Part One: Rules common to all types of insurance
- Chapter 1: Introductory provisions
Chapter 2: General rules relating to the scope of the insurance
Section 1: Insurable interest and insurable value
- 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
Section 2: Perils insured against, causation and loss
- 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
- Section 1: Insurable interest and insurable value
Chapter 3: Duties of the person effecting the insurance and of the assured
- General remarks
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.
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
Chapter 4: Liability of the insurer
- Section 1: General rules relating to the liability of the insurer
Section 2: Costs of measures to avert or minimise the loss, including salvage awards and general average
- 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
Chapter 5: Settlement of claims
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
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.
- Section 1: Claims adjustment, interest, payments on account, etc.
Chapter 6: Premium
- 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
Chapter 8: Co-insurance of third parties
- 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
Chapter 9: Relations between the claims leader and co-insurers
- 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
Part Two: Hull insurance
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
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
Chapter 12: Damage
- 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
- Chapter 10: General rules relating to the scope of the hull insurance
Part Three: Other insurances for ocean-going vessels
Chapter 14: Separate insurances against total loss
- 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
- Section 1: General rules relating to the scope of war risks insurance
- Section 2: Termination of the insurance
- Section 3: Trading areas
- Section 4: Total loss
- Section 5: Damage
- Section 6: Loss of hire
- Section 7: Owner’s liability, etc. (P&I)
- Section 8: Occupational injury insurance, etc.
Chapter 16: Loss of hire insurance
- 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
- Chapter 14: Separate insurances against total loss
Part Four: Other insurances
Chapter 17: Insurance for fishing vessels
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
Section 2: Hull insurance
- 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
Section 4: Catch and equipment insurance - standard cover
- 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
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
Chapter 18: Insurance of mobile offshore units (MOUs)
- Section 1: General rules relating to the scope of the insurance
Section 2: Hull insurance
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
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
Section 2-3: Damage
- 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
- Section 2-1: General rules relating to the scope of the H&M insurance
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
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
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.
Section 6: Construction risks insurance
- Section 6-1: General rules relating to the scope of construction risks insurance
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
Chapter 19: Builders’ risks insurance
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
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
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
Chapter 20: Insurance for vessels with trading certificates
- Section 1: Common provisions
Section 2: Hull insurance
- 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
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
- Chapter 17: Insurance for fishing vessels
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Chapter 21: Liability insurance
Clause 21-1. Scope of applicationView Clause Go to Plan page
This Clause was new in 2019 as a consequence of the independent status of the liability cover. As in all special covers under the Plan, the insurance in Chapter 21 is only applicable if agreed upon in the insurance contract between the parties.
Clause 21-2. Renewal of the insurance/Ref. Clause 1-5View Clause Go to Plan page
This Clause was new in 2019 because of the independent status of the liability cover. Reference is made to the Commentary to the equivalent Clause 20-2.
Clause 21-3. Classification and vessel inspection/Ref. Clause 3-14 and Clause 3-8View Clause Go to Plan page
This Clause was new in 2019 as a consequence of the independent status of the liability cover. Reference is made to the Commentary to the equivalent Clause 20-3.
Clause 21-4. Savings to the assuredView Clause Go to Plan page
The Clause is taken from the P&I conditions in the 1964 Plan, but contains a general principle of insurance law and has therefore been generalised.
Clause 21-5. Perils coveredView Clause Go to Plan page
Former Cl. 17-33.
Sub-clause 1, first sentence specifies the perils covered by the insurance as losses mentioned in Cl. 21-6 to Cl. 21-18. The provision reflects the basic principle that the P&I insurance only covers liability and other losses which are specifically stated. In other words, this is not a general liability insurance. On the other hand, a number of types of loss which are not in the nature of liability, viz. various forms of expenses and damage which the assured may incur, are covered. Such expenses and damage must also be specifically stated.
The provisions in Cl. 21-6 to Cl. 21-18 partly state the nature of the loss, partly the extent to which the loss is covered. Both sets of conditions must be satisfied in order for the insurer to be liable.
While Cl. 21-6 to Cl. 21-18 state the extent of liability, Cl. 21-19 et seq. state limitations to the cover. The provision in Cl. 21-5 must therefore also be seen in conjunction with these limitations.
Another fundamental principle for owner’s liability insurance is that the cover only includes liability and loss which “has occurred in direct connection with the operation of the vessel covered by the insurance”. The claims filed must be specifically linked to the running of the insured vessel. Liability and other loss which concern the shipping business in general, or which are common to several vessels, are normally not covered.
Accordingly, all liability and losses in connection with the running of the assured’s shore installations, social and other expenses which are not associated with any specific vessel are excluded from the cover. However, it is not a requirement that the loss occurred on board the vessel, or that it was caused by the crew.
The liability which is covered must be a legal liability for damages. The fact that the assured feels obligated from a business or moral standpoint to cover a loss is not sufficient. Legal liability normally means the personal obligation to pay for which the assured is liable to the extent of all his assets. However, also liability in rem where the assured is only liable with certain objects, typically the vessel and freight, is covered by the insurance. The country under whose law the liability occurs is also irrelevant, as is whether it is a contractual liability (e.g. cargo liability), or liability outside contractual relations (e.g. collision liability), and on what basis the liability is founded. However, contractual liability is subject to certain limitations according to Cl. 4-15.
The second sentence entails that the cover is extended in certain situations to include liability incurred by vessels other than the insured vessel.
Sub-clause 2, first sentence, is taken from Cl. 224, sub-clause 1, second sentence, of the 1964 Plan and establishes that the insurer covers liability according to sub-clause 1, irrespective of whether the liability is caused by marine perils or war perils. The liability insurance is therefore basically an insurance against marine perils, cf. Cl. 2-8, as well as against war perils, cf. Cl. 2-9. The war risks cover is, however, somewhat limited under the second sentence.
Clause 21-6. Liability for personal injuryView Clause Go to Plan page
Former Cl. 17-34.
Sub-clause 1 defines the cover in the event of personal injury or loss of life. The main rule in the first sentence affords a very comprehensive cover. If the injury is “sustained in direct connection with the operation of the vessel covered by the insurance”, the insurer covers the assured’s liability regardless of where and how the injury was inflicted and regardless of whether the assured is liable as personal wrongdoer, or e.g. is liable on the basis of the rules relating to vicarious liability in Section 151 of the Norwegian Maritime Code. The assured’s liability to crew and passengers is nevertheless subject to certain limitations, cf. below.
Nor are any limitations stipulated as regards which items of loss shall be covered. In the event of “personal injury”, liability covers expenses for treatment, expenses for artificial limbs, loss of income during the treatment and loss of future earnings as a result of full or partial disability, cf. Section 3-1 of the Norwegian Compensatory Damages Act (NCDA). In the event of losses more in the line of consequential losses, the assured’s, and hence the insurer’s, liability will, however, be limited by foreseeability considerations.
