Commentary

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Section 4: Catch and equipment insurance - standard cover

  • General

    Catch and equipment insurance corresponds to the former fishing insurance. In addition to this Section, the general part of the Plan and Chapter 17, Section 1, shall apply. However, Chapter 17, Sections 2 and 3, shall not apply.

    Dories are excluded from the Plan according to Cl. 10-1, sub-clause 2.

    The sum insured for insurance of catch and equipment is determined in the insurance contract on an annual basis or for a round voyage.

  • Clause 17-19. Objects insured

    The provision states the objects and interests covered by the insurance. Sub-clause (a), first sentence, concerns the catch. By catch is meant the quantity taken on board the assured’s own vessel at sea. It is irrelevant whether it was caught by the relevant vessels itself or bought from others at sea. The provision also covers catch which has been processed, packaged and frozen. However, the provision is limited to the vessel’s operation as a fishing, whaling or sealing vessel, and does not apply if the vessel is used as a cold store whilst laid up.

    The second sentence, establishes that the insurance, subject to certain specific conditions, also covers freight. This applies only where the catch has in actual fact been reported to a fish sales co-operative and the vessel directed to a specific place for unloading before the casualty occurred. It is not sufficient if the reporting, etc. takes place later. In addition to catch and freight, the fishing insurance also covers fishing gear and accessories which are on board the vessel, cf. sub-clause (b). It is a condition that the gear belongs to the assured. The assured may therefore not take on board seines which belong to other owners and obtain compensation for damage to these without this having been agreed in advance with the insurer. The gear must be on board the vessel; gear onshore or in the water therefore falls outside the scope of cover. The gear is deemed to be in the water from the moment setting starts and until it is back on board again. The requirement that the object must be on board is otherwise commented on in more detail under Cl. 10-1.

    The reference to Cl. 10-1 in sub-clause (d) is included for the purpose of making it clear that the cover under the fishing insurance will not be extended by agreeing on a more limited scope of cover under the hull insurance.

    It follows from Cl. 2-12 that the assured has the burden of proving that he has suffered a loss which is covered by the insurance. This rule entails that the assured must prove that the catch or the equipment was in actual fact on board when it was lost or damaged. 

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    Clause 17-19. Objects insured

    The insurance covers: catch which is on board the vessel as part of the fishing, whaling or sealing activities of the vessel. If a marketing co-operative has been advised, prior to a casualty, of the arrival of the catch and the catch has been directed to a specific place of discharge, transport...

  • Clause 17-20. Insurable value

    The provision states the value of the interests covered by the insurance based on certain “objective” criteria. Sub-clause 1 regulates the insurable value of the catch, while sub-clause 2 determines the insurable value of the other objects which are insurable under an insurance of catch and equipment.

    The provision does not prevent the parties to the insurance contract from agreeing on a specific insurable value. However, an agreement of the insurable value is not very common for insurance of catch, but is more widely used in insurance of fishing gear, etc.

    The basis for the calculation of the insurable value of the catch is under sub-clause 1 the market price of the catch at the place of loading at the time of loading. The market price of the catch will be the value of the catch to the seller’s hand, before he has incurred costs in connection with the forthcoming transport. The market price is the price at which the catch can be sold, taking into account the seller's place in the chain of distribution.

    The value refers to price conditions “at the time of loading”, i.e. at the time when the catch is loaded on board the vessel.

    If the catch was reported to a sales cooperative and directed to a specific place for unloading, it follows from the provision that the insurable value also covers freight, “transport surcharge”, see Cl. 17-19 (a), second sentence.

    Sub-clause 2 regulates the insurable value of objects covered according to Cl. 17-19 (b), (c) and (d). Here the insurable value represents the replacement cost of the object at the inception of the insurance. The provision is in accordance with Cl. 2-2. The “inception of the insurance” is the time when the insurer’s liability takes effect. The time for calculating the insurable value under sub-clause 2 is accordingly different from that under sub-clause 1, where the value refers to the time of loading.

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    Clause 17-20. Insurable value

    Unless otherwise agreed, the insurable value of the catch is market price at the place of loading at the time of loading, with the addition of any transport surcharge as mentioned in Cl. 17-19 (a). The insurable value of objects mentioned in Cl. 17-19 (b), (c) and (d) represents the replacement...

