Commentary

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

  • Clause 19-9. Objects insured/Ref. Clause 10-1

    The provision covers the financial effort made by the yard and the buyer at any given time in order to complete the subject-matter insured. Sub-clause 1 (a) and (c) and the commentaries were amended in the 2013 Plan.

    Sub-clause (a). The term “subject-matter insured” means whatever at any time is being built, and components, equipment and materials manufactured or procured for the subject-matter insured. This sentence refers to the yard’s operations.

    If the subject-matter insured consists of several sections/modules that are being built at several different yards, the insurance basically only covers the part of the subject-matter insured that is built in the yard of the person effecting the insurance, cf. Cl. 19-5, sub-clause 1 (a). If the parties want insurance cover which also comprises sections/modules built elsewhere, a separate agreement must be made for an extension of the place of insurance according to Cl. 19-5, sub-clause 2. In that event, it may also be relevant to give the subcontractor status as co-insured, cf. the comments on Cl. 19-3.

    Sub-clause (b), refers to the buyer, and specifies that the buyer’s delivery of components, equipment and materials is only covered by the insurance if this is stated in the insurance contract or if it transpires from conditions in general.

    If the sum insured is insufficient to cover the interests of both the yard and the buyer, it will, however, be difficult to decide whether this is due to the fact that the sum insured has been calculated too low in relation to the overall values, or to the fact that the buyer’s interest in materials and components delivered shall not be comprised. A clearer procedure is therefore for the insurance contract to state to what extent the buyer’s components and materials shall be covered. On the other hand, such a rule may become too rigid and lead to unreasonable results if the yard were to forget to state the buyer’s deliveries in the insurance contract despite the intention for them to be included. If the yard is in such cases obliged under the building contract to insure the buyer’s deliveries, and the insurer invokes the fact that the insurance contract does not contain any information to this effect, the yard will incur liability for the omission vis-à-vis the buyer. In order to avoid such an outcome, sub-clause (b) states that the deliveries are included, also if this “transpires from circumstances in general”. This may for example be the case if the buyer’s deliveries are included in the contract price and the contract price is identical to the sum insured. On the other hand, it may have been understood between the parties that the buyer shall take out his own insurance, for example where it is a question of comprehensive seismic equipment of great value. In such cases the buyer’s deliveries will not be included.

    Where the buyer’s deliveries are included in the insurance in this way, it is important that the yard ensures that the sum insured is sufficient to cover both the yard’s and the buyer’s deliveries. If the sum insured is too low, the result will be that the yard is underinsured for its own deliveries and furthermore incurs a liability to the buyer for the latter’s deliveries to the extent that the yard is obliged to keep these insured.

    Sub-clause (c) includes the yard’s costs in connection with the drawing and other planning of the subject-matter insured in the cover. Here the object insured is not the specific drawings, models, etc. - these can normally be reconstructed at low cost if they are destroyed - but the general costs incurred by the yard in its own planning department and to hire consultants in connection with the planning of the subject-matter insured. If the building contract is terminated, these costs will normally be wasted.

    If the subject-matter insured is part of a series which the yard is going to build, the costs can be distributed over all the subject-matters insured in the series. If it is quite clear that the existing plans will be used in connection with the building of subsequent subject-matters insured, it will be possible to say that “the yard’s costs in connection with the drawing and other planning of the subject-matter insured” only comprise the proportion of the costs which come under the builder´s risk insurance in question. However, if this is not perfectly clear, no deduction shall be made from the compensation on account of the potential value which the plans may have for the execution of subsequent contracts.

    Sub-clause (d). Under the conditions, deck and engine accessories were covered in addition to bunkers and lubricating oil. This cover now follows from the use of the term “equipment” in sub-clause (b). This means that it is sufficient that the equipment has been “procured for the subject-matter insured”; it need not be on board. The conditions also stipulated that the said objects, etc., must belong to the yard. However, bunkers and lubricating oil belonging to the buyer should also be covered.

    The rules in sub-clause 1 must be compared with Cl. 1-5, first sentence, regarding when the insurance period starts. The yard’s investments in materials etc. will only be covered from that point in time. However, there is obviously nothing to prevent an agreement that the investments shall be insured from an earlier point in time.

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    Clause 19-9. Objects insured/Ref. Clause 10-1

    The insurance covers: the subject-matter insured and components, equipment and materials  manufactured or procured for the subject-matter insured,  components, equipment and materials supplied by the  buyer are, however, only covered if this is set out in the insurance contract , or transpires fr...