The term “personal injury” also covers shock and other mental injuries, as well as “compensation for permanent injury” according to Section 3-2 of the NCDA. However, the liability will normally not cover non-economic loss under Section 3-5 of the NCDA. Such liability presupposes that the assured has personally caused the bodily injury intentionally or through gross negligence, in which event the insurer’s liability will normally lapse under the rules in Cl. 3-32 and Cl. 3-33.
If it is a question of “loss of life”, liability will cover loss of provider and funeral expenses, including expenses for shipping home the coffin or urn, cf. Section 3-4 of the NCDA.
Liability under sub-clause 1, first sentence, also covers liability for salvage awards in the event of the saving of life. Such salvage remuneration will only be relevant where a vessel or cargo has been salvaged at the same time, cf. Section 441 of the Norwegian Maritime Code. As regards salvage awards for the salvaging of vessels and cargo, the owner of these assets may recover the award as costs of measures to avert or minimise loss under the hull insurance and the cargo insurance respectively. In the same way, the liability insurer covers salvage awards for the saving of life under clauses 4-7 et seq., if the salvage operation is in effect a measure to avert or minimise loss. However, the provision in Cl. 21-6 provides an independent authority for coverage of a salvage award, regardless of whether or not it qualifies as a cost of measures to avert or minimise loss. On the other hand, only salvage awards determined specially due to the saving of life are covered. It is not sufficient that the salvage award as such has probably increased due to the saving of life, without this being specified in a judgment or an agreement.
It is only the assured’s liability for life-saving which is covered by the liability insurer. The assured may not claim a refund from the liability insurer for that part of the salvage award which may have been allocated to the cargo interests without liability for the assured. Nor does the liability insurer cover the liability in respect of which the assured may claim cover from the hull insurer under the relevant hull conditions, cf. Cl. 21-19.
As regards the persons who shall be covered by the assured’s liability, certain limitations are stipulated. In the first place, the cover under sub-clause 1, second sentence, does not include the assured’s liability to the crew or their dependents for wages in the event of a shipwreck, death, illness or injury. This insurance is not included in the Plan, and the definition has therefore been incorporated directly in Cl. 21-6. This liability will today normally be covered under an occupational injuries insurance. However, the insurer does cover certain social benefits to the crew under Cl. 21-16 (b).
The crew’s personal effects are excluded under Cl. 21-7, sub-clause 2 (c).
The delimitation applies only in relation to “the crew”. In the event of injuries sustained by others who work in the service of the vessel without belonging to the crew, e.g. persons who carry out work on board or in connection with the vessel while it is in port, the insurer covers the assured’s liability under sub-clause 1, first sentence.
Secondly, the assured’s liability for injury sustained by or loss of passengers is only covered where this has been specifically agreed, cf. sub-clause 2. The provision applies to passengers and “other persons accompanying the vessel without belonging to the crew” to merely applying to “passengers”. Under Skuld’s and Gard’s P&I Conditions, liability for passengers is included in the normal cover. According to the Plan’s rules, however, it is necessary to have a separate agreement about this. The requirement for a separate agreement, however, only applies to ordinary paying passengers. Family, friends or others who accompany the vessel are therefore covered in the usual way.
The cover under Cl. 21-6 must be seen in connection with the limitations of liability in Cl. 21-19, sub-clause 3, relating to insurance and social benefits for the crew, and the requirement for limitation of liability as regards liability to passengers in Cl. 21-20.
Clause 21-7. Liability for property damageView Clause Go to Plan page
Former Cl. 17-35.
The Clause was amended in 2016 by adding new letters (d), (e) and (f) to sub-clause 2. The said letters are identical to previous sub-clause 2 (b), (c) and (a) respectively. Sub-clause 3 was consequently deleted. The following sentence was added to new letter (d) "By a call is meant arrival, anchoring, working, discharging, loading and leaving" cf. the corresponding amendments to Cl. 17-17 and Cl. 20-14.
Sub-clause 1 contains the practically speaking most important cover provision in liability insurance and provides that the insurer covers the assured’s liability for damage to or loss of an object which “does not belong to the assured”. Loss in the event of damage to or loss of the assured’s own objects does not belong under a liability insurance subject to the limitations which follow from Cl. 4-16. The insurance includes liability for damage to objects which are not subject to private ownership, e.g. shell fish and seaweed which are damaged by oil pollution with the result that those who exploit them for business purposes suffer a loss.
By “object” is meant objects of every type or form, real estate as well as chattels. The object may be on board the insured vessel, on board another vessel, or on shore. Certain objects which are on board are nevertheless excluded in sub-clause 2, cf. below. The term “object” furthermore comprises another vessel, a vessel or other floating structure. “Damage” means any form of physical impact on the object which results in a deterioration in value: breakage, water damage, decay, infection, smell and radiation damage, etc. “Loss” covers not only cases where the object has physically been destroyed, but also cases where it has been stolen, impounded or mislaid so that the owner cannot expect to recover it within the foreseeable future.
The insurer covers liability for property damage regardless of the basis on which the liability is founded. It is irrelevant whether it is liability under contract law or non-contractual liability, and it is further irrelevant whether liability is non-statutory or is founded on statutes. The liability therefore covers cargo liability, liability to tugs, liability for property damage in the event of a collision, liability for property damage in the event of oil pollution and other non-contractual liability for property damage, provided liability has “occurred in direct connection with the operation of the vessel covered by the insurance”, cf. Cl. 21-5. Cargo liability is subject to certain limitations, see Cl. 21-23, and the assured is furthermore obliged to disclaim liability for damage to and loss of cargo to the extent that this is allowed under current rules of law, see Cl. 17-48.
Cl. 21-7 only regulates liability for property damage. Loss resulting from incorrect description of goods in the bill of lading or from the goods being handed over to a wrong recipient does not constitute liability for property damage. However, these types of liability are in certain contexts covered under Cl. 21-8 and Cl. 21-9. But, if liability for property damage occurs, then not only the part of the liability which corresponds to the reduction in the value of the object will be covered, but also the part which is associated with any consequential loss, cf. the wording “liability resulting from damage to or loss of”.
Sub-clause 2 (a) is normally superfluous, see Cl. 4-16, second sentence, which excludes the relevant objects if they are owned by the assured. Furthermore, the provision in Cl. 21-19 will exclude these objects if they are insurable under the rules in part II, part III or part IV, Chapter 17, Sections 2 to 5, of the Plan.
Sub-clause 2 (e) excludes damage to or loss of live fish carried in the vessel. Under the rules of the Norwegian Maritime Code it may be uncertain whether the assured has the right to disclaim liability for damage to or loss of live fish. This issue has now been resolved in a Supreme Court ruling, cf. the 2001 Norwegian Supreme Court Reports, p. 676, whereby the disclaiming of liability for live fish was found invalid, cf. Section 254, fourth sub-clause, of the Norwegian Maritime Code. However, the insurers are under no circumstances willing to accept this liability. It is therefore excluded from the cover according to sub-clause 2 (d) and (e). The provision must be seen in conjunction with the limitation of liability in Cl. 17-17 and Cl. 20-14, which establishes that the hull insurer does not cover liability under Cl. 13-1 for damage to or loss of fish or devices for keeping live fish in connection with calling at such an installation for loading or discharging.
