Commentary
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Part One: Rules common to all types of insurance
- Chapter 1: Introductory provisions
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Chapter 2: General rules relating to the scope of the insurance
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Section 1: Insurable interest and insurable value
- General
- Clause 2-1. Insurance unrelated to any interest
- Clause 2-2. Insurable value
- Clause 2-3. Agreed insurable value
- Clause 2-4. Under-insurance
- Clause 2-5. Over-insurance
- Clause 2-6. Liability of the insurer when the interest is also insured with another insurer
- Clause 2-7. Recourse between the insurers where the interest is insured with two or more insurers
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Section 2: Perils insured against, causation and loss
- General
- Clause 2-8. Perils covered by an insurance against marine perils
- Clause 2-9. Perils covered by an insurance against war perils
- Clause 2-10. Perils insured against when no agreement has been made as to what perils are covered by the insurance
- Clause 2-11. Causation. Incidence of loss
- Clause 2-12. Main rule relating to the burden of proof
- Clause 2-13. Combination of perils
- Clause 2-14. Combination of marine and war perils
- Clause 2-15. Losses deemed to be caused entirely by war perils
- Clause 2-16. Loss attributable either to marine or war perils
- Clause 2-17. Sanction limitation and exclusion
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Section 1: Insurable interest and insurable value
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Chapter 3: Duties of the person effecting the insurance and of the assured
- General remarks
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Section 1: Duty of disclosure of the person effecting the insurance
- Clause 3-1. Scope of the duty of disclosure
- Clause 3-2. Fraudulent misrepresentation
- Clause 3-3. Other failure to fulfil the duty of disclosure
- Clause 3-4. Innocent breach of the duty of disclosure
- Clause 3-5. Cases where the insurer may not invoke breach of the duty of disclosure
- Clause 3-6. Duty of the insurer to give notice
- Clause 3-7. Right of the insurer to obtain particulars from the vessel's classification society, etc.
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Section 2: Alteration of the risk
- Clause 3-8. Alteration of the risk
- Clause 3-9. Alteration of the risk caused or agreed to by the assured
- Clause 3-10. Right of the insurer to cancel the insurance
- Clause 3-11. Duty of the assured to give notice
- Clause 3-12. Cases where the insurer may not invoke alteration of the risk
- Clause 3-13. Duty of the insurer to give notice
- Clause 3-14. Loss of the main class
- Clause 3-15. Trading areas
- Clause 3-16. Illegal undertakings
- Clause 3-17. Suspension of insurance in the event of requisition
- Clause 3-18. Notification of requisition
- Clause 3-19. Suspension of insurance while the vessel is temporarily seized
- Clause 3-20. Removal of the vessel to a repair yard
- Clause 3-21. Change of ownership
- Section 3: Safety regulations
- Section 4: Measures to avert or minimise loss, etc.
- Section 5: Casualties caused intentionally or negligently by the assured
- Section 6. Identification
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Chapter 4: Liability of the insurer
- General
- Section 1: General rules relating to the liability of the insurer
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Section 2: Costs of measures to avert or minimise the loss, including salvage awards and general average
- General
- Clause 4-7. Compensation of the costs of measures to avert or minimise loss
- Clause 4-8. General average
- Clause 4-9. General average apportionment where the interests belong to the same person
- Clause 4-10. Damage to and loss of the object insured
- Clause 4-11. Assumed general average
- Clause 4-12. Costs of particular measures taken to avert or minimise loss
- Section 3: Liability of the assured to third parties
- Section 4: The sum insured as the limit of the liability of the insurer
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Chapter 5: Settlement of claims
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Section 1: Claims adjustment, interest, payments on account, etc.
- Clause 5-1. Duty of the assured to provide information and documents
- Clause 5-2. Claims adjustment
- Clause 5-3. Rates of exchange
- Clause 5-4. Interest on the compensation
- Clause 5-5. Disputes concerning the adjustment of the claim
- Clause 5-6. Due date
- Clause 5-7. Duty of the insurer to make a payment on account
- Clause 5-8. Payment on account when there is a dispute as to which insurer is liable for the loss
- Section 2: Liability of the assured to third parties
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Section 3: Claims by the assured for damages against third parties
- Clause 5-13. Right of subrogation of the insurer to claims by the assured for damages against third parties
- Clause 5-14. Waiver of claim for damages
- Clause 5-15. Duty of the assured to assist the insurer with information and documents
- Clause 5-16. Duty of the assured to maintain and safeguard the claim
- Clause 5-17. Decisions concerning legal proceedings or appeals
- Clause 5-18. Salvage award which entails compensation for loss covered by the insurer
- Section 4: Right of the insurer to take over the object insured upon payment of a claim
- Section 5: Limitation, etc.
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Section 1: Claims adjustment, interest, payments on account, etc.