  • Clause 19-10. Insurable value

    The Clause defines the insurable value in builders’ risks insurance. Some editorial amendments were made in the Commentary of the 2013 Plan.

    Sub-clause 1 defines the insurable value when the subject-matter insured is ready for delivery. The basis for the insurable value is the contract price originally agreed less subsequently agreed deductions. The wording “subsequently agreed deductions” concerns changes which result in a reduction in the contract price. Normally the insurer will be notified of such deductions for the purpose of obtaining a reduction in premium. In that event, they will also be stated in the insurance contract. To avoid that the insurable value exceeds the assured’s real loss, however, it is necessary to take such deductions into account in the calculation of the insurable value, regardless of whether or not the insurer has been notified.

    The wording “later agreed additional amounts” in sub-clause (b) refers to variation work in relation to the original contract which results in an increase in the price. The consequence of such variation work/additions not having been reported is that this increase in the building contract will not be covered by the builder´s risk insurance. It follows from sub-clause (c), that the value of the buyer’s deliveries is also included in the insurable value. Under Cl. 19-9 (b), such deliveries are included in the insurance if this is set out in the insurance contract or transpires from conditions in general. In such case, it is logical that the value of these deliveries is also stated in the insurance contract and included in the insurable value.

    If the insurable value is based on the contract price with agreed additions, the yard’s profit will be included. On the other hand, such a definition of the insurable value does not comprise the buyer’s profit on the building contract arising from the difference between the contract price with additions, etc., and the market value of the subject-matter insured. Sub-clause 2 defines the insurable value before the subject-matter insured is ready for delivery. The provision is based on the fact that the insurable value under the builders’ risks insurance increases as the project progresses. Deductions shall be made in the insurable value calculated according to sub-clause 1 for work that has not been carried out and components and materials which have not been procured or manufactured for the subject-matter insured, cf. sub-clauses (a) and (b). Components and materials which have been procured shall, however, be included, provided that they are within the place of insurance, cf. Cl. 19-5.

    However, the definition of the insurable value under sub-clause 2 does not afford cover for the yard’s profit on the investments which have not yet been made. In order to obtain the full profit, the contract must therefore be executed by rebuilding the subject-matter insured. However, this is conditional on the profit being specified as a separate item of the sum insured, which it is currently not customary to do.

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    Clause 19-10. Insurable value

    The insurable value when the subject-matter insured is ready for delivery constitutes: the original contractual building price less subsequently agreed  deductions, subsequently agreed additional amounts mentioned in the insurance contract , the value of the buyer’s deliveries which are covered b...

  • Clause 19-11. Total loss in the event of condemnation

    The definition of total loss and the determination of compensation in the event of total loss are combined in a joint Clause, Cl. 1-4. In Chapter 19 the rules are split into three clauses. Cl. 19-11 and Cl. 19-12 define total loss and thus correspond to Cl. 11-1, Cl. 11-3 and Cl. 11-7 of the Plan. Compensation in the event of total loss is regulated in Cl. 19-13, which corresponds to Cl. 4-1 of the Plan, but is more complicated.

    This Clause determines a rule regarding condemnation and is additional to the total-loss rule in Cl. 19-12 relating to the situation where the yard’s obligation to deliver is terminated. The purpose is to obtain a simpler total-loss rule under which it is not necessary to decide whether extensive damage to the subject-matter insured results in the termination of the obligation to deliver because of failed contractual assumptions. In the event of extensive damage to the subject-matter insured, the condemnation rule is now directly applicable.

    The assured is entitled to compensation for total loss if the subject-matter insured has such extensive damage that the costs of repairs will constitute more than 100% of the sum insured. This condemnation limit differs from the corresponding rule in the hull conditions, where the condemnation limit is set at 80% of the insurable value or the value of the subject-matter insured in repaired condition. The reason is that Cl. 19-11 does not contain any corrective in the event of the market value being higher than the sum insured, making a higher limit necessary.

    If the subject-matter insured is damaged without this constituting a total loss, settlement shall be effected according to the rules relating to damage contained in Cl. 19-14 et seq.

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    Clause 19-11. Total loss in the event of condemnation

    The assured may claim compensation for a total loss if the damage to the subject-matter insured is so extensive that the costs of repairs amount to more than 100 % of the sum insured.