Previous sub-clause 3 referred to “freighters, including well-boat” and led sometimes to confusion amongst owners of so-called working-boats. The term “freighter” refers to the Norwegian Maritime Authority’s definition which comprises all kinds of vessels that are not passenger- or fishing vessels.
Clause 21-8. Liability for descriptionView Clause Go to Plan page
Former Cl. 17-36.
The first sentence establishes that the insurer covers the assured’s liability for inadequate or incorrect description of the goods or other incorrect information in the bill of lading or similar document.
In principle, the liability covers all types of liability under bills of lading. If liability is imposed under the principle of estoppel, see Section 299, third sub-clause, of the Norwegian Maritime Code, it will, however, normally be a cargo damage liability and accordingly be covered under the rules in Cl. 21-9.
Liability is covered even if the vessel’s crew or the owner’s employees have been grossly negligent in connection with the issue of the bill of lading. By contrast, the assured will not be covered if he has himself been grossly negligent, cf. Cl. 21-21, sub-clause 1.
Liability under bills of lading applies to “a bill of lading or similar document”. The term “bill of lading’” comprises both shipped bills of lading (Section 292 of the Norwegian Maritime Code), through bills of lading (Section 293 of the Norwegian Maritime Code) and received-for-shipment bills of lading (Section 294 of the Norwegian Maritime Code). In connection with transhipment, not only liability under bills of lading where the bill of lading is issued in connection with the loading of the insured vessel is covered, but also where the bill of lading is issued by an earlier carrier on behalf of all concerned.
By other “similar documents” is meant other documents issued as evidence of goods received for carriage. A practical example is the non-negotiable sea waybill (Section 308 of the Norwegian Maritime Code). Admittedly, goods in transit will rarely be bought or paid for on the strength of the description of the goods in such a sea waybill, but it does happen. If the assured then becomes liable under general liability rules for negligent, incorrect or incomplete description of the goods, etc., this will be covered under this provision.
The last part of the provision contains a limitation of the insurer’s liability. If the assured or the master of the vessel knows that the description in the document of the cargo, its quantity or condition is incorrect, the insurer is not liable. This provision concords with the solution in, e.g. Gard’s P&I Conditions. On the one hand, it is sufficient that the master of the vessel knows that the description is incorrect. The assured is not required to know. On the other hand, the exclusion does not cover negligence. The assured or the master must have definite knowledge that the description is incorrect.
Clause 21-9. Liability for the misdelivery of goodsView Clause Go to Plan page
Former Cl. 17-37.
The cover of the assured’s liability for wrongful delivery is on inter alia Gard’s P&I Conditions. The basic principle is admittedly still that the assured’s liability for wrongful delivery is covered, see sub-clause 1. However, due to sub-clause 2, this principle will in reality only be relevant where the goods are carried on a sea waybill or some other non-negotiable document. In that case liability for wrongful delivery acquires an entirely different content than in the event of carriage under a bill of lading, because such non-negotiable documents do not constitute evidence of the right to the cargo. The assured’s duty to hand over the goods is therefore not tied to the document in the same way as under a bill of lading, where he is obliged to hand over the goods to the third party who presents the document in the port of discharge. In the event of non-negotiable documents, the assured shall hand over the goods to the consignee stated in the document, possibly to some other consignee named by the consignor, see Section 308 of the Norwegian Maritime Code. If the goods are handed over to someone else, and the assured incurs liability in that connection, such liability will be covered under sub-clause 1.
Sub-clause 2 initially establishes that liability for wrongful delivery is not covered if the goods are handed over to a person without presentation of a proper bill of lading. The main rule where the carriage in question takes place under a bill of lading will thus be that the insurer does not cover the liability for wrongful delivery incurred by the assured because the goods were handed over to someone who is not entitled to them without presentation of the bill of lading. However, the rest of sub-clause 2 stipulates a small exception to this rule. The assured’s liability for wrongful delivery in such a situation is in fact covered if the goods were carried by the assured in accordance with a sea waybill or some other non-negotiable document and handed over as prescribed by this document, but he incurs liability under a bill of lading or some other negotiable document issued by or on behalf of someone else for carriage partly in the assured’s vessel, partly in another vessel. Such a situation may arise if a non-negotiable document and a negotiable document have been issued for the same cargo, and the bearer of the negotiable document is someone other than the cargo consignee named in the non-negotiable document. An example may illustrate the situation. Carrier A issues a bill of lading for a shipment from Kristiansund to Kiel. A is in charge of the shipment from Kristiansund to Oslo, while the shipment from Oslo to Kiel is to be handled by sub-carrier B. Under the bill of lading, each carrier is liable for damage to or loss of the goods while they are on board his vessel. B has issued for his leg of the shipment a non-negotiable document with the same named consignee as stated in the bill of lading. However, the bill of lading is transferred to someone else, and this new bearer of the bill of lading demands that B deliver the goods to him. If B has already handed over the goods in accordance with the non-negotiable document, his liability to the bearer of the bill of lading will be covered under the provision.
Clause 21-10. General average contributionsView Clause Go to Plan page
Former Cl. 17-38.
Sub-clause 1 establishes that the insurer covers the assured’s loss resulting from his being precluded from claiming cargo’s contribution in general average by reason of a breach of the contract of affreightment. In the event of general average, the assured will normally be entitled to recover cargo’s contribution from the cargo owner or his insurer. Basically, this also applies where the general average is caused by the assured’s breach of contract, e.g. where a fire with major fire-extinguishing damage is caused by defects in the vessel when it last left port, and where this defect was known, or ought to have been known, to the vessel’s crew and made the vessel unseaworthy. However, in such cases the cargo owner may have recourse against the assured for the general average contributions they are obliged to pay, cf. YAR rule D and ND 1993, p. 162 NH FASTE JARL. If it is the assured who has incurred the general average expenses and who collects the contributions, the cargo owner will exercise his recourse claim by a set-off. If the counterclaim succeeds, the cargo owner will not have to pay the general average contribution, and the assured suffers a loss. This loss is covered by the liability insurer under sub-clause 1. This cover may be seen as a continuation of the coverage of the assured’s cargo liability: Formally, the assured will not be precluded from claiming a contribution, but he has to accept being held liable for the loss which the cargo owner has suffered by the imposition of the duty to pay contribution.
The general average contribution may also be lost or reduced for reasons other than a breach of contract or the cargo’s unwillingness or inability to pay, e.g. where the assured does not comply with the time limit for filing the claim. This will in that event be the assured’s risk. Nor does the cover extend to excess general average contributions from the cargo, where a loss arises for the assured because sacrifices and disbursements exceed the value of the contributions, at the same time as the cargo owner’s liability is limited to the value of the cargo.