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Chapter 6: Premium
- General
- Clause 6-1. Payment of premium
- Clause 6-2. Right of the insurer to cancel the insurance in the event of non-payment of premium
- Clause 6-3. Premium in the event of total loss
- Clause 6-4. Additional premium when the insurance is extended
- Clause 6-5. Reduction of premium
- Clause 6-6. Reduction of premium when the vessel is laid up or in similar situations
- Clause 6-7. Claim for a reduction of premium
- Chapter 7: Co-insurance of mortgagees
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Chapter 8: Co-insurance of third parties
- General
- Clause 8-1. Rights of third parties against the insurer
- Clause 8-2. Protection of third parties against subrogation claims from the insurer
- Clause 8-3. Application of the rules in Chapter 3 and Clause 5-1
- Clause 8-4. Amendments and cancellation of the insurance contract
- Clause 8-5. Handling of claims, claims adjustment, etc.
- Clause 8-6. Other insurance
- Clause 8-7. Independent co-insurance of mortgagees or named third parties
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Chapter 9: Relations between the claims leader and co-insurers
- General
- Clause 9-1. Definitions
- Clause 9-2. The right of the claims leader to act on behalf of the co-insurers
- Clause 9-3. Lay-up plan
- Clause 9-4. Notification of a casualty
- Clause 9-5. Salvage
- Clause 9-6. Removal and repairs
- Clause 9-7. Provision of security
- Clause 9-8. Disputes with third parties
- Clause 9-9. Claims adjustment
- Clause 9-10. Insolvency of a co-insurer
- Clause 9-11. Interest on the disbursements of the claims leader
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Part Two: Hull insurance
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Chapter 10: General rules relating to the scope of the hull insurance
- Clause 10-1. Objects insured
- Clause 10-2. Objects, etc. temporarily removed from the vessel
- Clause 10-3. Loss due to ordinary use
- Clause 10-4. Insurance "on full conditions"
- Clause 10-5. Insurance “against total loss only” (T.L.O.)
- Clause 10-6. Insurance “against total loss and general average contribution only”
- Clause 10-7. Insurance “against total loss, general average contribution and collision liability only”
- Clause 10-8. Insurance "on stranding terms"
- Clause 10-9. Duration of voyage insurance
- Clause 10-10. Extension of the insurance
- Clause 10-11. Liability of the insurer if the vessel is salvaged by the assured
- Clause 10-12. Reduction of liability in consequence of an interest insurance
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Chapter 11: Total loss
- Clause 11-1. Total loss
- Clause 11-2. Salvage attempts
- Clause 11-3. Condemnation
- Clause 11-4. Condemnation in the event of a combination of perils
- Clause 11-5. Request for condemnation
- Clause 11-6. Removal of the vessel
- Clause 11-7. Missing or abandoned vessel
- Clause 11-8. Extension of the insurance when the vessel is missing or abandoned
- Clause 11-9. Liability of the insurer during the period of clarification
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Chapter 12: Damage
- General
- Clause 12-1. Main rule concerning liability of the insurer
- Clause 12-2. Compensation for unrepaired damage
- Clause 12-3. Inadequate maintenance, etc.
- Clause 12-4. Error in design, etc.
- Clause 12-5. Losses that are not recoverable
- Clause 12-6. Deferred repairs
- Clause 12-7. Temporary repairs
- Clause 12-8. Costs incurred in expediting repairs
- Clause 12-9. Repairs of a vessel that is condemnable
- Clause 12-10. Survey of damage
- Clause 12-11. Invitations to tender
- Clause 12-12. Choice of repair yard
- Clause 12-13. Removal of the vessel
- Clause 12-14. Apportionment of common expenses
- Clause 12-15. Ice damage deductions
- Clause 12-16. Machinery damage deductions
- Clause 12-17. Compensation without deductions
- Clause 12-18. Deductible
- Clause 12-19. Basis for calculation of deductions according to Clauses 12-15 to 12-18 and Clause 3-15
- Chapter 13: Liability of the assured arising from collision or striking
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Chapter 10: General rules relating to the scope of the hull insurance
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Part Three: Other insurances for ocean-going vessels
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Chapter 14: Separate insurances against total loss
- General
- Clause 14-1. Insurance against total loss and excess collision liability (hull interest insurance)
- Clause 14-2. Insurance against loss of long-term freight income (freight interest insurance)
- Clause 14-3. Common rules for separate insurances against total loss
- Clause 14-4. Limitations on the right to effect separate insurances against total loss
- Chapter 15: War risks insurance
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Chapter 16: Loss of hire insurance
- General
- Clause 16-1. Main rules regarding the liability of the insurer
- Clause 16-2. Total loss
- Clause 16-3. Main rule for calculating compensation
- Clause 16-4. Calculation of the loss of time
- Clause 16-5. The daily amount
- Clause 16-6. Agreed daily amount
- Clause 16-7. Deductible period
- Clause 16-8. Survey of damage
- Clause 16-9. Choice of repair yard
- Clause 16-10. Removal to the repair yard, etc.
