Commentary

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Section 2: Hull insurance

  • General

    Section 2 deals with the standard cover of hull insurance for vessels with limited trading areas. The provisions in Section 2 are supplementary to Part II of the Plan, Chapters 10 to 13, relating to hull insurance. This was previously stated in the Commentary, but has now also been included in the text of the Plan, cf. Cl. 17-7.

    In addition to the provisions in Section 2, this insurance is therefore subject to the common provisions in Section 1 and the provisions in the general part I of the Plan (Chapters 1 to 9) and part II relating to hull insurance (Chapters 10 to 13).

    The system of a standard cover and an extended cover has been retained in that the standard cover is incorporated in Section 2, while the extended cover is incorporated in Section 3.

    In accordance with the general system of the Plan, the most practical approach is for deductibles and machinery damage deductions to be agreed on an individual basis. Hence, it is sufficient here to apply the rules in Cl. 12-16 and Cl. 12-18. There was also agreement that the new for old deductions were cumbersome and outdated, and that they should therefore be deleted and replaced by machinery damage deductions and deductibles which took into account the age of the vessel and machinery and the sum insured. However, insurance without new for old deductions is conditional on these deductions being compensated for by the other deductions. If the assured is not willing to accept a sufficiently high level of deductible and machinery damage deductions, the insurers must therefore be entitled to incorporate provisions concerning new for old deductions in the individual insurance contract.

  • Clause 20-6. The relationship to Chapters 10-13

    The provision states that for hull insurance the rules of Chapters 10 to 13 apply, with such amendments as follow from this Section.

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    Clause 20-6. The relationship to Chapters 10-13

    The rules in Chapters 10-13 shall apply together with the amendments that follow from this Section.

  • Clause 20-7. Hull and freight-interest insurance/Ref. Clause 10-12

    The hull insurer may consent to the effecting of interest insurance. In that event, the reduction rule will only apply to interest insurances which are larger than what the hull insurer has consented to.

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    Clause 20-7. Hull and freight-interest insurance/ Ref. Clause 10-12

    Instead of Cl. 10-12 the following shall apply:If the insured receives compensation under an interest insurance, the hull insurer’s liability is reduced correspondingly, unless the hull insurer has consented in advance to such insurance being taken out.

  • Clause 20-8. Condemnation/Ref. Clause 11-3

    The condemnation limit is 90 % in relation to Cl. 11-3. A limit of 80 % is too advantageous when taking into account that the average age of the fleet is far higher today than 30-40 years ago, that the international marine insurance market relies on a condemnation limit of 100 %.

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    Clause 20-8. Condemnation/Ref. Clause 11-3

    Instead of Cl. 11-3, sub-clause 2, first sentence, the following shall apply: The conditions for condemnation are met when casualty damage is so extensive that the costs of repairing the vessel will amount to at least 90 % of the insurable value or of the value of the vessel after repairs if the...

  • Clause 20-9. Damage to the hull of vessels which are not built of steel/Ref. Clause 12-1

    Sub-clause 1 (a) is first and foremost relevant to insurance of vessels deserving of preservation.

    Sub-clause 1 (b) is not intended to cover more unforeseeable forms of striking against ice, e.g. where an ice floe has drifted out from a branch of a fjord to an open area of water where there is normally no ice.

    Sub-clause 1 (c) excludes caulking of hull and deck. This is typical maintenance work, and it will not be easy to decide to what extent the caulking has been necessitated by the casualty. The exclusion does not cover expenses incurred in caulking those parts of hull and deck which must be replaced as a result of the casualty. Here the caulking represents a normal cost of renewal of a part of the vessel, and it must therefore be covered.

     

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    Clause 20-9. Damage to the hull of vessels which are not built of steel/Ref. Clause 12-1

    In the event of damage to the hull of vessels which are not built of steel, the insurer is not liable for: distortion of the keel or damage resulting therefrom. The same applies to a depreciation in value caused by the fact that repairs are not carried out,  damage resulting from striking against...

  • Clause 20-10. Limited cover of damage to machinery

    The Commentary to Cl. 17-13 was amended in 2016. Cl. 20-10 is identical to Cl. 17-13. 

    The Clause provides limited cover for damage to machinery. On the other hand, extended cover for damage to machinery may be effected in accordance with Cl. 17-18. The wording has been editorially amended in the 2019 Version to underline the fact that this Clause applies unless otherwise agreed in the insurance contract.

    The first part of the first sentence specifies that the insurer is “only” liable for the enumerated perils. 

    The second part of the first sentence states the perils covered by the insurer. The damage must be a result of collision, striking, an earthquake, an explosion outside the engine room, fire, or of the vessel having sunk or capsized. The term “engine room” replaces the term ”machinery” in the earlier versions of the Plan. It comprises only the main and auxiliary engine rooms. Further, the insurer is liable where the vessel has been filled with water as a result of a breach of a hose or a pipe onboard the vessel. The breach may occur on the hose/pipe itself or at any couplings/sockets, provided the hose or pipe couplings/sockets are fitted either in accordance with Nordic Boat Standard or public statutory rules applicable to the vessel. Thus, consequential damage of a leakage which arises suddenly and unexpectedly and is a result of external influence or faulty material will be covered. Such damage is not covered if attributable to a breach of a hose or a pipe that has not been statutory fitted as described above. The insurer will cover that peril provided the breach was not caused by corrosion or age. A breach caused by corrosion or age is a maintenance issue or rather lack of maintenance. It is the duty of the assured to carry out maintenance. The insurer’s liability for “the vessel having sunk or capsized” also applies when the vessel is moored.