  • Clause 17-21. Extraordinary handling costs

    The need for this cover is linked to the problems that arose in winter 1998/99 when a number of fishing vessels proved to have been infected with salmonella due to the fact that the ice used to preserve fish on board was infected with the bacteria. In addition, there is the fact that the authorities set stringent requirements for the destruction of catch in a controlled manner. There is therefore a need for cover of extraordinary costs in connection with the removal and destruction of damaged catch.

    The cover applies only when the shipping company has effected insurance for the catch. The insurer is liable for an amount equivalent to the sum insured and is in accordance with the cover for costs of measures to avert or minimise loss, which is largely similar to the cover for extraordinary costs.

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    Clause 17-21. Extraordinary handling costs

    The insurer covers extraordinary costs in connection with the discharge, removal and destruction of a damaged catch up to an amount equivalent to the sum insured.

  • Clause 17-22. Excluded perils/Ref. Clause 2-8

    The provision states limitations to the perils covered by the insurance, and must be seen in conjunction with the provisions in Cl. 2-8 to Cl. 2-10. According to Cl. 2-8 an insurance against marine perils covers any peril to which the interest is exposed, with the exception of the perils stated in sub-clauses (a) to (d). The war peril has been taken out of the marine-perils cover through the exception in Cl. 2-8 (a) and has been made the object of a separate war-risks insurance under Cl. 2-9. If there is no specific statement as to what perils are covered by the insurance, the rule in Cl. 2-10 is that the insurance covers marine perils under Cl. 2-8.

    The exclusions in Cl. 17-22 largely reflect the general principle of insurance law that the insurance shall only cover unforeseeable losses. Losses resulting from the inherent nature of the catch, inadequate packaging, loss in weight or volume of the catch, etc. are foreseeable and should therefore fall outside the scope of cover. Sub-clause (a) excludes damage due to the inherent nature or condition of the catch when the catch was taken on board. The exclusion also covers cases where the catch is unable to stand up to the foreseeable exposures on board. This provision is particularly relevant to mackerel and herring in bulk, which are unfit to stand movements on the way to port if the vessel has remained for too long in the field with the fish on board.

    Sub-clause (b) regulates inadequate packaging and preservation. Inadequate preservation includes cases where refrigerated or frozen catch did not have the correct temperature at the time it was refrigerated or frozen down.

    Sub-clause (c) excludes loss as a result of ordinary loss in weight or volume.

    Sub-clause (d) relates to refrigerated or frozen catch. The treatment of refrigerated catch is subject to extensive EU regulation, and buyers also have stringent criteria as regards the quality of the fish. The assured will therefore normally be very careful to ensure that the water is sufficiently cooled down before the catch is taken on board. If the refrigeration plant is not functioning or has not been started up, fish will not normally be taken on board.

    Quality standards for frozen fish are so stringent that any thawing may result in loss because the fish cannot be sold at the ordinary price.

    If the loss in question has resulted from a delay which has no connection with a preceding casualty, it follows from Cl. 4-2 that the insurer is not liable. It is also conceivable that loss resulting from a delay is excluded through Cl. 17-22 (a), in that the fish has to stand a few days’ delay. If, on the other hand, the delay is a result of an earlier casualty, the insurer must be fully liable in the normal way, cf. the cover of further developments according to the Special Conditions. This follows from general rules of causation and applies independently of the cause of the delay or its duration. The fact that damage to the catch develops further during transport to the place of destination is a risk which must be covered by the insurance. However, the insurer’s liability for the delay is based on the assumption that the assured could not have avoided this delay. If the assured, following a casualty, chooses instead of taking the vessel directly to a port, to remain at sea in order to prevent loss of time, the loss caused by the delay is not a consequence of the casualty. If it is found that the loss is partly a result of the casualty, partly of a delay, the rule of apportionment in Cl. 2-13 shall be used.