- Clause 16-11. Extra costs incurred in order to avert or minimise loss
- Clause 16-12. Simultaneous repairs
- Clause 16-13. Loss of time after completion of repairs
- Clause 16-14. Repairs carried out after expiry of the insurance period
- Clause 16-15. Liability of the insurer when the vessel is transferred to a new owner
- Clause 16-16. Relationship to other insurances and general average
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Chapter 14: Separate insurances against total loss
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Part Four: Other insurances
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Chapter 17: Insurance for fishing vessels
- General
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Section 1: General provisions
- Clause 17-1. Scope of application
- Clause 17-2. Renewal of the insurance/Ref. Clause 1-5
- Clause 17-3. Trading areas for fishing vessels/Ref. Clause 3-15
- Clause 17-4. Classification and vessel inspection/Ref. Clause 3-14 and Clause 3-8
- Clause 17-5. Safety regulations/Ref. Clause 3-22 and Clause 3-25
- Clause 17-6. Savings to the assured
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Section 2: Hull insurance
- General
- Clause 17-7. The relationship to Chapters 10-13
- Clause 17-7A. Fixed equipment temporarily removed from the vessel
- Clause 17-8. Change of the open or agreed insurable value/Ref. Clause 2-2 and Clause 2-3
- Clause 17-9. Damage to lifeboats, fishing, whaling and sealing tackle and catch/Ref. Clause 4-7 to Clause 4-12 and Clause 4-16
- Clause 17-10. Hull and freight-interest insurance/Ref. Clause 10-12
- Clause 17-11. Condemnation/Ref. Clause 11-3
- Clause 17-12. Damage to the hull of vessels which are not built of steel/Ref. Clause 12-1
- Clause 17-13. Limited cover of damage to machinery
- Clause 17-14. Costs incurred in saving time/Ref. Clause 12-7, Clause 12-8, Clause 12-11 and Clause 12-12
- Clause 17-15. Deductions/Ref. Clause 12-15, Clause 12-16 and Clause 12-18
- Clause 17-16. Collision liability for fishing vessels/Ref. Clause 13-1
- Clause 17-17. Collision liability/Ref. Clause 13-1
- Section 3: Hull insurance - extended cover
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Section 4: Catch and equipment insurance - standard cover
- General
- Clause 17-19. Objects insured
- Clause 17-20. Insurable value
- Clause 17-21. Extraordinary handling costs
- Clause 17-22. Excluded perils/Ref. Clause 2-8
- Clause 17-23. Deck cargo
- Clause 17-24. Total loss
- Clause 17-25. Damage to or loss of catch
- Clause 17-26. Damage to other objects
- Clause 17-27. Survey of damage
- Clause 17-28. Deductible
- Section 5: Supplementary cover for nets and seines in the sea
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Section 6: Loss of hire insurance for fishing vessels
- General comments
- Clause 17-33. Relationship to Chapter 16
- Clause 17-34. Liability of the insurer/applies instead of Clause 16-1
- Clause 17-35. Total loss/applies instead of Clause 16-2
- Clause 17-36. Calculation of compensation for fishing vessels/Ref. Clause 16-3
- Clause 17-37. The daily amount for fishing vessels/applies instead of Clause 16-5
- Clause 17-38. Agreed daily amount for fishing vessels/applies instead of Clause 16-6
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Chapter 18: Insurance of mobile offshore units (MOUs)
- Overview
- Section 1: General rules relating to the scope of the insurance
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Section 2: Hull insurance
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Section 2-1: General rules relating to the scope of the H&M insurance
- Clause 18-2. Objects insured
- Clause 18-3. Objects temporarily removed or separated etc. from the MOU
- Clause 18-4. Loss due to ordinary use
- Clause 18-5. Extension of the insurance
- Clause 18-6. Liability of the insurer if the MOU is salvaged by the assured
- Clause 18-7. Reduction of liability in consequence of an interest insurance
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Section 2-2: Total loss
- Clause 18-8. Total loss
- Clause 18-9. Salvage attempts
- Clause 18-10. Condemnation
- Clause 18-11. Condemnation in the event of a combination of perils
- Clause 18-12. Request for condemnation
- Clause 18-13. Removal of the MOU
- Clause 18-14. Missing or abandoned MOU
- Clause 18-15. Extension of the insurance when the MOU is missing or abandoned
- Clause 18-16. Liability of the insurer during the period of clarification
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Section 2-3: Damage
- General
- Clause 18-17. Main rule concerning liability of the insurer
- Clause 18-18. Compensation for unrepaired damage
- Clause 18-19. Inadequate maintenance
- Clause 18-20. Error in design, etc.