The provision applies only in relation to the cargo’s contribution. This is due to the fact that the freight contribution shall normally be covered by the assured. However, in the event of sub-chartering, the contribution shall be allocated to the charterer. The failure to pay contributions which may then occur is, however, not covered by the liability insurer.
Sub-clause 2. Expenses incurred in connection with the collection of general average contributions will often be recoverable as costs of measures to avert or minimise loss, cf. Cl. 4-7 and Cl. 4-12. However, sub-clause 2 imposes a direct obligation on the liability insurer to cover such costs regardless of whether or not they qualify as costs of measures to avert or minimise loss. The provision is of particular importance if legal proceedings must be instituted in connection with general average, but it also covers other costs in connection with collecting cargo’s contribution, e.g. costs in connection with out-of-court collection.
As regards the assured’s duties to maintain and secure the claim against the cargo, Cl. 5-16 shall apply.
Clause 21-11. Liability for removal of wrecksView Clause Go to Plan page
Former Cl. 17-39.
The first sentence of the provision provides that the insurer shall cover the assured’s liability for removal of wrecks, provided such removal is ordered by the authorities. If the assured becomes liable for the removal of a wreck, it is normally because the vessel has been involved in a collision with another vessel or object, or because it has run aground. To the extent that the liability is covered by the vessel’s hull cover, it falls outside the scope of the liability insurance, cf. Cl. 21-19, sub-clause 1 (a) with the exception of excess collision liability, cf. sub-clause 2. Under the Plan, the hull insurance covers liability for the removal of the wreck of another vessel with which the insured vessel has collided, cf. Cl. 13-1, sub-clause 1, but not liability for the removal of the wreck of the vessel itself, cf. Cl. 13-1, sub-clause 2 (i). Liability for the removal of the wreck of the insured vessel is therefore in its entirety covered under Cl. 21-11. Excess collision liability for an oncoming vessel, i.e. liability for the removal of wrecks for the oncoming vessel which exceeds the sum insured for collision liability is covered partly under Cl. 21-11, partly under the rule of cover for the assured’s ordinary liability for property damage, cf. Cl. 21-7.
The provision covers liability for the removal of wrecks “ordered by the authorities”. This restriction entails that liability for the removal of wrecks according to contract is not covered by the insurance. Otherwise, the cover is very general. It covers any basis for liability and liability for the removal of wrecks which present an obstruction to traffic according to the port regulations of the country concerned, cf. for Norwegian law the Ports and Waters Act of 17 April 2009, No 19, Section 35, liability for removal of wrecks because the vessel has gone down at a location where the cargo may cause damage, and liability for removal of wrecks as a result of collision to the extent that this liability is not covered under the hull insurance. Both strict liability (e.g. under the Ports Act) as well as culpa liability are included. It is also irrelevant whether the costs incurred in removing the wreck concern the insured vessel or another vessel, and it is irrelevant whether the vessel becomes a wreck due to a casualty or for other reasons.
Under Cl. 230 of the Norwegian Plan of 1964, the insurance only covered liability for the removal of wrecks where the vessel was lost in consequence of other causes than war perils. This was due to the fact that the war risks hull insurer covered liability for the removal of wrecks where the vessel was lost as a result of a war peril. In the Plan, liability for the removal of war wrecks has been incorporated in the liability insurance part in Chapter 15 on war risks insurance, cf. Cl. 15-21. It must therefore also be included in the liability insurance in this Chapter.
A vessel is a “wreck” when salvage has been abandoned because it would be unprofitable, i.e. the value of the object to be salvaged is less than the costs involved in salvaging it. It is irrelevant whether the vessel is condemnable under the Norwegian Maritime Code or under the hull conditions. In practice, it may be difficult to decide when the insurer‘s liability for removal of wrecks is triggered. When an owner is instructed to remove a wreck, he must without undue delay decide whether he wants to salvage the vessel so that the insurer may start the work of removing the wreck before the port authorities do it.
If the insurer pays the costs involved in removing the wreck, the proceeds will accrue to him, even if the wreck should prove to be worth more than the costs involved in removing it.
The term “liability for the removal of wrecks” also covers the costs of removing the cargo, etc. to the extent that this is necessary in order to remove the wreck. Otherwise the removal of wreckage other than the actual shipwreck will not be covered, e.g. cargo which the vessel has lost, or parts of vessel or cargo which have sunk. Nor does the cover include liability for obstructions to traffic vis-à-vis owners of ports, canals, etc. It is only the actual wreck-removal expenses that are covered. On the other hand, the cover includes the costs of marking and illuminating the wreck as required by the public authorities.
The second sentence states that the insurer’s liability also includes the assured’s liability for disposal and destruction of the wreck. The reason for this is that such costs must be regarded as part of the costs of removing the wreck.
Clause 21-12. Liability for special salvage compensationView Clause Go to Plan page
Former Cl. 17-40.
According to this provision the insurer is required to cover the assured’s liability for special compensation to the salvor where the assured is required to pay such compensation under the rules of the relevant sections of the Nordic Maritime Codes or other rules of law or contract rules which are based on Article 14 of the International Convention on Salvage of 1989. Article 14 of the Convention, on which e.g. Section 449 of the Norwegian Maritime Code of 1994 is based, arises from the amendments to the international salvage rules relating to prevention of damage to the environment. It appears from Section 446 (b) of the Norwegian Maritime Code, cf. Article 13 sub-clause 1 (b) of the Convention, that the ordinary salvage reward shall be fixed taking into account ”the skills and efforts of the salvors in preventing or minimising damage to the environment”. The concept ”damage to the environment” is defined in further detail in Section 441 (d) of the Norwegian Maritime Code of 1994, cf. Article 1 (d) of the Convention. If therefore the result of the salvor’s efforts is that the vessel has been salvaged, wholly or in part, at the same time as damage to the environment has been prevented or minimised, this will be taken into consideration and the salvage reward will be increased. The total salvage reward will be apportioned in the general average adjustment which shall take place after a salvage operation, cf. Rule VI (a) sub-clause 2 of the York-Antwerp Rules. The vessel’s general average contribution will be covered by the (hull) insurer in the normal manner according to the rules in Cl. 4-8. If the conditions for a general average adjustment are not met, either because the vessel, freight and cargo belong to the same person, or because the vessel is in ballast, the (hull) insurer will nevertheless cover the vessel’s contribution in an assumed general average adjustment under the rules of Cl. 4-9 and Cl. 4-11 respectively.