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    Clause 17-22. Excluded perils/Ref. Clause 2-8

    In addition to Cl. 2-8 the following shall apply: The insurer does not cover losses caused by: the properties or condition of the catch when taken on board, inadequate packaging or preservation of the catch, normal shrinkage of the catch, excessive temperature of refrigerated or frozen catch,...

  • Clause 17-23. Deck cargo

    The provision entails that further restrictions are made in the perils covered for deck cargo. In sub-clause (b) the term “dirt” first and foremost covers pollution from the ship’s own exhaust system.

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    Clause 17-23. Deck cargo

    For objects on deck the insurer does not cover losses resulting from: precipitation or seawater, dirt or sparks which do not cause a fire, impact caused by shifting, the catch being washed overboard, leakage from other objects on board.

  • Clause 17-24. Total loss

    The provision concerns all objects insured under the catch and equipment insurance, i.e. both the catch and the accessories, cf. the introductory words of the provision.

    Sub-clause 1 defines when a total loss has occurred, and is taken from the Norwegian Cargo Clauses Cl. 35, sub-clause 1. Under sub-clause (a), a total loss has occurred if the objects insured have been destroyed. The objects have been “destroyed” where they are totally burnt up, dissolved, evaporated or have leaked out, or where they are in some other way physically totally destroyed. In principle, all objects insured, including the entire catch, must be affected in order for it to constitute a total loss. The rules relating to loss in weight, cf. Cl. 17-25, however, make sub-clause 1 of Cl. 17-24 similarly applicable where part of the objects insured/catch are totally lost. The condemnation rules in sub-clauses (c) and (d) do not call for a more precise definition of the term “destroyed”. On the other hand, the distinction between condemnation and partial damage may be difficult to make. Reference is made to the Commentary on Cl. 17-26.

    Under sub-clause 1 (b) a total loss has also occurred where the objects insured (including the catch) “have been removed from the assured without any possibility of his recovering them”. The objects have been “removed from” the assured if he does not have physical disposal of them. They have sunk, been washed over board, stolen, impounded or handed over to a wrongful recipient. There is, however, no requirement that the objects shall be physically damaged or impaired. The actual removal must be complete. The objects must have been removed from the assured “without any possibility of his recovering them”.

    If the objects have disappeared without there being any basis or information to indicate how this happened, the assured has the burden of proving that the total loss was caused by a peril covered by the insurance.

    Rules relating to condemnation are contained in sub-clause 1 (c) and (d). The provision in (c) sets the condemnation limit at 100% for fishing gear and accessories. For other objects, however, the condemnation limit is 90% in line with the solution in the Norwegian Cargo Clauses § 35, sub-clause 1, no. 4. The reason for the difference is that catch, packaging and supplies may be considered equivalent to goods, while the insurance of fishing gear is more similar to an ordinary property insurance.

    The condemnation rules apply when the objects insured are so extensively damaged that at least 100% or 90% of their value must be considered lost. When deciding whether the objects are condemnable, damage must be assessed under Cl. 17-25 and Cl. 17-26 and be seen in relation to the insurable value. In the assessment only loss of value resulting from damage covered by the insurance shall be taken into account. If several insured incidents occurred during the transport, it is the aggregate damage which must have resulted in a loss of value of 100% or 90% respectively.

    Sub-clause 2 regulates the further content of a total-loss settlement. The provision corresponds to the Norwegian Cargo Clauses § 35, sub-clause 2. In the conditions for fishing insurance there was no such rule. The fundamental principle is that the assured is entitled to payment of the sum insured for the object insured, limited, however, to its insurable value, cf. first sentence.

    If the objects, before becoming a total loss, sustain damage, it follows from the second sentence that no deduction shall be made for such damage in the total-loss claim. It is, however, a condition that the damage occurred during the insurance period. For pre-existing damage prior to the inception of the insurance, deductions shall be made, given that such damage will reduce the insurable value of the object correspondingly.

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    Clause 17-24. Total loss

    A total loss has occurred if the objects insured: been destroyed, have been withheld from the assured without any possibility of his recovering them, stated in Cl. 17-19 (b) are so extensively damaged that the loss constitutes 100 % of their value, stated in Cl. 17-19 (a), (c) and (d) are so...