  • Clause 19-12. Total loss where the yard’s obligation to deliver no longer applies

    This Clause ties total loss under the builders’ risks insurance to the termination of the yard’s obligation to deliver under the building contract due to damage to the subject-matters insured or the yard. However, due to the fact that a condemnation rule has now also been introduced, cf. Cl. 19-11, the total-loss rule in Cl. 19-12 has become less relevant.

    The Clause specifies that it is only the termination of “the yard’s” obligation to deliver which triggers the right to the total-loss compensation. It is not sufficient that the parties, in connection with an incident of damage, agree that the contract shall not be executed, or that the buyer has stipulated in the building contract a unilateral cancellation right in case of delay due to damage.

    The question as to when the building contract is terminated must be decided on the basis of the building contract, cf. e.g. Cl. 2, sub-clauses 2 and 3, of the 1981 Contract relating to cases of force majeure, supplemented by general non-statutory rules on force majeure and failed contractual assumptions. A total loss will only exist if the damage to the subject-matter insured or the yard is so extensive that the yard may demand to be released from the obligation to fulfil the contract on the basis of these rules. The force-majeure concept in the 1981 Contract presupposes that the damage to the subject-matter insured or the yard has made it impossible, or practically impossible, to fulfil the contract. This question is discussed in further detail in Knudtzon: “Den nye kontrakt for bygging av skip ved norske verksteder, Nordisk Skipsreder­forenings medlemsblad 1984 A”, pp. 19 et seq. (“The new contract for the building of ships at Norwegian shipyards, the Northern Shipowners’ Defence Club’s bulletin 1984 A”).

    A total loss is contingent on “the obligation to deliver” being terminated “as a result of” the said circumstances. The insurer is not liable if the obligation to deliver is terminated for other reasons, e.g. where the yard has the right to cancel without any loss or damage as mentioned having occurred. Nor will the termination of the obligation to deliver due to the yard’s failure to meet its obligations trigger the right to total-loss compensation. This is a strictly commercial risk which cannot be covered by insurance, cf. also the exclusion for insolvency in Cl. 2-8 (c).

    The Clause specifies three reasons for the termination of the yard´s obligation to deliver: damage to the subject-matter insured itself, damage to components of the subject-matter insured, or damage to the yard, cf. sub-clauses (a) and (b). The decisive factor is that the actual subject-matter insured is so extensively damaged that the yard cannot be expected to rebuild it, or that the yard itself suffers such extensive damage that it must be released from its obligations, cf. above.

    According to sub-clause (c), a total loss furthermore occurs when the obligation to deliver is terminated due to similar circumstances for a subcontractor, provided that manufacturing at the premises of the relevant subcontractor is covered according to Cl.19-5, sub-clause 2.

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    Clause 19-12. Total loss where the yard's obligation to deliver no longer applies

    The assured may claim compensation for a total loss where the yard's obligation to deliver no longer applies as a result of: damage to or loss of the subject-matter insured or parts of it, damage to the yard, or damage to a subcontractor's yard, provided the work there is covered by the insurance...

  • Clause 19-13. Compensation in the event of a total loss/Ref. Clause 4-1

    Sub-clause 1 regulates the insurer’s liability for damages in the event of total loss when the subject-matter insured is ready for delivery. The basis for the total-loss settlement may in such cases be either the condemnation rule in Cl. 19-11, or the rule in Cl. 19-12 concerning the termination of the obligation to deliver. In that event, the insurer covers the sum insured, but not in excess of the insurable value, cf. Cl. 19-10.

    In addition to the sum insured, the insurer shall in the event of total loss cover costs and other losses as set out in Cl. 4-19.

    According to Cl. 19-10, the insurable value is defined as the original contractual price with any deductions or additions and the value of the buyer’s deliveries. All of the elements mentioned must therefore be included in the agreed sum insured. If a fixed sum insured has been agreed at the inception of the insurance and notice of additional work is later given to the insurer, the assured must therefore ensure that the sum insured is increased correspondingly. If not, the sum insured will be lower than the insurable value at the time of loss and this will result in under-insurance, cf. Cl. 2-4.

    In the same way the assured must ensure that the sum insured is reduced in the event of deductions resulting from parts of the work not being carried out. If this is not done, the sum insured will be higher than the insurable value, and the compensation will be limited to the insurable value. In that event, the assured will have paid premium on a larger amount than what he can recover under the insurance.