- Clause 18-21. Losses that are not recoverable
- Clause 18-22. Damage to the drill string
- Clause 18-23. Deferred repairs
- Clause 18-24. Temporary repairs
- Clause 18-25. Costs incurred in expediting repairs
- Clause 18-26. Repairs of an MOU that is condemnable
- Clause 18-27. Survey of damage
- Clause 18-28. Invitations to tender
- Clause 18-29. Choice of repairers
- Clause 18-30. Removal for repairs
- Clause 18-31. Apportionment of common expenses
- Clause 18-32. Ice damage deductions
- Clause 18-33. Deductible
- Clause 18-34. Basis for calculation of deductions according to Clauses 18-32, 18-33 and 3-15
- Section 2-4: Liability of the assured arising from collision or striking
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Section 2-1: General rules relating to the scope of the H&M insurance
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Section 3: Separate insurances against total loss
- Clause 18-39. Insurance against total loss and excess collision liability (hull interest insurance)
- Clause 18-40. Insurance against loss of long-term freight income (freight interest insurance)
- Clause 18-41. Common rules for separate insurances against total loss
- Clause 18-42. Limitations on the right to insure separately against total loss
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Section 4: Loss of hire insurance
- Clause 18-43. Main rules regarding the liability of the insurer
- Clause 18-44. Total loss
- Clause 18-45. Main rule for calculating compensation
- Clause 18-46. Calculation of the loss of time
- Clause 18-47. The daily amount
- Clause 18-48. Agreed daily amount
- Clause 18-49. Deductible period
- Clause 18-50. Survey of damage
- Clause 18-51. Choice of repairer
- Clause 18-52. Move to the repair location, etc.
- Clause 18-53. Extra costs incurred in order to avert or minimise loss
- Clause 18-54. Simultaneous works
- Clause 18-55. Loss of time after completion of repairs
- Clause 18-56. Repairs carried out after expiry of the insurance period
- Clause 18-57. Liability of the insurer when the MOU is transferred to a new owner
- Clause 18-58. Relationship to other insurances and general average
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Section 5: War risks insurance
- Section 5-1: General rules relating to the scope of war risks insurance
- Section 5-2: Termination of the insurance
- Section 5-3: Areas of operation
- Section 5-4: Total loss
- Section 5-5: Damage
- Section 5-6: Loss of hire
- Section 5-7: Owner’s liability, etc. (P&I)
- Section 5-8: Occupational injury insurance, etc.
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Section 6: Construction risks insurance
- Section 6-1: General rules relating to the scope of construction risks insurance
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Section 6-2: Loss of or damage to the MOU
- Clause 18-87. Objects insured/Ref Clause 18-2
- Clause 18-88. Insurable value
- Clause 18-89. Compensation in the event of a total loss/Ref. Clause 4-1
- Clause 18-90. Total Loss/Ref. Section 2-2
- Clause 18-91. Damage/Ref. Section 2-3
- Clause 18-92. Error in design, etc.
- Clause 18-93. Costs incurred in order to save time/Ref. Clauses 18-24, 18-28 and 18-29
- Section 6-3: Supplementary covers
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Chapter 19: Builders’ risks insurance
- General
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Section 1: Common provisions
- Clause 19-1. Perils covered/Ref. Clause 2-8, cf. Clause 2-10
- Clause 19-2. Insurance period/Ref. Clause 1-5
- Clause 19-2A. Premium in the event of total loss
- Clause 19-3. Co-insurance/Ref. Clause 8-1
- Clause 19-4. Transfer of the building contract/Ref. Clause 3-21
- Clause 19-5. Place of insurance
- Clause 19-6. The sum insured as the limit of the liability of the insurer/Ref. Clause 4-18 and Clause 4-19
- Clause 19-7. Escalation of the sum insured
- Clause 19-8. Deductible
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Section 2: Loss of or damage to the subject-matter insured
- Clause 19-9. Objects insured/Ref. Clause 10-1
- Clause 19-10. Insurable value
- Clause 19-11. Total loss in the event of condemnation
- Clause 19-12. Total loss where the yard’s obligation to deliver no longer applies
- Clause 19-13. Compensation in the event of a total loss/Ref. Clause 4-1
- Clause 19-14. Damage/Ref. Chapter 12
- Clause 19-15. Limitation of the insurer’s liability/Ref. Clause 12-1
- Clause 19-16. Compensation for unrepaired damage/Ref. Clause 12-2
- Clause 19-17. Costs incurred in order to save time/Ref. Clause 12-7, Clause 12-11 and Clause 12-12
- Section 3: Indemnification of additional costs incurred in an unsuccessful launching and costs of wreck removal
- Section 4: Liability insurance
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Section 5: Supplementary covers
- Clause 19-22. Applicable rules
- Clause 19-23. Insurance of additional costs in connection with rebuilding and/or building of a new subject-matter insured
- Clause 19-24. Insurance of the yard’s liability for the buyer’s interest claim for instalments paid
- Clause 19-25. Insurance of the yard’s loss of interest in the event of late delivery
- Clause 19-26. Insurance of the yard’s daily penalties in the event of late delivery
- Clause 19-27. Towage and removal of the subject-matter insured
- Section 6: Supplementary cover for war risks
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Chapter 20: Insurance for vessels with trading certificates
- General
- Section 1: Common provisions
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Section 2: Hull insurance
- General
- Clause 20-6. The relationship to Chapters 10-13
- Clause 20-7. Hull and freight-interest insurance/Ref. Clause 10-12
- Clause 20-8. Condemnation/Ref. Clause 11-3
- Clause 20-9. Damage to the hull of vessels which are not built of steel/Ref. Clause 12-1
- Clause 20-10. Limited cover of damage to machinery
- Clause 20-11. Costs incurred in saving time/Ref. Clause 12-7, Clause 12-8, Clause 12-11 and Clause 12-12
- Clause 20-12. Deductions/Ref. Clause 12-15, Clause 12-16 and Clause 12-18
- Clause 20-13. Collision liability/Ref. Clause 13-1
- Section 3: Hull insurance - extended cover
- Section 4: Hull insurance - limited cover
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Chapter 21: Liability insurance
- Clause 21-1. Scope of application
- Clause 21-2. Renewal of the insurance/Ref. Clause 1-5
- Clause 21-3. Classification and vessel inspection/Ref. Clause 3-14 and Clause 3-8
- Clause 21-4. Savings to the assured
- Clause 21-5. Perils covered
- Clause 21-6. Liability for personal injury
- Clause 21-7. Liability for property damage
- Clause 21-8. Liability for description
- Clause 21-9. Liability for the misdelivery of goods
- Clause 21-10. General average contributions
- Clause 21-11. Liability for removal of wrecks
- Clause 21-12. Liability for special salvage compensation
- Clause 21-13. Liability for bunker oil pollution damage and damage to the environment
- Clause 21-14. Stowaways
- Clause 21-15. Liability for fines, etc.