If the salvor has incurred costs in connection with ”salvage operations in respect of a vessel which by itself or its cargo threatened a risk of damage to the environment”, he is entitled to a special compensation from the owner equivalent to his expenses, see Section 449, first sub-clause, of the Norwegian Maritime Code, cf. Article 14.1 of the Convention. If the vessel has been salvaged, wholly or in part, such special compensation shall, however, be paid only to the extent that it exceeds the fixed salvage reward, see Section 449, first sub-clause, second sentence, of the Norwegian Maritime Code, cf. Article 14.1 of the Convention. However, it is not a condition for claiming special compensation that the efforts were a success in the sense that damage to the environment was prevented or minimised. But, if the efforts were successful, ”the special compensation may be increased by about 30 % of the expenses incurred by the salvor”, and if deemed ”fair and just” by ”up to 100 %”, see Section 449, second sub-clause, of the Norwegian Maritime Code, cf. Article 14.2 of the Convention. This special compensation is not recoverable in the general average adjustment, see Rule VI (b) of the York-Antwerp Rules and, accordingly, will not be covered by the (hull) insurer as part of the vessel’s general average adjustment contribution.
It follows from the provision that the assured’s liability for such special compensation is recoverable under insurance of fishing vessels and small freighters according to the rules in the liability section. This is subject to the condition that liability is provided for by Section 449 of the Norwegian Maritime Code of 1994, or rules of law in other countries which are based on Article 14 of the International Convention on Salvage of 1989. Liability may also be provided for in contract clauses which are based on this Convention, see e.g. Lloyd’s Open Form (LOF 2011) Cl. D. Given that liability for special compensation must be regarded as a special rule relating to costs of measures to avert or minimise loss, cf. Cl. 4-12 relating to costs of particular measures taken to avert or minimise loss, liability is not recoverable within the sum insured under Cl. 21-26, but under the separate sum insured for costs of measures to avert or minimise loss, cf. Cl. 4-18, sub-clause 1, second and third sentences, and the Commentary on Cl. 21-26.
Clause 21-13. Liability for bunker oil pollution damage and damage to the environmentView Clause Go to Plan page
Former Cl. 17-41.
Sub-clause 1 of the provision establishes that the insurer covers the assured’s liability for bunker oil pollution damage in accordance with the provisions laid down in national legislation that are based on the provisions of the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (the Bunker Convention). Through this provision, cover under the Plan is expanded to include all liability under the Bunker Convention. This approach tallies with practice, where it has been customary for the parties to agree on a corresponding expansion of cover by incorporating a special Clause in the insurance contract.
Sub-clause 2 establishes that the insurer covers the assured’s liability for damage to the environment. Vessels trading in the waters of the states in the European Economic Area are liable for damage to the environment pursuant to the rules of the EU Directive 2004/35CE of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage. The purpose of the Directive is to establish a framework of environmental liability based on the ‘polluter-pays’ principle, to prevent and remedy environmental damage. The Directive applies where environmental damage and damage to protected species and natural habitats are concerned, to occupational activities which present a risk for human health or the environment. The Nordic countries have made the rules of the Directive part of their national law. In Denmark, the relevant acts are Act of 17 June 2008 No 466 relating to environmental damage (Lov om undersøgelse, forebyggelse og afhjælpning af miljøskader - Miljøskadeloven) and Act of 22 December 2006 No 1757 relating to environmental protection (lov om miljøbeskyttelse); in Finland, Act of 29 May 2009 No 383 relating to remedying certain environmental damage (Lag om avhjälpande av vissa miljöskador); in Norway, Act of 19 June 2009 No. 100 Relating to the Management of Biological, Geological and Landscape Diversity (Nature Diversity Act) – (lov om forvaltning av naturens mangfold - naturmangfoldloven); and in Sweden, the Environmental Code of 11 June 1998 (Miljöbalken).
Clause 21-14. StowawaysView Clause Go to Plan page
Former Cl. 17-42.
The provision regulates expenses and liability relating to stowaways. The assured’s liability and direct expenses resulting from the vessel having stowaways on board are covered. Such liability is first and foremost relevant in the event of deportation, etc., if the stowaways get ashore in a port where they are not wanted.
The term “direct expenses” merely covers “out-of-pocket expenses” in contrast to loss of earnings.
According to the second part of the provision, an exception is made for expenses for board and lodgings which could otherwise have been provided on board. Such maintenance expenses will normally be so low that there is no point in having the insurance cover them.
This provision applies only to “stowaways”. It does not cover the situation where the vessel takes refugees on board for humanitarian reasons.
Clause 21-15. Liability for fines, etc.View Clause Go to Plan page
Former Cl. 17-43.
According to sub-clause 1 (a), the assured’s liability for immigration and customs fines is covered regardless of who has committed the offence. It is sufficient that the assured becomes liable and that liability has been incurred in direct connection with the running of the vessel. This latter requirement will normally be satisfied if the assured becomes liable for the conduct of the crew or the passengers, even if the offence has no connection with the service or the vessel. The possibility of the assured becoming liable in such cases is a risk in connection with the running of the vessel.
The precondition for the cover is that it is a question of “fines”, i.e. a definite penal sanction. Charges in the form of customs duties or taxes are not covered, even if they might be of a certain penal nature.
Sub-clause (b) covers fines resulting from the conduct of the crew. Such fines are covered regardless of the nature of the fine, but the cover concerns only fines caused by the master or the crew. Fines attributable to offences committed by passengers or the assured’s people ashore are not covered.
Under sub-clause (c), expenses in connection with orders for deportation of the crew, passengers or other persons accompanying the vessel without belonging to the crew are covered. For the assured, such expenses are in effect the same as fines when he is liable for them. The provision concerns all persons who have accompanied the vessel, i.e. also persons who are neither passengers nor members of the crew, e.g. an itinerant repairman. However, the deportation of stowaways is covered under Cl. 21-14. The cover also extends to a deportation which is foreseeable, e.g. where passengers go ashore or crew is signed off in a port where they have no permit of residence and no home journey has been arranged for them.
The cover under sub-clause 1 presupposes that the assured has “liability” for the fine or the expenses, i.e. a personal liability. However, sub-clause 2 extends the cover to include such cases where payment can be enforced by detaining the vessel, e.g. by a formal arrest or by denying clearance to depart, or by obtaining security in the vessel, e.g. because there is a maritime lien or some other legal mortgage for the claim. A fine for which the assured is not liable and where payment furthermore cannot be enforced is, however, not covered by the liability insurer.
Sub-clause 3 makes an exception to the insurer’s liability under sub-clauses 1 and 2 for a certain number of specified fines. Sub-clause 3 (a) excludes fines resulting from overloading of the vessel. By “overloading” is meant that the vessel lies lower in the water than the allowed mark, normally due to excess cargo, bunkers, ordinary water or ballast water. The reason for the exception is that overloading entails a significant increase in the risk of damage to vessel, cargo and passengers. A similar exclusion is contained in sub-clause 3 (b) as regards the fact that the vessel has more passengers than allowed.
