B-116912, SEPTEMBER 16, 1953, 33 COMP. GEN. 123

B-116912, SEPTEMBER 16, 1953, 33 COMP. GEN. 123

MARINE AND WAR RISK INSURANCE - BINDERS - TIME EXTENSION INASMUCH AS BINDER FEES FOR VESSEL WAR RISK INSURANCE INTERIM BINDERS ARE NOT APPLIED ON THE PAYMENT OF PREMIUMS AND DO NOT CONSTITUTE ANY PART OF THE CONSIDERATION FOR THE RISKS TO BE INSURED IF WAR BREAKS OUT, THE PROPOSAL TO EXTEND THE PERIOD OF TIME DURING WHICH EXISTING BINDERS WILL REMAIN IN FORCE WITHOUT CHARGING ADDITIONAL BINDER FEE IS NOT OBJECTIONABLE AS CONSTITUTING AN AMENDMENT OF A CONTRACT WITHOUT CONSIDERATION.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF COMMERCE, SEPTEMBER 16, 1953:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 3, 1953, FROM THE ACTING SECRETARY OF COMMERCE, RELATIVE TO PROPOSED AMENDMENTS TO GENERAL ORDER 75, 17 FR 8295-8307, UNDER WHICH WAR RISK INSURANCE INTERIM BINDERS COVERING HULL, PROTECTION AND INDEMNITY, AND SECOND SEAMEN'S WAR RISK INSURANCE HAVE BEEN ISSUED PURSUANT TO TITLE XII OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, 64 STAT. 773, 46 U.S.C. SUPP. V, 1281-1294. IS PROPOSED TO AMEND EXISTING AND FUTURE INTERIM BINDERS TO PROVIDE, IN LIEU OF THE PRESENT PROVISION FOR THEIR AUTOMATIC EXPIRATION ONE YEAR FROM THEIR DATES OF ISSUANCE, THAT THEY SHALL CONTINUE IN EFFECT DURING ANY PERIOD IN WHICH THE SECRETARY OF COMMERCE IS AUTHORIZED TO PROVIDE WAR RISK INSURANCE AND TO CONTINUE INSURANCE COVERAGE OF THE VESSELS UNTIL THEY REACH PORT, IF THEY ARE AT SEA WHEN THE PRESENT 30-DAY PERIODS OF COVERAGE BY THE INTERIM BINDERS EXPIRE. A DECISION IS REQUESTED AS TO WHETHER THE PROPOSED EXTENSION OF EXISTING BINDERS, WITHOUT ADDITIONAL BINDER FEES, IS OBJECTIONABLE AS CONSTITUTING AN AMENDMENT OF A CONTRACT WITHOUT CONSIDERATION.

IT IS REPORTED THAT THE PROPOSED AMENDMENTS TO EXISTING (AND FUTURE) BINDERS ARE DETERMINED TO BE IN THE INTEREST OF THE GOVERNMENT BECAUSE THEY WILL FACILITATE THE ADMINISTRATION OF THE INSURANCE PROGRAM BY MAKING IT UNNECESSARY TO RENEW THE BINDERS ANNUALLY. ALSO, THE AMENDMENTS WILL CLARIFY THE RESPONSIBILITIES OF THE ASSURED TO PAY PREMIUMS, AND OF THE UNITED STATES TO PAY LOSSES THAT MAY OCCUR BEFORE THE VESSEL REACHES A PORT, AND AT A TIME WHEN IT MAY BE DIFFICULT TO PROVE WHETHER THE LOSS OCCURRED BEFORE OR AFTER THE INSURANCE EXPIRED BY OPERATION OF THE 30-DAY AUTOMATIC TERMINATION CLAUSE.

INASMUCH AS THE BINDER FEES ARE NOT APPLIED ON THE PAYMENT OF PREMIUMS AND DO NOT CONSTITUTE ANY PART OF THE "CONSIDERATION" FOR THE RISKS TO BE INSURED IF WAR BREAKS OUT, THIS OFFICE PERCEIVES NO OBJECTION TO THE PROPOSED AMENDMENTS.