- Clause 21-16. Liability for social benefits for the crew
- Clause 21-17. Travel expenses for replacement crew
- Clause 21-18. Expenses for disinfection and quarantine
- Clause 21-19. Limitation due to other insurance, etc.
- Clause 21-20. Safety regulations/Ref. Clause 3-22 and Clause 3-25
- Clause 21-21. Assured's fault
- Clause 21-22. The insurer's rights in the event of liability
- Clause 21-23. Liability for loss that occurred during other transport, etc.
- Clause 21-24. Limitation of liability for fishing vessels
- Clause 21-25. Limitation of the insurer's liability for measures to avert or minimise loss
- Clause 21-26. The sum insured as a limit to the insurer's liability
- Clause 21-27. Deductible
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Chapter 17: Insurance for fishing vessels
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Section 5: Supplementary covers
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Clause 19-22. Applicable rules
View Clause Go to Plan pageThe Commentary was rewritten in the 2013 Plan.
This Clause maintains the principle that it is possible to expand the builders’ risks insurance by taking out supplementary covers. A factor common to all such supplementary covers is that the Clauses of Chapter 19, Sections 1 to 4, as a rule are applicable. The same applies to Section 5, but only insofar as the content of the Clauses does not deviate from the main rule.
The 2013 Plan introduces one entirely new standardised supplementary cover which may be agreed upon, i.e. Cl. 19-27 covering towage of the subject-matter insured in the water or on a barge.
Furthermore, the former Cl. 19-25 has now been divided into two parts. In the 2013 Plan, it was decided to split up the supplementary cover for the yard’s loss of interest and its daily penalties in the event of late delivery into two different clauses. This was done because it has not always been logical for the yard to buy both insurances. Cl. 19-25 now concerns only the yard’s loss of interest in the event of late delivery, while supplementary insurance of the yard’s daily penalties must from now on be covered under the new Cl. 19-26.
All such supplementary covers must be agreed on in advance and must be explicitly included in the insurance certificate for the builders’ risks insurance.
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Clause 19-23. Insurance of additional costs in connection with rebuilding and/or building of a new subject-matter insured
View Clause Go to Plan pageThe heading and the Commentary were amended in the 2013 Plan.
This Clause concerns insurance of additional costs in connection with the rebuilding/building of a new subject-matter insured. It therefore only applies in the event of a total loss necessitating rebuilding and does not apply to repairs of damage covered under Cl. 19-14 et seq. In the event of total loss that does not result in a rebuilding, such costs are not incurred.
The insurer’s liability is defined as the difference between what is recoverable under the builders’ risks insurance and the costs of rebuilding. The difference will normally consist of the ordinary increase in the price of materials, components and equipment, and any wage increases during the rebuilding period, e.g. if the building project should be delayed by 12 months.
Compensation for additional costs will not be payable until the sum insured under the ordinary builders´ risk insurance has been used up.
It follows from Cl. 19-22 and the reference in Cl. 19-14 to Chapter 12, cf. Cl. 12-1, sub-clause 2, that the insurer’s liability arises as and when costs are incurred.
Normally, the additional costs according to the building contract will be the yard’s risk which means that it is the yard that is entitled to the compensation.
The sum insured shall always be stated in the insurance contract. The same applies to the insurable value, cf. Cl. 2-2 and Cl. 2-3. If only one amount is stated in the insurance contract, it must be presumed that the insurance has been effected with an open insurable value.
The sum insured for additional costs is normally set at 10% of the contract price.
This provision must not be confused with the new escalation Clause in Cl. 19-7, which also provides for an increase of up to 10% of the sum insured. The escalation cover is now part of the ordinary builders’ risks insurance, and is not defined as a supplementary cover in Chapter 5. Nor, unlike the present provision, is it applicable in the case of rebuilding after a total loss.