The exclusion in sub-clause 3 (c) concerning illegal fishing has to do with the fact that increased competition combined with reduced fish resources has resulted in an increased risk of excessive fishing. Many coastal states have strict regulations for permitted fishing zones, the use and size of equipment and prohibition against fishing certain types of fish. Fines resulting from a breach of these rules should not be covered by the liability insurance.
Sub-clause 3 (d) excludes fines resulting from inadequate maintenance of lifesaving or navigation equipment and is based on the increased focus on safety. Lifesaving equipment includes not only life boats and life buoys, but also equipment such as life jackets, flares and water tight lights. Maintenance of this equipment includes routine repairs and replacements. By navigation equipment is meant e.g. radar, echo sounders and charts. Most coastal states have minimum requirements regarding the lifesaving equipment which must be on board the vessel. Breach of such regulations will normally result in a fine, which is thus not covered under the liability insurance.
The exclusion in sub-clause 3 (e) concerns the flag state’s requirement that a vessel shall at all times carry the mandatory certificates on board. As far as Norway is concerned, this is a certificate required by the Norwegian Maritime Directorate. According to Cl. 21-3 the insurance cover will lapse if the valid certificate lapses. In that event, the exclusion in sub-clause (e) is superfluous. The provision is therefore only relevant where the vessel does have a valid certificate, but it is not on board.
Clause 21-16. Liability for social benefits for the crewView Clause Go to Plan page
Former Cl. 17-44.
Sub-clause 1 establishes that the insurance covers the assured's liability for certain specific social benefits for the crew in accordance with the law or collective wage agreements.
Under sub-clause 1 (a), the care and maintenance of the crew on shore in the event of illness or injury are covered. The provision reflects the fact that a seaman who has fallen ill or been injured is, under Section 4-6 of the Norwegian Ship Labour Act, entitled to nursing for the assured's account, on board or ashore, for the duration of his service. If he is ill or injured on termination of his employment, he has the same rights for up to 16 weeks. It is only the expenses for care and maintenance ashore which are covered, not on board the vessel.
The insurer also covers costs in connection with the crew's travel home, including maintenance, in the event of illness or injury or following a shipwreck, cf. sub-clause 2 (b). A seafarer who is left in a Norwegian or foreign port due to illness or injury, or who in signing off suffers from an illness which would have made signing off necessary, is, under Section 4-6 of the Norwegian Ship Labour Act, entitled to a free journey home with maintenance for the assured's account. If his service terminates as a result of a shipwreck or condemnation, the seafarer is entitled to a free journey home with maintenance, cf. Section 4-6 of the Ship Labour Act.
According to sub-clause 1 (c), costs in connection with the funeral and sending home of the cinerary urn and the deceased's effects are covered. The assured is obliged to cover such expenses if a seafarer dies whilst still in service or whilst he is entitled to nursing or whilst he is travelling for the assured's account, cf. Section 8-3 of the Ship Labour Act.
Sub-clause 1 (d) provides for an extension of liability to include liability under collective wage agreements for costs relating to the crew's travel home, including maintenance, in the event of the illness or death of a close relative. This extension was taken from Gard's rule 27 d and Skuld's rule 7.6.1, and brings the liability insurance under Chapter 21 in line with the other P&I covers as far as this point is concerned.
Clause 21-17. Travel expenses for replacement crewView Clause Go to Plan page
Former Cl. 17-45.
The first sentence establishes that the insurer must cover the necessary expenses of a replacement, and is based on the fact that a number of countries have rules concerning minimum manning and refuse to let a vessel leave a port unless these requirements are met. If the master or an officer of a vessel falls ill or dies, it may therefore be necessary to have a replacement in order for the vessel to be allowed to leave the port. The cause of death, injury or illness is irrelevant, but the illness or injury must be the primary reason for the termination of service. Only the expenses related to the outward journey are covered, but the place of departure is irrelevant. The cover includes all expenses, e.g. ticket, meals, accommodation during the journey, etc. The cover is, however, subject to the condition that the expenses are deemed “necessary”. If an acceptable replacement can be found locally, therefore, the assured does not have the right to send a replacement from elsewhere at the insurer’s expense.
The second sentence restricts the cover further. Only expenses for travel to the first port of call following the death, or the port where the person in question signed off, even if the replacement is in actual fact sent to a port further away, are recoverable.
Clause 21-18. Expenses for disinfection and quarantineView Clause Go to Plan page
Former Cl. 17-46.
The first sentence deals with the cover of the costs of quarantine orders and disinfection of the vessel. By “quarantine orders” is meant orders from public authorities, and the expenses are “necessary” to the extent that they must be incurred in order to comply with the order. The reason for the order is irrelevant. It may be a current danger of infection or a general fear of infection.
The cover of necessary expenses in connection with the disinfection of vessel or crew is limited to cases of infectious diseases on board and does thus not cover extermination of insects, bugs, vermin, etc. Nor does it apply to preventive measures, unless they constitute measures to avert or minimise loss.
Under the second sentence, operating expenses during the stay will not be covered. Loss of time and other consequential losses will also fall outside the scope of cover.
Clause 21-19. Limitation due to other insurance, etc.View Clause Go to Plan page
Former Cl. 17-47.
The definition in sub-clause (a) concerns losses which according to their nature are insurable under a hull insurance according to Part II of the Plan, or Part IV, Chapters 17 and 20, or other insurances for ocean-going vessels in Part III of the Plan. The provision establishes a strictly complementary delimitation between the liability insurance and the above mentioned insurances. It is irrelevant whether the insurance in question has in actual fact been effected or whether it is limited quantitatively so that the assured will not get full cover, cf. “according to their nature”. This applies both in relation to limitations which follow from the actual standard conditions, and limitations which follow from individually agreed deductions or deductibles. However, an important exception to this rule concerns collision liability, cf. below.
Furthermore, the cover provided under Plan provisions is of decisive importance. If the assured has taken out insurance on conditions which afford a cover inferior to that of the Plan’s provisions, this will accordingly not result in any extension of the scope of cover of liability.
Overlapping between hull cover and liability cover occurs, partly where the liability insurer covers damage to or loss of the assured’s effects, and partly where the hull insurance covers the assured’s liability, see further Brækhus/Rein: Handbook of P&I Insurance, pp. 248 et seq. The most frequently occurring overlapping situation concerns collision liability, where the hull insurer according to Cl. 13-1, cf. Cl. 17-16, covers liability in connection with a “collision” caused by the vessel with accessories, equipment and cargo, or tug used by the vessel. However, this cover is subject to a whole series of limitations, cf. Cl. 13-1, sub-clause 2, Cl. 17-16, sub-clause 2, and Cl. 17-17 and Cl. 20-14, where the liability insurer comes in (with the exception of Cl. 13-1, sub-clause 2 (a), cf. below). In addition, the liability insurer covers liability which is not covered by the rule in Cl. 13-1, cf. Cl. 17-16. Reference is made here to the Commentary on Cl. 13-1 and Cl. 17-16, and to Brækhus/Rein 1.c. pp. 250 et seq.