  • Clause 17-25. Damage to or loss of catch

    Due to the renumbering of the Clauses of Chapter 17 in the 2010 version, the number of the Clause was changed from 17-26 to 17-25.

    The provision regulates the claims settlement where catch is damaged or lost without the rules relating to total loss in Cl. 17-24 becoming applicable. Because there is no question of any repairs in respect of a catch in the event of damage or partial loss, as would be the case for other objects covered by the insurance, the provision determines that the assured will in these cases always be entitled to compensation. As regards the size of this compensation, it shall be determined in the same way as under Cl. 17-26, sub-clause 2, and reference is therefore made to the Commentary on that provision.

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    Clause 17-25. Damage to or loss of catch

    If a catch, cf. Cl. 17-19 (a), is damaged or lost without the rules in Cl. 17-24 being applicable, the insurer shall cover the percentage of the insurable value which corresponds to the final reduction of the value of the catch (the damage percentage).

  • Clause 17-26. Damage to other objects

    The provision regulates settlement in the event of damage to fishing gear, accessories and equipment insured according to Cl. 17-19 (b), (c) and (d).

    Sub-clause 1 is taken from the Norwegian Cargo Clauses Cl. 37, sub-clause 1, and establishes that the insurer is always entitled to demand that damage be repaired, thus ruling out any compensation to the assured for unrepaired damage. Repair means that the object is restored to its original state. Only the insurer may demand repairs. The assured will be referred to the compensation alternative in sub-clause 2. He may not, over the insurer’s objection, carry out repairs and claim compensation for the costs incurred in that connection.

    The insurer’s right to demand that damage be repaired is not unconditional. Repairs must be feasible without “unreasonable loss or inconvenience for the assured”. In the evaluation of this question, the length of time such repairs will take must amongst other things be taken into account.

    Presumably the costs of repairs will constitute a smaller amount than the sum insured; if not, it will be a case of condemnation under Cl. 17-24, sub-clause 1 (c) or (d). If the insurer has demanded repairs under Cl. 17-26, sub-clause 1, and these repairs turn out to be significantly more expensive than anticipated, he must, however, pay all costs in full. The same applies if the repairs turn out to be inadequate.

    Sub-clause 2 regulates settlement when the damage is not repaired, either because the insurer is not entitled to demand it, or chooses not to do so. The provision is taken from the Norwegian Cargo Clauses Cl. 37, sub-clause 2. In such cases a cash settlement shall be made based on the determination of a damage percentage for the object. The damage percentage shall reflect the final reduction in the value of the damaged objects, i.e. the market value of the object in undamaged condition in proportion to the value in damaged condition at the place of destination. The damage percentage shall be calculated on a discretionary basis

    When the damage percentage has been determined, the insurer’s liability will be the product of the damage percentage and the insurable value. However, if the sum insured does not cover the entire insurable value, such under-insurance must be taken into account by a pro-rata calculation of the insurer’s liability, cf. Cl. 2-4.

    Sub-clause 3 is taken from the Norwegian Cargo Clauses § 38 and concerns damage to or loss of an object which consists of several parts. It is mainly relevant in the event of damage to fishing gear and similar equipment. Under the provision, the insurer’s liability is limited to covering repairs or renewal of the part that is lost. The assured therefore never has the right to demand a new object in the event of such damage.

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    Clause 17-26. Damage to other objects

    If objects stated in Cl. 17-19 (b), (c) and (d) have been damaged, the insurer may require that the damage be repaired subject to his paying the costs of repairs as and when they are incurred. Repairs may not be required if they result in an unreasonable loss or disadvantage for the assured. If t...

  • Clause 17-27. Survey of damage

    Insurance of catch and equipment is not subject to the rules in Chapter 12. It is therefore necessary to have a reference to Cl. 12-10 in order to have authority to carry out a survey of damage.

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    Clause 17-27. Survey of damage

    Cl. 12-10 shall apply correspondingly to insurance in accordance with this Section.

  • Clause 17-28. Deductible

    The deductible applies to damage, total loss and loss arising from measures to avert or minimise loss.

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    Clause 17-28. Deductible

    For any one casualty the amount stated in the insurance contract shall be deducted.