Clause 19-23. Insurance of additional costs in connection with rebuilding and/or building of a new subject-matter insured
The insurance covers the difference between compensation paid under the builders’ risks insurance, cf. Sections 1 and 2, and the costs of rebuilding/building of a new subject-matter insured.
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Clause 19-24. Insurance of the yard’s liability for the buyer’s interest claim for instalments paid
View Clause Go to Plan pageThe Commentary was amended in the 2013 Plan.
It is specified in the Clause heading that this supplementary cover applies to the yard’s liability for the buyer’s claim for interest on instalments paid. This is done in order to make it clear that it is a question of a liability insurance taken out by the yard.
The insurance is effected by the yard and relates to the yard’s contractual obligations in relation to the buyer. In contrast to the ordinary liability cover under the builders’ risks insurance in Section 4, Cl. 19-24 therefore concerns contract liability associated with the building contract.
The yard’s liability for the buyer’s interest claims in the event of a total loss refers to the instalments that have been paid by the buyer to the yard during the building period. The liability is limited to the sum insured.
The supplementary cover only comprises the interest claim if ”the duty to deliver is terminated due to loss or damage which is recoverable under Cl. 19-12”. If the buyer cancels the building contract due to a breach of contract and in this connection is entitled to a refund of the instalments, the buyer’s interest claim is not covered under an insurance according to Cl. 19-24. It is also based on the assumption that the loss or damage does not result in a rebuilding, cf. the references to Cl. 19-12. In the event of rebuilding the instalments shall not be repaid. The reference to Cl. 19-12 must be seen in conjunction with the requirement that the duty to deliver is terminated; if an incident of damage is settled under the condemnation rule in Cl. 19-11 without the duty to deliver being terminated, there will be no interest cover.
According to the second sentence, interest shall be calculated from the date of payment of the individual instalment until the time of the total loss. It follows from general rules of liability law that the buyer has the burden of proving his loss in relation to the yard, and from Cl. 2-12 that the yard has a corresponding burden of proof vis-à-vis the insurer.
Clause 19-24. Insurance of the yard’s liability for the buyer’s interest claim for instalments paid
The insurance covers the yard’s liability for the buyer’s interest claim under the building contract in the event that the obligation to deliver ceases to apply due to loss or damage which is recoverable under Cl. 19-12. Interest is calculated from the time of payment of the individual instalment...
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Clause 19-25. Insurance of the yard’s loss of interest in the event of late delivery
View Clause Go to Plan pageThe Clause was amended in the 2013 Plan. In previous versions of the Norwegian Marine Insurance Plan the insurance covered both the yard´s loss of interest and its daily penalties, but the daily penalties was removed from the cover in the 2013 Plan. Further, there was made some amendments in sub-clause 4.
The provision is comparable to a loss of hire insurance or an insurance against late delivery of a newbuilding which is taken out by the buyer. However, the provision in Cl. 19-25 only covers the yard’s loss. The supplementary cover is expensive in relation to the ordinary builder’s risks insurance, but is in practice used to some extent.
Sub-clause 1 states that the insurance covers the yard’s interest loss resulting from late delivery due to damage which is recoverable under the builders’ risks insurance according to Sections 1 and 2. According to Cl. 2-12 the yard has the burden of proving the loss suffered.
Sub-clause 2 contains rules regarding deductible. In the same way as for an ordinary loss-of-hire insurance, deductible is agreed in the form of a deductible period. Today a deductible period of 14 days is customary. The deductible period shall apply to any one casualty that results in delays and subsequent loss of interest under the builders’ risks insurance.
Sub-clause 3 states the insurer’s maximum liability for any one casualty. The insurer’s liability for the yard´s loss of interest in the event of late delivery is limited to a certain number of days. The loss of interest must be specified in whole days.
Sub-clause 4 was editorially amended in the 2013 Plan. The terms “takeover date” and “taken over” in the 1996 Plan was replaced with “delivery date” and “taken delivery”. The Clause lays down rules regarding the length of the insurance period. If the assured and the buyer agree to postpone the delivery date due to circumstances which do not provide grounds for compensation under this supplementary cover, the insurance will automatically be extended subject to an additional premium. As in the event of an extension of the principal cover, cf. Cl. 19-2, the additional premium shall be determined in the insurance contract. Extensions are limited to nine months, cf. the reference to Cl. 19-2, sub-clause 3.
When determining whether there has been “late delivery”, the basis for the calculation is the delivery date agreed between the assured and the buyer. Sub-clause 5 lays down a specific rule on loss due to a combination of causes and concords in that respect with the principle in Cl. 2-13. If the delay is the result partly of damage entitling the assured to compensation under the builders’ risks insurance, partly of uncovered circumstances, the insurer covers a proportional part of loss of interest calculated on the basis of the loss which the two groups of causes of delay would have entailed beyond the deductible period if they had arisen separately.
Sub-clause 6 states that if the assured takes measures to avert or minimise the delay covered by the insurance, the insurer shall not be liable for more than the amount he should have paid if no such measures had been taken. This solution is in accordance with Cl. 16-11, sub-clauses 2 and 3. In many ways, cover under Cl. 19-25 is built up in the same way as loss-of-hire insurance, with a deductible period, etc., and it is therefore logical to include a corresponding rule here.