According to sub-clause 1 (b), first sentence, the liability insurer does not cover losses as mentioned in Cl. 13-1, sub-clause 2 (a), i.e. liability which arises while the vessel is engaged in towage, or which is caused by the towage, unless it is a salvage operation. The reason for this exclusion Clause is the increase in the collision risk which arises when the insured vessel engages in towage. The second sentence, however, modifies this exclusion as regards liability incurred during towage of a vessel belonging to the same fishing team.
Sub-clause 1 (c) concerns losses as mentioned in Cl. 4-16 and contains a delimitation in relation to fire insurance, cargo insurance or other general insurance. According to Cl. 4-16, the liability insurer will in certain cases be liable for damage to the assured’s own property. However, also on this point, the liability insurer’s liability is strictly complementary to general insurance. Losses which according to their nature are insurable under the said general insurances fall outside the scope of the liability insurance. The provision means that the assured normally may not claim compensation for damage to his own cargo according to Cl. 17-35. Such damage could have been covered by cargo insurance.
Sub-clause 2 represents an important exception to the principle that liability insurance is complementary to hull insurance. The liability insurer covers collision liability which exceeds the amount which the assured may claim under a hull insurance with a sum insured which is equivalent to the full value of the vessel. The liability insurance here provides a complementary excess cover of the assured’s collision liability.
The excess cover concerns liability in excess of “the amount which according to Cl. 13-3 is recoverable under a hull insurance with a sum insured that covers the full value of the vessel”. The “full value” of the vessel means the value (normally the market value) at the time the casualty occurs, not the insurable value in relation to the hull insurance, which is the full value of the interest at the inception of the insurance, cf. Cl. 2-2. However, the agreed hull value will be relevant as an element in the assessment of the real value. If the vessel is undervalued, the excess cover does not apply to the amount between the agreed hull value and the “full value” of the vessel.
Sub-clause 2, second sentence, provides a separate rule regarding collision liability for collision with the assured’s own vessel, cf. Cl. 4-16. For excess collision liability for sister vessels, a deduction will be made for amounts which could have been covered under insurances as mentioned in sub-clauses (a) and (c). On this point the cover is thus subsidiary also in relation to insurances mentioned in sub-clause (c).
Sub-clause 3 makes the liability insurance partly subsidiary, partly complementary, in relation to benefits from the Norwegian National Insurance scheme, pension schemes, the Occupational Injuries Insurance and other personal insurance benefits funded by the liable employer. The provision comes in addition to the protection against liability for personal injury which the assured, and hence the liability insurer, already have under Norwegian law pursuant to Section 3-1, third sub-clause, and Section 3-7 of the Norwegian Compensatory Damages Act (NCDA), and which entails that a deduction shall be made in the claims settlement (on an exact amount basis or on a discretionary basis) for the relevant benefits, at the same time as the assured will normally not have any liability to the party who makes the payments. However, the delimitation in sub-clause 3 goes further than the rules of the NCDA.
The provision applies to any type of personal injury, regardless of who the injured party is, and therefore covers any liability for personal injury covered under Cl. 17-34. In addition, it applies to the liability for social benefits for the crew, cf. Cl. 17-44.
According to sub-clause 3 (a), the cover has been made subsidiary to national insurance benefits and benefits from employee or occupational pension schemes. The deciding factor here is the actual amount which the injured party receives from the said schemes. The provision applies only to “employee or occupational” pension schemes. Private pension insurance agreements which the injured party might have therefore fall outside the scope of cover.
As regards benefits covered by insurance agreements which are mandatory under collective wage agreements and which are funded by the liable employer, the cover of liability has, however, been made complementary, cf. sub-clause 3 (b).The provision is relevant where the assured becomes liable for persons of whom he is the employer, i.e. the vessel’s crew and any other employees who might be injured in connection with the running of the vessel. If the assured in his capacity of employer has neglected to take out the mandatory insurance, defaulted on payments of premium, etc., and therefore does not obtain a deduction for these benefits in accordance with Section 3-1, third sub-clause, of the NCDA, the assured must cover this part of the liability himself.
Sub-clause 3 (c) makes the cover of liability complementary to the occupational injury insurance. The 1996 Plan referred to the Norwegian Occupational Injuries Insurance Act of 16 June 1989 no. 65. The Nordic 2013 Plan refers to the relevant industrial injuries insurance legislation instead.
According to Section 3 of the Norwegian Occupational Injury Insurance Act, an employer is obliged to take out insurance to cover industrial injuries and industrial diseases for his employees. Losses which according to their nature are covered under this insurance are removed from the liability cover. This applies both in relation to the assured’s own employees, to persons whom the assured uses in the service of the vessel, but of whom the assured is not an employer, and for total outsiders, e.g. an injured party on an oncoming vessel in connection with a collision. As regards the industrial injuries insurance, the assured therefore bears the risk that other employers have in actual fact fulfilled their obligation to take out insurance. In practice, the injury will be covered by a pool arrangement if no industrial injuries insurance has been taken out. In view of the fact that the insurance companies involved have recourse against both the employer and the party causing the injury (the assured), cf. Sections 7 and 8 of the Norwegian Occupational Injury Insurance Act, cover under the assured’s liability insurance may give the industrial injuries insurance company a motive for a recourse claim against him. However, such injuries should remain with the employer or with the industrial injuries insurance companies jointly.
Clause 21-20. Safety regulations/Ref. Clause 3-22 and Clause 3-25View Clause Go to Plan page
Former Cl. 17-48.
This rule is patterned on the limitation of liability rule in inter alia Gard’s Conditions, but in the form of a safety regulation. The assured’s duty to incorporate disclaimers of liability is tied directly to his right to exclusion of liability and limitations of liability according to current rules of law.
By “current rules of law” is meant the rules in force in the state where the liability arises, as well as relevant international conventions. As far as Norway is concerned, the rules are first and foremost contained in Sections 171 et seq. of the Norwegian Maritime Code.
In view of the fact that this is a special safety regulation, the loss of cover is subject to the condition that the assured or anyone who on his behalf is obliged to comply with the regulation, has been negligent, and that there is a causal connection between the negligence and the liability, cf. Cl. 3-25, sub-clause 2.
Clause 21-21. Assured's faultView Clause Go to Plan page
Former Cl. 17-40.
Sub-clause 1 regulates the causing of an event insured against by a negligent act or omission. The provision supplements and modifies Cl. 3-32 et seq. It follows from Cl. 3-32 that the insurer does not cover liability which the assured has intentionally caused, whereas in the event of gross negligence a reduction may be made under Cl. 3-33. However, under Cl. 17-49, the rules have been made stricter: the insurer is completely free from liability if the assured has brought about the loss by gross negligence, or on the basis of a negligent understanding of rules of law or contractual terms. The reason is the very comprehensive liability cover, inter alia in view of the fact that the insurance covers the assured’s contractual liability.
