Commentary

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Section 1: Common provisions

  • Clause 17-1. Scope of application

    Chapter 17 provides a special insurance cover for small vessels and constitutes a supplement to the other rules of the Plan. The hull part of this Chapter (Sections 2 and 3) is an addition to the general hull part of the Plan (Chapters 10 to 13), while the special insurance for catch and equipment (Sections 4 and 5) and the liability insurance (Section 6) do not have any parallel in the Plan. The special rules on loss-of-hire insurance for fishing vessels (Section 7) supplement the general provisions on loss-of-hire insurance in Chapter 16 of the Plan. However, there is no clear dividing line between vessels that are insured according to Chapters 10 to 13 of the Plan and vessels that are insured according to Chapter 17. Certain fishing vessels and freighters are thus insured on so-called hull conditions for ocean-going vessels (Chapters 10 to 13). It is therefore necessary to have a rule determining the applicable cover if this is not clear. According to Cl. 17-1 the rules in Chapter 17, Sections 1 to 7, shall only apply to the extent that this is explicitly stipulated in the insurance contract. The provision has the greatest practical significance in relation to the hull cover because there are two sets of rules to choose between here. If hull insurance has been effected on Plan conditions without Chapter 17, Sections 2 and 3, being mentioned in the insurance contract, only the rules in Chapters 10 to13 shall apply.

    Given that the provision relating to the scope of application is contained in Section 1, Sections 4 to 6 must be stated in the insurance contract in order to be applicable. As mentioned, the Plan does not contain any alternative covers for these insurances. If it is not stated that a catch and equipment insurance or an owners’ liability insurance has been effected, the vessel will therefore be sailing without such cover on Plan conditions.

    Insurance for catch and equipment according to Sections 4 and 5 and owner’s liability insurance according to Section 6 may, as mentioned, be tied to a hull cover on the general hull conditions of the Plan in Chapters 10 to13. In that event, the common rules in Section 1 apply to the catch and equipment insurance and the liability insurance, but not to the hull cover. The consequence of this is that the hull cover is not automatically renewed, cf. Cl. 1-5, sub-clause 3, and that the ordinary rules relating to trading areas, classification and safety regulations must be adhered to.

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    Clause 17-1. Scope of application

    The rules in Chapter 17, Sections 1-7 shall only apply to the extent that this follows from the insurance contract .

  • Clause 17-2. Renewal of the insurance/Ref. Clause 1-5

    The non-mandatory rule in the Norwegian Insurance Contracts Act (ICA) Section 3-6 concerning automatic renewal has been departed from in Cl. 1-5, sub-clause 3, of the Plan, which establishes that the insurance is not renewed unless this has been specifically agreed. Many of the persons effecting insurances in this industry do not have professional offices. It may therefore be problematic for them to be required to ensure that the insurance is renewed, particularly if it expires while they are at sea. However, the reinsurance is frequently not finalised until immediately before the insurance takes effect, and insurers do not want to bear the risk if it turns out that reinsurance is not obtainable on the conditions anticipated 30 days before the renewal. The problem of reinsurance may be resolved by the insurers cancelling the insurance not less than 30 days before expiry, if it is not clear whether satisfactory reinsurance is obtainable. This special rule has therefore been maintained in the form of a rule providing for automatic renewal if the insurance is not cancelled 30 days before the date of expiry.

    In the rule regarding automatic renewal it is specified that in such case the insurance is renewed at the same premium and on the same conditions as before, cf. sub-clause 1. If the insurer does not wish to renew the insurance, or if he is only willing to renew it on different conditions or at a different premium rate, he must follow the procedure set out in sub-clause 2, cf. below.

    The basic rule in sub-clause 1 is that the insurance remains in force on the same conditions and at the same premium rate unless it is cancelled within 30 days prior to expiry of the insurance period, cf. above. If the insurer wishes to cancel the insurance or change the premium rate or the conditions, it now follows from sub-clause 2 that he must notify the person effecting the insurance of this within one month of expiry of the insurance period. The person effecting the insurance is thereby given a reasonable amount of time to consider alternative cover. For insurance contracts that run for several years, the decisive point in time for the insurer's duty of notification will be when the multi-year insurance contract is about to expire. Thus the provisions do not apply to payments of due premium during the period covered by the multi-year insurance contract.