Clause 19-25. Insurance of the yard’s loss of interest in the event of late delivery
The insurance covers the yard’s loss of interest resulting from late delivery due to damage which is recoverable under the builders’ risks insurance, cf. Sections 1 and 2. For any one casualty a deductible period shall be determined which is calculated from the start of the casualty and lasts unt...
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Clause 19-26. Insurance of the yard’s daily penalties in the event of late delivery
View Clause Go to Plan pageAs stated in the Commentary on Cl. 19-22, in the 2013 Plan it was decided to split up the supplementary cover for the yard’s loss of interest and daily penalties in the event of late delivery into two different clauses. This has been done in order to make it easier for the yard in the event it wishes to purchase just one of the products, i.e. cover for either loss of interest or for daily penalties. It has been seen in practice that it is expedient to distinguish between the two categories because supplementary cover for loss of interest and such cover for daily penalties are almost always agreed separately and independently of one another. This Clause therefore deals only with the yard’s daily penalties in the event of late delivery. No change in the substance of the content of the former Cl. 19-25 was intended.
For the same reason, the Commentary on Cl. 19-26 is virtually identical to the Commentary on Cl. 19-25.
With regard to daily penalties in the event of late delivery, the Clause is comparable to a loss-of-hire insurance or an insurance for late delivery of a newbuilding that is contracted by the buyer. Sub-clause 1 states that the insurance covers the yard’s daily penalties resulting from late delivery due to damage which is recoverable under the builders’ risks insurance under Sections 1 and 2. Under Cl. 2-12, the yard has the burden of proving the loss that has been suffered.
Sub-clause 2 contains rules regarding deductibles. As is the case for an ordinary loss-of-hire insurance, the deductible is agreed in the form of a deductible period. The deductible period applies to any one casualty that results in a delay and subsequent daily penalties under the builders’ risks insurance.
Sub-clause 3 states the insurer’s maximum liability for any one casualty. As under loss-of-hire insurance, the insurer’s liability is defined in the form of an agreed daily amount and a certain number of days.
Sub-clause 4 sets out rules regarding the length of the insurance period. If the assured and the buyer agree to postpone the delivery date due to circumstances that do not constitute grounds for compensation under this supplementary cover, the insurance will automatically be extended subject to an additional premium. As in the case of an extension of the principal cover, cf. Cl. 19-2, the additional premium shall be determined in the insurance contract. The extension is limited to nine months, cf. the reference to Cl. 19-2, sub-clause 3.
When determining whether there has been “late delivery”, the basis for the calculation is the delivery date agreed between the assured and the buyer. Sub-clause 5 lays down a specific rule on loss due to a combination of causes and in that respect tallies with the principle in Cl. 2-13. If the delay is the result partly of damage entitling the assured to compensation under the builders’ risks insurance, and partly of uncovered circumstances, the insurer covers a proportional part of the daily penalties calculated on the basis of the loss which the two groups of delay causes would have entailed beyond the deductible period if they had arisen separately.
Sub-clause 6 states that if the assured takes measures to avert or minimise the delay covered by the insurance, the insurer shall not be liable for more than the amount that he would have had to pay if no such measures had been taken, This solution concords with Cl. 16-11, sub-clauses 2 and 3. In many ways, cover under Cl. 19-26 is built up in the same way as loss- of-hire insurance, with a pre-agreed deductible period, and it is therefore logical to include a corresponding rule here.
The problem can be illustrated by an example:
Just before a fishing vessel is delivered, the sonar’s bottom equipment is damaged, and the damage is recoverable under the builders’ risks insurance. The ordering, delivery and installation of new parts will delay delivery by 10 days. To avoid late delivery, alternative bottom equipment is leased and installed, and the replacement of this equipment with “correct” new equipment is postponed to a later date when it can be done without extra loss of hire.
In this way, ten days of delay are avoided by paying for the lease of alternative equipment and extra installation/dismantling costs. However, covering this amount in full without regard for the fact that the assured would not have received any compensation at all if a 14-day deductible was applied is not reasonable and contrary to the solution under Cl. 16-11. In relation to Cl. 19-25, it is therefore more logical to follow the same principles as under the loss-of-hire insurance.
Clause 19-26. Insurance of the yard’s daily penalties in the event of late delivery
The insurance covers the yard’s daily penalties resulting from late delivery due to damage which is recoverable under the builders’ risks insurance, cf. Sections 1 and 2. For any one casualty a deductible period shall be determined which is calculated from the start of the casualty and lasts unti...
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Clause 19-27. Towage and removal of the subject-matter insured
View Clause Go to Plan pageThis Clause is new in the 2013 Plan. The Clause has been placed in Chapter 19, Section 5, which means that it is a “supplementary cover” that may be agreed on and included in the ordinary builders’ risks insurance contract.