    Sub-clause 2 defines the insurer’s liability for damages in the event of a total loss before the subject-matter insured is ready for delivery. The insurer’s liability for damages in this case constitutes the proportion of the sum insured which corresponds to the insurable value calculated according to Cl. 19-10, sub-clause 2. The calculation of the insurable value in this case is commented on in more detail under Cl. 19-10, sub-clause 2. If the total loss here only affects part of the subject-matter insured, the insurer’s liability must be adjusted accordingly. If the sum insured is equivalent to the insurable value, the entire insurable value under Cl. 19-10, sub-clause 2, will be payable. However, if the sum insured is less, the assured shall only receive the proportionate share which corresponds to the ratio between the sum insured and the insurable value.

    The rule that a total loss has occurred when the yard’s obligation to deliver is terminated because of damage to the yard or the premises of a subcontractor may result in the insurer having to cover the value of the subject-matter insured and components or materials procured for the same, even if both the subject-matter insured and the components are relatively, or even totally, undamaged. This may be the situation if the yard or a subcontractor sustains damage, e.g. in a fire or natural disaster, which does not affect the subject-matter insured, components or materials, and the damage is so extensive that it would be unreasonable to expect the yard to complete the building project. In that event, under sub-clause 2 in conjunction with the definition of the insurable value in Cl. 19-10, sub-clause 2, the assured will also recover compensation for the part of the subject-matter insured and materials or components which are undamaged, cf. the fact that deductions shall only be made from the insurable value for investments which have not been made. The reason is that where the obligation to deliver is terminated due to damage to the subject-matter insured or damage to the yard/the subcontractor’s yard, it is clear that all the investments made are in principle lost for the assured. He should therefore receive compensation for these investments, even if the subject-matter insured and any components/materials are wholly or partly undamaged. However, this is conditional on the components, equipment and materials being within the place of insurance, cf. Cl. 19-5.

    On the other hand, in connection with the total loss settlement the insurer will take over the title to the subject-matter insured and any undamaged components or materials, cf. Cl. 5-19, sub-clause 1. The insurer can therefore utilize the market value which the subject-matter insured or the components may represent after the damage. If the buyer and the yard find it expedient to rebuild the subject-matter insured after payment of the total-loss claim, this is therefore conditional on the insurer agreeing with such a decision.

    Under-insurance in the event of total loss before delivery now follows from Cl. 19-13, sub-clause 2, in that the insurer’s liability is limited to the proportion of the sum insured which corresponds to the insurable value calculated according to Cl. 19-10, sub-clause 2. As regards total loss on delivery, however, the under-insurance principle, follows from Cl. 2-4 on under-insurance.

    In practice, the buyer will normally have paid one or several instalments of the contract price, and these must be reimbursed when the yard’s obligation to deliver is terminated due to a total loss. According to Cl. 19-3, the buyer shall be regarded as co-insured as far as the instalments paid are concerned and will in the event of a total loss acquire a direct claim against the insurer.

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    Clause 19-13. Compensation in the event of a total loss/ Ref. Clause 4-1

    In the event of a total loss where the subject-matter insured is ready for delivery, the insurer covers the sum insured, but not in excess of the insurable value. In the event of a total loss before the subject-matter insured is ready for delivery, the insurer covers the proportion of the sum...

  • Clause 19-14. Damage/Ref. Chapter 12

    This Clause was edited in 2016 in order to bring the text in line with the Commentary.

    This provision refers to Chapter 12, which entails that if the subject-matter insured (or components and materials for the subject-matter insured) are damaged without this constituting a total loss, the insurer shall indemnify the costs by repairing the damage or re-acquiring lost objects. The costs of repairing the damage also comprise ordinary profit for the yard from such work. The repair work must in other words be calculated in the same way as if the yard had undertaken work paid by the hour for someone else, and the insurer shall indemnify the full amount. However, Cl. 12-1, sub-clause 2, to the effect that liability arises as and when the repair costs are incurred protects the buyer against a major compensation for damage being paid to the yard without the corresponding repair work being carried out.

    It is conceivable that the damage can be repaired, but that the owner nevertheless demands new equipment rather than repairs, e.g. out of fear of delayed damage in connection with water damage to a generator. Here the insurer’s liability must be tied to the yard’s obligation vis-à-vis the buyer according to the building contract. If under the contract it is sufficient for the yard to carry out repairs, possibly combined with a warranty against future damage, the insurer’s liability must be limited in the same way. If the yard, out of consideration for its customers or for other reasons, chooses to buy a new object rather than repair it, this must accordingly be of no concern to the insurer.

