for: the proportion that the covered value of that part of such merchandise bears to the covered value of all such merchandise; or at your option, the cost and expense (including labor and forwarding charges), to repair or replace the lost or damaged part, but not including additional import duties (unless such additional duty is included in the values you report). In no event will we pay more than the lesser of: the covered value of such merchandise; or the applicable Limit Of Insurance shown in the Declarations. Partial Loss In case of partial loss or damage, you must separate damaged and undamaged merchandise and use reasonable efforts to protect the undamaged merchandise from loss or damage. We will determine the amount of loss by: applying a percentage of depreciation, agreed to by you and us at the time of loss or damage; or in the event we cannot agree, the difference between the covered value of the loss or damaged merchandise and the actual value received after sale of such merchandise. Form (Ed. 2-06) Contract Page 22 of 27