The deciding factor according to the first alternative is that the loss was “brought about” by the assured “by a grossly negligent act or omission”. The assessment of the negligence shall therefore be tied to the act or omission, and not to the consequent damage. The gross negligence is not required to have been deliberate.
The second alternative is a special rule relating to mistakes of law in connection with the performance of a contract. In such cases the criterion gross negligence is often difficult to apply. In a business context the assured will often have to take chances, and he may not automatically be deemed to have been grossly negligent if he chooses a solution which may lead to liability. He makes his choice between the various possibilities based on an evaluation as to what will give him the best result. If he is lucky, the profit is his. If he is unlucky, he should not be entitled to transfer the loss to the liability insurer. The rule acquires special significance in relation to so-called “liberty” clauses in charterparties, i.e. deviation, ice, war or strike clauses.
Conception of law is “wrong” when it is in contravention of clear law or practice. That the understanding is “uncertain” means that it is disputed, so that one must be prepared that the courts resolve the issue in the disfavour of the assured. It is not decisive whether arguments may also be submitted in favour of the assured.
Sub-clause 2 lays down special rules for an assured who is master of the vessel (the master owner) or a member of the crew. The provision was patterned on Cl. 3-25, sub-clause 1, without this entailing any major changes on points of substance. Reference is furthermore made to the Commentary on Cl. 3-25, sub-clause 1, second sentence.
Clause 21-22. The insurer's rights in the event of liabilityView Clause Go to Plan page
Former Cl. 17-50.
By the term “the liability amount” is meant the lowest of the injured party’s claim, the limitation amount under the law and the insurer’s maximum liability under Cl. 21-25.
Sub-clause 2 refers to the mandatory provision in Section 7-8 of the Norwegian Insurance Contracts Act. The fact that the injured party does not otherwise have a direct claim against the insurer appears from Cl. 4-17, sub-clause 1.
Clause 21-23. Liability for loss that occurred during other transport, etc.View Clause Go to Plan page
Former Cl. 17-51.
Sub-clause (a) refers to Sections 254 and 274 of the Norwegian Maritime Code, while sub-clause (b) refers to Section 285 of the same Act. The provision must also be seen in conjunction with the basic principle in Cl. 17-33 to the effect that the liability insurer only covers loss that occurred in direct connection with the operation of the insured vessel.
Sub-clause (a) excludes liability for cargo arising during the period prior to loading or after discharging or during transport to and from the vessel covered by the insurance when the cargo is not in the carrier’s custody. If the cargo is in the carrier’s custody, e.g. where it is carried out to the vessel in the carrier’s boats, the assured will be liable under Section 274 of the Norwegian Maritime Code, and the liability must normally be deemed to have occurred in direct connection with the operation of the vessel. For passengers a corresponding distinction shall apply according to sub-clause (d).
It follows from sub-clause (b) and sub-clause (c) that the assured’s liability to passengers and cargo is not covered while passengers or cargo are in transit with or in the custody of another carrier. As far as the cargo is concerned, it follows from Section 285, second sub-clause, of the Norwegian Maritime Code that the assured can in such cases normally disclaim liability. The same follows from Section 431, subsection 3, of the Norwegian Maritime Code as regards passenger transport.
Clause 21-24. Limitation of liability for fishing vesselsView Clause Go to Plan page
Former Cl. 17-52.
The provision refers to the “knock-for-knock” principle which is mentioned in the Commentary on Cl. 17-9 and Cl. 17-16. When several vessels are fishing together in the same fishing team or as pair trawlers, damage to the assured’s own and other vessels with accessories and catch is foreseeable. It is therefore more expedient for the individual owner to cover damage to his own object, possibly via his hull insurance, than having a claims settlement in connection with the liability insurance.
Clause 21-25. Limitation of the insurer's liability for measures to avert or minimise lossView Clause Go to Plan page
Former Cl. 17-53.
Basically, the liability insurer covers costs of measures to avert or minimise loss according to the rules in Cl. 4-7 et seq. Provided that the conditions are met, the insurer will be fully liable regardless of the nature of the loss, damage or expenses in question. As regards liability insurance, however, Cl. 21-24 contains a number of restrictions to this principle. The provision must be regarded as a continuation of the restrictions which follow from Cl. 4-12 concerning particular measures to avert or minimise loss. This means that it cannot be interpreted antithetically, but must be supplemented with Cl. 4-12.
Sub-clause (a) is based on the point of view that proper loading and stowage is an operating expense which the assured shall pay himself. This also applies if the work is initially done so inadequately that it has to be done over again. The vessel may be “too heavily loaded” without being overloaded in the ordinary sense.
Sub-clause (b) excludes costs incurred in connection with measures which were or could have been taken by the vessel’s crew or with the proper use of the vessel or its equipment. Typical costs here are wages and overtime of the crew and bunkers consumption. If such costs were to be covered as costs of measures to avert or minimise loss in all cases where the measures must be regarded as unforeseeable or extraordinary, cf. Cl. 4-12, this could result in an unnecessarily complicated settlement. The distinction between operating costs and costs of measures to avert or minimise loss is often difficult to make. Certain costs are to be regarded as operating costs even if they are incurred in connection with measures which, seen in isolation, are unforeseeable or extraordinary, e.g. a minor deviation to avoid a storm centre. It is therefore important to have an inflexible rule in order to reach a conclusion. The provision entails that costs as mentioned in sub-clause (b) are not covered, even if the measures are of an extraordinary nature or are qualified as unforeseeable. Wages and bunkers in connection with a port of refuge call in order to recondition the cargo shall therefore not be covered. As regards the use of the vessel, it is, however, a condition that it is “justifiable”. If it is necessary to force the engine so that there is a deliberate risk of damaging it, the costs of potential damage shall not be covered. Similar considerations apply to the exclusion in sub-clause (d).
Sub-clause (c) entails that the liability insurer will not cover as a cost of measures to avert or minimise loss the liability the assured may incur if such a measure delays the vessel.
Clause 21-26. The sum insured as a limit to the insurer's liabilityView Clause Go to Plan page
Former Cl. 17-54.
The limitation also applies if the injured party files the claim directly against the insurer. If the assured, according to current rules of law, is entitled to limit his liability to the injured party, the insurer is obviously also entitled to invoke this limitation vis-à-vis the injured party.
The sum insured applies only to the actual liability for compensation associated with the casualty. If costs of measures to avert or minimise loss have also been incurred, special rules shall apply in accordance with Cl. 4-18, sub-clause 1, second and third sentences.
Sub-clause 2 specifies that payments under Cl. 4-19 are made in addition to the maximum amount of the insurance contract.
Clause 21-27. DeductibleView Clause Go to Plan page
Former Cl. 17-55.
In accordance with the other deductible provisions of the Plan, the actual amount of deductible has been removed from the provision.