    Cl. 12-3 regarding adequate maintenance, etc. shall be applied correspondingly in connection with the rebuilding/conversion of ships or other entities where the conditions set out in Chapter 19 are applied. This is now expressly stated in the text itself by limiting this exception to newbuildings only.

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    Clause 19-14. Damage/Ref. Chapter 12

    If the subject-matter insured or components etc. have been damaged without  Cl. 19-11 or Cl. 19-12 being applicable, the rules in Chapter 12 shall apply, with the exception of Cl. 12-3, Cl. 12-4, Cl. 12-5 (d) and (e), Cl. 12-6 and Cl. 12-15 to Cl. 12-18.  Cl. 12-3 shall apply to rebuilding/conver...

  • Clause 19-15. Limitation of the insurer’s liability/Ref. Clause 12-1

    The Commentary has been rewritten in the 2013 Plan. It is patterned on the definitions in Cl. 12-4, and much of the content must be seen in conjunction with the Commentary on this Clause. Cl. 12-4 deals with the terms “error in design” and “faulty material”, and the terms in Cl. 19-15 must therefore have the same meaning, but account must be taken of the fact that Cl. 19-15 relates specifically to newbuildings or rebuilding/conversion projects at the building yard. Furthermore, Cl. 19-15 makes specific mention of “faulty workmanship”.

    Error in design
    The term “design” refers to the entire process from the drawing of the component concerned, specification of types of material and dimensions, how the individual components of the subject-matter insured are produced/manufactured, structure/shape, the quality of the materials and the construction/composition of the components that eventually will constitute the subject-matter insured. 

    An error in design means that the subject-matter insured has deficiencies or defects because it has been wrongly designed or built.  Such errors apply in particular in cases where a part or parts of the subject-matter insured have been given the following characteristics or the following errors have been made:

    1. An unsatisfactory shape, arrangement or function
    2. A degree of strength that proves to be inadequate
    3. An error in drawings of the individual parts
    4. An error in the specification of types of material, dimensioning and strength
    5. An error in the specification of the manufacturing procedure/the method used to manufacture the component and the choice of procedure/method.
    6. An error in the execution of the process of manufacturing the part. If an incorrect specification of the manufacturing process has been given, the resulting defects must be regarded as errors in design. On the other hand, defects attributable to the fact that a performing link in the production process has failed to comply with the specifications given cannot be classified as errors in design. However, the definition of the term is by no means clear-cut.

    An error in design can be subjective or objective
    A subjective error in design means that the design is such that, in the light of current knowledge and standards, it is unsuitable and that this should have been evident. This thus constitutes a reproach to the assured for the choices that were made. In order for an error in design to be regarded as subjective, however, steps must have been taken to remedy the error before the subject-matter insured was delivered if the error had been discovered. An objective error in design means that the design is such that it appeared to be reasonable when it was chosen, but subsequently proved to be inadequate or sub-standard. This can, for instance, apply to new and untested materials.

    Faulty material
    The term “faulty material” implies that the material in a part of the subject-matter insured is of a quality inferior to the presupposed standard. These faults in material consist particularly of cases where the material in a part or parts of the subject-matter insured:

    1. is of a quality inferior to materials that would otherwise have been chosen in accordance with good shipbuilding practice
    2. is defective in the sense that the material used does not correspond to the specifications
    3. is defective in terms of the structure and/or strength of the material. The material may be suitable, but has deteriorated, is inappropriate or unfit for its intended use.

    Faulty material will normally be concealed in the sense that it is not detectable by a superficial examination. Detection will normally require more complex methods, such as material analyses, load tests, etc.

    Consequently, the yard, too, will be unaware of the fault in material until it materialises in the form of damage. Faulty material thus refers to the inherent or original fault in the material, and not to a fault that is discovered at a later date. The faulty material must therefore have been present during the entire lifetime of the part. It is not, for instance, a question of faulty material when material used in the subject-matter insured has been weakened as a result of an earlier casualty. The quality deficiency may be due to a defect in casting or some other fault in the structure of the material which occurred during processing, or to the supplier of the material having delivered a quality which is not in accordance with the quoted specifications (e.g. the steel supplied is too brittle).

    However, faulty material can also be caused by an external influence, such as when the part falls during processing in the workshop and sustains a flaw.

