Chapter 19 - NordicPlan

Commentary

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Chapter 19: Builders’ risks insurance

  • General

    Chapter 19 previously aimed primarily at covering newbuildings, but practice in recent years has shown that the Chapter is increasingly also applied in connection with the rebuilding of ships and building of other units, where the parties and the insurer deem it most appropriate to apply Chapter 19. As a result, “newbuilding” has been replaced in the provisions by “subject-matter insured”. The scope of Chapter 19 has thus in fact been widened. The insurance is generally taken out by the yard, but there is nothing to prevent it being taken out by the owner or buyer.

    A new Clause has been introduced in Cl. 19-7 that deals with the escalation of the sum insured by up to 10% without the insurer’s prior approval. There are corresponding provisions in the English Clauses, ICBR 01.06.1988 and MARCAR 01.09.2007, respectively.

    A new provision has been added to Section 4 – Liability Insurance, which deals with the assured’s liability for environmental damage. This provision has been included in Cl. 19-20 as a new sub-clause 4, and is based on a 2004 EU Directive which has subsequently been incorporated into the legislation of the individual countries.

    The provisions concerning towage and removal of the subject-matter insured have now been placed under Section 5 – Supplementary covers, under a new Cl. 19-27. As a result, Cl. 19-6 – Removal plan has been deleted in its entirety. Towage of the subject-matter insured or components thereof is a key focus of the Clause, since towage is the form of removal that is most commonly used in the context of building risk. This is due to the change in production method that has taken place in the 2000s. More and more hulls/modules and Sections are being built at yards other than the outfitting yard (the assured), including yards outside the Nordic region (foreign yards). Until now, towage risk has often been covered separately under builders’ risks insurance, whereas it will now be covered under a supplementary cover as part of the ordinary builders’ risks insurance.

    The Clause also covers transport of the subject-matter insured or components thereof on board a ship, during transport on land or by air.

    In addition to the provisions of Chapter 19, builders’ risks insurance is also subject to the provisions of Chapters 1 to 9 of the general part of the Plan and the provisions of Chapters 10 to 12, insofar as this is evident from Chapter 19, Section 2.

  • Section 1: Common provisions

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    Section 1: Common provisions

  • Section 2: Loss of or damage to the subject-matter insured

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    Section 2: Loss of or damage to the subject-matter insured

  • Section 3: Indemnification of additional costs incurred in an unsuccessful launching and costs of wreck removal

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    Section 3: Indemnification of additional costs incurred in an unsuccessful launching and costs of wreck removal

  • Section 4: Liability insurance

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    Section 4: Liability insurance

  • Section 5: Supplementary covers

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    Section 5: Supplementary covers

  • Section 6: Supplementary cover for war risks

    The supplementary cover for war risk under the builders´ risks insurance contract has been tied to Chapter 15 of the Plan. The war risks cover is set out in three Clauses: Cl. 19- specifies the perils insured, Cl. 19-30 prescribes rules regarding the insurance period, and Cl. 19-31 states which rules from Chapters 15 and 19 apply correspondingly to the war risk insurance.

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    Section 6: Supplementary cover for war risks