    Under sub-clause 3, the person effecting the insurance has a time limit of 14 days before expiry of the insurance period to consider the insurer's renewal offer. If he notifies the insurer, before the time limit expires, that he does not wish to accept the renewal offer, this will result in the contract lapsing from the date the insurance period expires unless the parties agree on new conditions. On the other hand, if the person effecting the insurance fails to respond within the time limit, he is bound by the renewal at the proposed premium rate and on the proposed conditions. Therefore, if the person effecting the insurance accepts an offer from a competing insurer, it is important that he at the same time ensures that the previous contract is cancelled within the specified time limit. Otherwise, he will be bound by two insurance contracts, in which case he must ask one of the insurers to release him from the contract.

    If the insurer wishes to renew the insurance on the same conditions and at the same premium rate, it will not be necessary for him to send notification pursuant to sub-clause 2. If, in such a case, the person effecting the insurance should not wish to renew the insurance, possibly not on the same conditions or at the same premium rate, he must notify the insurer accordingly within the same time limit as stated above, i.e. 14 days prior to expiry of the insurance period. Otherwise the insurance will remain in force on the same conditions and at the same premium rate pursuant to sub-clause 1.

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    Clause 17-2. Renewal of the insurance/Ref. Clause 1-5

    Upon expiry of the insurance period, the insurance is automatically renewed for 12 months at the same premium and on the same conditions. If the insurer does not wish to renew the insurance, or if he only wishes to renew it at a different rate or on different conditions, he must notify the person...

  • Clause 17-3. Trading areas for fishing vessels/Ref. Clause 3-15

    The consequence of the rules relating to trading areas being placed in Section 1 is that they automatically become applicable to all three types of insurance, hull, equipment and liability insurance.

    The basic rule for vessels insured under Chapter 17 is that the trading areas are as indicated in Cl. 3-15 of the Plan with Appendix, unless otherwise provided by the insurance contract. In such case, the system of sanctions for conditional and excluded trading areas applies in the normal manner. For freighters, any departure from Cl. 3-15 must be explicitly stated in the insurance contract, cf. the fact that Cl. 17-3 applies only to fishing vessels. The normal procedure for freighters is that the trading areas in the insurance contract are linked to what is stated in the vessel's trading certificate. Furthermore, it is normally only a matter of ordinary and excluded trading areas, so that navigation in conditional trading areas, which are regulated in Cl. 3-15, sub-clause 2, is not relevant.

    Such a procedure may also be used for fishing vessels, cf. sub-clause 1 which states that the provision only applies unless "otherwise provided in the insurance contract".

    For fishing vessels, however, there is a need for a standard solution that is different from the one that follows from Cl. 3-15 and the Appendix. On the one hand, parts of the fishing fleet operate close to ice-strewn waters, and therefore need an extension of the normal trading areas northwards. On the other hand, there is a considerable risk associated with small fishing vessels that operate in remote waters. A special rule regarding trading areas for fishing vessels is therefore incorporated into Cl. 17-3, sub-clause 2. The trading area is 55 degrees east longitude south of Novaya Semlya and 65 degrees east longitude north of Novaya Semlya, cf. point III, second sentence, of the Appendix and maps nos. 4 and 5. To the west the limits are 65 degrees west longitude north of Saint John and 75 degrees west longitude south of Saint John, cf. point III, third sentence, and maps nos. 4 and 6. The trading area includes ports on the east coast of the USA and Canada north of 40 degrees north latitude, cf. the fact that the southerly limit at 40 degrees north latitude. On the other hand, the seaward approach to the St. Lawrence River and the Hudson Bay are outside the trading area.

    The trading area to the north is open/scattered drift ice concentration (4/10-6/10) or higher. This limit applies in all directions, see point III, last sentence, of the Appendix. The purpose of this limitation is to ensure that the vessel does not enter waters where there is ice. It may be difficult to achieve such a limitation by means of a fixed geographical specification because the ice limit will vary considerably. The trading area is therefore linked to the ice charts issued by the Norwegian Meteorological Institute (DNMI). The ice charts distinguish between "ice free", "open water", "very open drift ice", "open drift ice", "close drift ice", "very close drift ice" and "fast ice". The trading limit is stated to be the limit between "very open drift ice" and "open drift ice", cf. the wording "open/scattered drift ice concentration (4/10-6/10) or higher". In this context, 4/10 indicates the lower limit for "open drift ice".