    Faulty workmanship
    Faulty workmanship will as a rule be related to work that is carried out on the subject-matter insured. This type of fault applies in particular when work on a part or parts of the subject-matter insured relates to the following:

    1. an error in workmanship has occurred, such as when the material chosen, the dimensioning or the actual execution of the work is contrary to regulations, recognised norms and good ship-building practice;
    2. an inferior quality of work/poor workmanship has been done by the building yard due to deficient quality, knowledge and technical execution.

    The limitation with respect to faulty workmanship is due to fundamental doubts about covering the building yard’s costs of rectifying a fault due simply to poor workmanship. Faulty “workmanship” has occurred, for instance, when the welding is not in compliance with the designer’s regulations or generally recognized building standards.

    Damage due simply to accidents during work, e.g. fire damage resulting from negligence during welding, or hull damage that occurs when the subject-matter insured is topples over due to inadequate support in the building dock, is not, however, to be regarded as “faulty workmanship”.

    It is also conceivable that faulty workmanship may be carried out which does not cause any direct physical damage to the subject-matter insured or its components, but which nevertheless gives rise to a loss for the insured. e.g. that the wrong type of propeller is installed and must later be replaced. Such losses also fall within the scope of the term “faulty workmanship” and are thus included in the exclusion.

    The incorrect choice of material is also included in the term “faulty workmanship”.  This could, for instance, comprise the choice of the wrong steel quality or overly thin steel during the building process.

    The limitations apply only to “costs of renewing or repairing the part or parts” which were not in proper condition due to the stated perils. This means that the exclusion applies only to the costs of repairing the part that is defective, i.e. the primary damage. In such case, the assured must cover the costs of renewing or repairing the part that was not in proper condition, while the insurer is liable for the consequential damage. If the subject-matter insured runs aground during the trial run due to faulty design or faulty workmanship as regards the steering gear, the grounding damage will thus be recoverable, but not the costs of repairing or replacing the steering gear.

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    Clause 19-15. Limitation of the insurer’s liability/Ref. Clause 12-1

    If the damage is a result of an error in design, faulty workmanship or faulty material, the insurer is not liable for the costs of renewing or repairing the part or parts of the hull, machinery or equipment which were not in a proper condition.

  • Clause 19-16. Compensation for unrepaired damage/Ref. Clause 12-2

    Sub-clause 1 deals with the parties’ right to claim compensation for the damage upon expiry of the insurance period even if repairs have not been carried out. Whether the yard and/or the buyer has this right will depend on who owns the damaged interests.

    Sub-clause 2 states that the compensation shall be calculated on the basis of a discretionary estimate of the cost of repairs upon termination of the insurance, limited to the reduction in price resulting from the damage. The provision concords with Cl. 12-2, sub-clause 2.

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    Clause 19-16. Compensation for unrepaired damage/ Ref. Clause 12-2

    Even if repairs have not been carried out, both parties may claim compensation for the damage upon expiry of the insurance period, cf. Cl. 19- 2 . Compensation is calculated on the basis of a discretionary estimate of the costs of repairs upon expiry of the insurance period, but is limited to the...

  • Clause 19-17. Costs incurred in order to save time/Ref. Clause 12-7, Clause 12-11 and Clause 12-12

    This Clause was edited in 2016 so that loss of time appears as a new separate letter (c) in order to bring the lay-out in line with Cl. 18-93.

    This clause deals with the cover of the yard’s costs applied in order to expedite repairs. Such a rule is expedient also in builders’ risks insurance because damage may have negative consequences both for the yard’s possibility of timely performance of the building contract and for its overall building program. The cover of such costs follows from the reference in Cl. 19-14 to the rules in Chapter 12. Cl. 19-17 limits this cover as compared with what follows from Clauses 12-7, 12-11 and 12-12 by excluding from cover the 20% p.a. of the insurable value of the subject-matter insured.

    If the yard has, in addition to the ordinary hull insurance under Section 2, also taken out insurance against the yard’s loss of interest and daily penalties in the event of late delivery, this supplementary cover will only apply where the yard’s loss exceeds the insurer’s liability under Cl. 12-8. The yard’s liability for loss of interest and daily penalties must thus be set off against the cover for extraordinary costs before the supplementary cover is triggered.

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    Clause 19-17. Costs incurred in order to save time/ Ref. Clause 12-7, Clause 12-11 and Clause 12-12

    The insurer is not liable for costs incurred in connection with: temporary repairs according to Cl. 12-7, sub-clause 2, beyond the amount  he saves through the postponement of the permanent repairs, repairs and removal according to Cl. 12-12, sub-clause 2, beyond the  amount that would have been...