The rationale for incorporating a clause regarding towage under the builders’ risks insurance is that more and more hulls/sections and modules are being built at yards other than the outfitting yard, including foreign yards, while outfitting and commissioning largely take place at the yard that has taken out the builders’ risks insurance. Up until now, the towage risk has often been covered separately under the builders’ risks insurance, while this risk can now be covered through such supplementary cover as part of the ordinary builders’ risks insurance. However, this is conditional on the supplementary cover having been agreed in advance with the company and on this being stated in the insurance certificate. It will also be logical to include in the insurance certificate particulars regarding the agreed sum insured, the locations from and to which the tow is to be carried out, and the time period for the tow.
The provision regarding the range of perils covered in Cl. 19-1 will also apply when the subject-matter insured is under tow. The provisions of Chapter 19 otherwise apply. This means, for instance, that the condemnation limit applicable to towage is determined by the provision in Cl. 19-11, which means that the condemnation limit is set at 100% (and not 80% as stated in Chapter 11 of the Plan). Correspondingly, some of the clauses in Chapter 12 of the Plan (damage) will be excluded in accordance with the content of Cl. 19-14. If there should be a desire to expand or limit the scope of cover during towage in this connection, it will be logical to do so by using one of the alternative covers in Chapter 10 of the Plan, cf. Cl. 10-4 to Cl. 10-8, for instance Cl. 10-5, Insurance “against total loss only”.
With regard to liability arising during towage, it follows from Cl. 19-7 that the insurance covers liability up to the sum insured per casualty. Any payment made under the liability insurance will be additional to compensation paid for damage/total loss and salvage costs. If a special insurance for towage under Cl. 19-27 has been taken out, the sum insured agreed for the tow will be the limitation amount, as opposed to the total sum insured for the entire builders’ risks cover.
The tow can be carried out as an ordinary “wet tow”, where the subject-matter insured is towed floating in the water. But the insurance also covers “dry tows”, where the subject-matter insured is placed on a barge. In such event, the range of perils is the same as for tows in the sea. The insurance also covers the transport of the subject-matter insured or components thereof on board a vessel during land or air transport.
Sub-clause 2 deals with the special risk related to loading and discharge operations, which has been treated slightly differently. When the tow has arrived at the destination – which will as a rule be the outfitting yard - the builders’ risks insurance will continue to apply until the work is completed and the subject-matter insured is delivered. In other words, if additional cover has been taken out for the tow, the discharge from a barge will take place during the actual insurance period. For the same reason, it is specified in sub-clause 2 that the discharge of the subject-matter insured, is covered by the supplementary cover for the tow.
On the other hand, loading on board a barge will not automatically be covered. Whether such loading is for the account and risk of the hull yard or the outfitting yard is determined by the delivery conditions set out in the agreement between the two. If the outfitting yard takes over the sections/modules before they are loaded on board the barge, the yard in question will usually include this operation in its insurance. In such case, this must be specified in the builders’ risks insurance contract in connection with the inception of the insurance cover, which will thus be prior to the commencement of the tow.
Sub-clause 3 sets out the safety regulations for towage. Tows must always be surveyed and approved by a surveyor that is approved in advance by the insurer. Admittedly, there are no formal requirements or standard templates for the survey report on the towage risk. Large, reputable surveyors will normally use their own approved “Certificates of Approval”. These documents generally contain provisions regarding the securing of the tow for the voyage, stability requirements, permitted towing speed, “weather windows” (i.e. maximum wind speeds and wave height) and sometimes also provisions specifying when and where the tug must put into a port of refuge. This certificate is routinely signed by the tugmaster, i.e. the captain of the tug that is to be used for the voyage/another representative of the owner, after which it is sent to the yard and its leading insurer. If the assured has ensured that the safety regulations in Cl. 19-27, sub-clause 3 (a)-(d), are complied with prior to the commencement of the tow, any loss that may be incurred as a result of the tug not following the orders issued by the assured will not be attributed to him.
The requirement that the tow must be surveyed does not apply to internal berth shifts and removals of the subject-matter insured on the yard’s own site, cf. the last sub-clause of the Clause. Such removals could, for instance, be a transfer from the building site to the yard’s own outfitting dock. It makes no difference whether the subject-matter insured is moved by means of winches, is towed or proceeds under its own power. The decisive factor is that it must at all times remain within the yard’s own area in order not to trigger the survey obligation.
If the insurer wishes to make the towage risk subject to special safety regulations, this must also be specified in the insurance certificate.
Sub-clause 4 establishes that if the subject-matter insured is moved in other ways, the safety regulations in sub-clause 3 apply correspondingly. When the subject-matter insured or components thereof are transported by vessel, over land or by air, this operation will also have to be surveyed and approved.
Clause 19-27. Towage and removal of the subject-matter insured
The insurance covers towage or removal of the subject-matter insured or components thereof. In the case of towage on a barge, the insurance also covers loss of or damage to the subject-matter insured or components thereof which occurred during discharge. Subject to agreement, the insurance also...
Clause 19-22. Applicable rules
If supplementary cover has been agreed according to Cl. 19-23 to Cl. 19-27 the rules in Chapter 19, Sections 1 to 4, shall apply insofar as they have not been departed from in Section 5.