    The ice limit may move during the period between the publishing of two ice charts. For the definition of trading limits, the most recent ice chart available from the Norwegian Meteorological Institute is the decisive factor. The question as to whether or not the chart is available must be subject to an objective assessment. If the assured has failed to obtain the most recent chart made available to the public, this must therefore be his risk.

    If the ice limit has moved from one chart to the next, the assured has a duty to remove the vessel from waters where the concentration of ice is too high. In such a situation, however, the vessel must be given time to proceed into a permitted trading area. Consequently, the vessel cannot be deemed to have proceeded beyond the trading limits if it reacts promptly to new information about the ice limit, even if the vessel, strictly speaking, was in an excluded trading area for a brief period of time.

    Within the specified trading area, premium rates must be determined on the basis of the operating area of each individual fishing vessel.

    The provision relating to trading limits in the general part of the Plan stipulates ordinary trading limits, a conditional trading area and an excluded trading area. A vessel may sail within the conditional trading area, but if the insurer has not been notified of this, an additional deduction shall be made in the event of damage. For fishing vessels a slightly simpler system is used: if the assured wishes to proceed beyond the trading limits defined in the insurance contract, permission must be obtained in advance, possibly subject to payment of an additional premium. Areas beyond the trading limits specified in the insurance contract are automatically regarded as excluded. Trading in these areas shall therefore be treated in accordance with the rules relating to excluded trading areas in Cl. 3-15, sub-clause 5. This means that the insurance automatically ceases to be in effect when the fishing vessel enters the area, but that the insurance comes into effect again if the vessel leaves the excluded area before expiry of the insurance period. As mentioned above, a similar system can also be applied to freighters, but must in such case be agreed in the insurance contract.

    The rules in Cl. 17-3 apply only to "fishing vessels". Consideration was given to whether there was a need to define the term "fishing vessels", but in view of the strict marking and registration rules, this was considered unnecessary. If the vessel is registered as a fishing vessel and has been given a registration number, it must be regarded as a fishing vessel under Cl. 17-3, even if it is used for purposes other than fishing in a specific situation.

    The rules in Cl. 17-3 relating to trading areas must be viewed in conjunction with the authorities' regulation of the trading area for certain vessels, cf. the Norwegian Maritime Directorate's Regulation of 4 November 1981 No. 3793 relating to trading areas. The rules for fishing, whaling and sealing vessels are contained in Chapter IV. The trading area stipulated by the authorities is normally described in a trading certificate for the vessel in question. As a rule, the trading area in the trading certificate will be more limited than the area specified in sub-clause 1. If the insurer wants the trading area under the insurance to coincide with the trading area in the trading certificate, this must follow from the insurance contract, cf. sub-clause 1. Normally, however, this type of official regulation is only in the nature of a special safety regulation in relation to the insurance, cf. Cl. 17-5 (b). Under these rules, if a vessel proceeds beyond the trading limits specified in the trading certificate, this will only have consequences for the insurance coverage if the infringement can be ascribed to the assured, or someone with whom he may be identified, and if there is a causal connection between the infringement and the casualty. This means that the sanction will be somewhat less strict than it would have been pursuant to Cl. 3-15, sub-clause 3.

    If the vessel has lost its trading certificate, the rules in Cl. 17-4 shall apply.

    It may in certain cases be expedient to state the vessel's type of use in the insurance contract. Infringements of the stated type of use must in that event be considered an alteration of the risk under Cl. 3-8 et seq. If the vessel is used contrary to the stated purpose, the insurer is free from liability, provided that he can prove that he would not have accepted the insurance if he had known that the alteration would take place, cf. Cl. 3-9, sub-clause 1. If he would have accepted the insurance, but on other conditions, he is free from liability if the casualty was caused by the alteration of the risk, cf. Cl. 3-9, sub-clause 2. In addition, the insurer has the right to cancel the insurance, cf. Cl. 3-10.

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    Clause 17-3. Trading areas for fishing vessels/Ref. Clause 3-15

    Unless otherwise provided in the insurance contract , insurance of fishing vessels shall be subject to the limitations that follow from Point III of the Appendix to the Plan, Trading areas applicable to insurance of fishing vessels pursuant to Chapter 17. If a vessel proceeds beyond the trading...

  • Clause 17-4. Class and ship control/Ref. Clause 3-14 and Clause 3-8

    Sub-clause 2 was amended in the 2013 Plan.

    Cl. 3-14 of the Plan is based on the assumption that the vessel is in class and establishes that the insurance will automatically lapse in the event of loss of class. Change of classification society is deemed to be an alteration of the risk, cf. Cl. 3-8, sub-clause 2, last sentence. However, there is no reason to introduce such an assumption for vessels that are insured under Chapter 17, see sub-clause 1, which merely establishes that if the vessel is classed with a classification society at the inception of the insurance, Cl. 3-14 and Cl. 3-8, sub-clause 2, shall apply in the normal way. The provision means that the insurance lapses if the assured cancels the class and proceeds to sail legally under the rules of the vessel´s flag state.

    Vessels which are not in class will be subject to the vessel´s flag state. According to the rules of the Norwegian Maritime Directorate, fishing vessels and freighters of more than 50 gross registered tonnes will be issued a trading certificate. For vessels of less than 50 gross registered tonnes the rules differ to a certain extent for fishing vessels and freighters respectively. Fishing vessels shall - depending on their length - have an equipment certificate/safety certificate, which is a simplified form of trading certificate, whilst the freighters shall have a simpler form of equipment certificate called a survey certificate.

    Trading certificates, equipment certificates, safety certificates and the like issued by the vessel´s flag state have the same significance as class has for larger vessels. At the same time it is a condition for coverage on Plan conditions that these are vessels with a length of 15 meters or more. Norwegian vessels with a length of less than 15 meters are insured on separate conditions according to the mandatory rules of the Norwegian Insurance Contracts Act. Under sub-clause 2, first sentence, the insurance of a vessel that is not in class is made subject to the condition that it has a valid certificate according to the rules of the vessel´s flag state. This sentence was amended in the 2013 Plan. Previous versions referred to the rules of the Norwegian Maritime Directorate instead of the rules of the vessel´s flag state. The term “certificate” covers trading certificate, equipment certificate/safety certificate, survey certificate and any other form of certificate which the vessel´s flag state might issue. The lapse of a valid certificate will for such vessels result in the lapse of the insurance, cf. second sentence, which refers to the rules relating to the loss of class. This provision may seem strict, but the reaction is necessary because normally it should take a lot more to lose a trading certificate or another certificate than it does to lose a class.

    Orders from the vessel´s flag state are regulated in Cl. 3-22.

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    Clause 17-4. Classification and ship control/Ref. Clause 3-14 and Clause 3-8

    If the vessel at the start of the insurance period is classified with a classification society approved by the insurer, Cl. 3-14 and Cl. 3-8, sub-clause 2, shall apply. Vessels not ascribed to any class shall at the start of the insurance period have a valid certificate in accordance with the rul...

  • Clause 17-5. Safety regulations/Ref. Clause 3-22 and Clause 3-25

    Section 7, sub-clause 1, of the Norwegian Ship Safety Act No. 9 of 15 February 2007 reads as follows in English translation: 

    “The operator of the ship shall ensure that a safety management system which can be documented and verified is established, implemented and developed in his organisation and on the individual vessels in order to identify and control the risk and also to ensure compliance with requirements laid down in a statute or in the actual safety management system. The contents, scope and documentation of the safety management system shall be adapted to the needs of the operator and his activities.”

    There has been discussion on whether Section 7 of the Norwegian Ship Safety Act applies to ships below 500 gt. The reason for this discussion is that the ISM Code has not been made applicable for ships below 500 gt. However, the Norwegian Maritime Authority has reiterated that said Section 7 pursuant to Section 2 of the Act is applicable for all ships except pleasure craft less than 24m length. 

    Similar provisions as in Section 7 of the Norwegian Ship Safety Act do not exist in the other Nordic countries whose legislation refers to the standard of the ISM Code when it comes to what ships have a statutory obligation to apply safety management systems. 

    Section 7 of the Norwegian Ship Safety Act is in itself a safety regulation as defined in Cl. 3-22 of the Plan; breach of which will be governed by Cl. 3-25. However, as Section 7 of the Norwegian Ship Safety Act is so vague it will for practical purposes be very difficult to invoke it against the assured until the Norwegian Maritime Authority has adopted a regulation setting out what a safety management system for vessels under 500 gt. should comprise. For ships or vessels or other crafts or units that are subject to the ISM Code, reference is made to the Commentary to Cl. 3-22 and Cl. 3-25 where it is made clear that the ISM Code is a safety regulation pursuant to the definition in Cl. 3-22; breach of which is governed by Cl. 3-25.

    The provision provides three special safety regulations for the insurance of fishing vessels and freighters and comes in addition to Cl. 3-22 et seq. in the general part of the Plan.

    Due to the fact that it is incorporated in the Section containing common rules, it is applicable also to equipment and liability insurance. The purpose of the provision is to avoid any deliberate fisheries, etc. under difficult ice conditions with a high risk of ice damage.

    The provision constitutes “a special safety regulation laid down in the insurance contract” under Cl. 3-25, sub-clause 2. This means that the assured must be fully identified with anyone “whose duty it is on behalf of the assured to comply with the regulation or to ensure that it is complied with”. This will normally be the duty of the master of the vessel. As a special safety regulation Cl. 17-5 (a) also prevails over the provision relating to the situation where the owner is the master of the vessel in Cl. 3-25, sub-clause 1, second sentence. If the owner himself is the master of the vessel, he will therefore forfeit coverage if the vessel sustains damage due to negligent ice-forcing.

    Sub-clause 1 (a) applies only to ice-forcing. Ice-forcing presupposes that the vessel proceeds through ice as the result of a deliberate choice. It further follows from the rules relating to safety regulations that the damage must be a foreseeable consequence of this choice. If ice damage is sustained accidentally, e.g. by striking against drift ice in open sea, this does not constitute ice-forcing. Nor does the provision cover “ice-forcing” in order to avert major damage or total loss where a vessel has unexpectedly become ice bound; this would constitute a measure to avert or minimise loss. On the other hand, sub-clause (a) will apply if the master has deliberately proceeded into an area where it is foreseeable that the vessel will become ice-bound.

    It is further a condition that the forcing concerns “ice”. If the vessel is sailing in an open lane, this does not constitute ice-forcing. This was earlier stated explicitly in the Special Conditions, but is superfluous. Furthermore, the content of the term “ice” can be difficult to define precisely. The term must be defined on the basis of discretionary criteria, such as the thickness, solidity and extent of the ice. There may also be reason to take into consideration the time of year in question and whether any ice-breaker service has been organised. A certain support may also be obtained from the ice classification requirements.

    Sub-clause (b) concerns the trading certificate, which is referred to in Cl. 17-3. As mentioned, the trading certificate defines the trading area as it has been determined by the authorities for the vessel in question. The provisions contained in the trading certificate automatically constitute safety regulations under Cl. 3-22. However, the advantage of mentioning them specifically here is that the identification rule in Cl. 3-25, sub-clause 2, second sentence, becomes applicable.

    Orders from the vessel´s flag state are not subject to any special regulations. If the assured fails to comply with orders issued by the flag state, the trading certificate might become invalid, in which case the insurance will automatically lapse according to Cl. 17-4.

    Sub-clause (c) concerns vessels at quay or laid up, and is consequently more extensive than Cl. 3-26, which merely concerns vessels laid up. For fishing vessels and freighters it is more practical to stay in port than to be laid up. There is moreover a special need for safety regulations in connection with the risk of theft, because it is normally quite simple to gain access to this type of vessel. It is therefore the assured’s duty to provide daily supervision of the vessel and its moorings and furthermore to secure the vessel and its equipment. The provision also contains a requirement that the equipment shall be kept in such a way that it can only be removed by the use of tools.

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    Clause 17-5. Safety regulations/Ref. Clause 3-22 and Clause 3-25

    The following special safety regulations shall apply, cf. Cl. 3-25, sub-clause 2: The vessel shall not force ice. If the vessel has a trading certificate, the provisions in the certificate shall constitute special safety regulations. When the vessel is at quay or laid up, the assured shall secure...

  • Clause 17-6. Savings to the assured

    The provision is taken from the P&I conditions in the 1964 Plan, but contains a general principle of insurance law and has therefore been generalised.

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    Clause 17-6. Savings to the assured

    If the assured as a result of a casualty or liability covered by the insurance has received additional income, saved expenses or averted liability which he would otherwise have incurred and which would not have been covered by the insurer, the latter may deduct from the compensation an amount...