    The second sentence stipulates an exception to the rule in the first sentence as regards damage to electronic equipment. If such damage is caused by bad weather and the same casualty causes damage to hull or superstructure, the damage to the electronic equipment shall be covered.

     

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    Clause 20-10. Limited cover of damage to machinery

    Unless otherwise agreed in the insurance contract, the insurer is only liable for damage to: machinery with accessories, pipelines and electric cables outside the machinery, and  electronic equipment if the damage is a result of collision, striking, an earthquake, an explosion outside the engine...

  • Clause 20-11. Costs incurred in saving time/Ref. Clause 12-7, Clause 12-8, Clause 12-11 and Clause 12-12

    The provision excludes the time-loss element in the ordinary hull conditions from the cover under the coastal hull insurance conditions. 

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    Clause 20-11. Costs incurred in saving time/ Ref. Clause 12-7, Clause 12-8, Clause 12-11 and Clause 12-12

    The insurer is not liable for costs incurred in connection with: temporary repairs under Cl. 12-7, sub-clause 2, in excess of what he saves by a postponement of the final repairs, the fact that the assured pursuant to the rules in Cl. 12-8 expedites repairs by extraordinary measures in order to...

  • Clause 20-12. Deductions/Ref. Clause 12-15, Clause 12-16 and Clause 12-18

    Sub-clause (a) refers to ice damage. According to the 2013 Plan the deduction will be the subject of individual negotiations where inter alia the strength of the hull and ice class will be taken into account. According to the Plan, the deduction applies only to partial damage in accordance with the general system of the Plan. 

    Sub-clause (b) refers to electronic equipment. The deduction will be the subject of individual negotiations where inter alia the age of the equipment can be taken into account. It is therefore unnecessary to make the size of the deduction dependent on the age of the equipment in the actual Plan text. 

    The term “electronic equipment” covers three main groups, viz. radio equipment, fish-finding equipment and navigation equipment.

    Radio equipment includes main transmitters with short-wave and receiver, watch-receivers, AM-VHF telephone monitors, VHF transmitters and receivers, lifeboat transmitters, direction-finding beacons, emergency communication sets for aircraft frequency, receivers and TVs for mess rooms or cabins, walkie-talkie transmitters and receivers, equipment for communication between bridge, engine room, cabins, mess rooms, and deck, and weather map recorders.

    Navigation equipment includes gyrocompasses, autopilots, course controllers, all types of radar, electronic logs for satellite navigators and display screens, radio sounders for AM VXF and WT, satellite navigators, Omega receivers and Loran C receivers.

    In addition to deductions for electronic equipment, the Plan’s rules relating to machinery damage deductions and deductibles, cf. Cl. 12-16 and Cl. 12-18 shall apply. For the sake of clarity, this is repeated in sub-clauses (c) and (d). As regards the basis for calculating the various deductions, Cl. 12-19 applies so that all deductions shall be calculated on the basis of the full amount of compensation according to the Plan before deductions under any of the relevant provisions.

    Given that the normal cover has not allowed for new for old deductions, the age of the vessel and the machinery, possibly also the sum insured, shall be taken into account when determining deductions and deductibles. In the event that the agreed deductions do not compensate for the lack of new for old deductions, the insurer may have to agree on individual new for old deductions.

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    Clause 20-12. Deductions/Ref. Clause 12-15, Clause 12-16 and Clause 12-18

    Ice damage deduction, cf. Cl. 12-15: Damage resulting from striking against or contact with ice is covered subject to the deductions stated in the insurance contract. Electronic equipment damage deduction: Damage to electronic equipment is covered subject to the deductions stated in the insurance...

  • Clause 20-13. Collision liability/Ref. Clause 13-1

    “By a call is meant arrival, anchoring, working, discharging, loading and leaving”, it is made clear that the insurance does not cover any collision liability to the relevant structure or any fish contained therein during the whole period when the insured vessel is calling at the structure. The previous wording was by some owners read to the effect that the exclusion of cover for collision liability only applied if damage occurred during loading or discharge.

    The provision emphasises that the exclusion also comprises damage to the actual device and shall apply irrespective of what is loaded or discharged. The provision is first and foremost aimed at floating devices which are easily damaged, such as where the vessel runs into an enclosure for fish and the fish escape. In such cases it is difficult or impossible to determine the extent of damage. The application of the provision is not subject to the condition that there is loss of or damage to live fish; the deciding factor is the nature of the device. If there are several independent devices in the same area, however, liability to another device than the one from which loading or discharging shall take place will be covered.

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    Clause 20-13. Collision liability/Ref. Clause 13-1

    In addition to the limitations in Cl. 13-1, sub-clause 2, the following shall apply: The insurer does not cover liability under Cl. 13-1 for damage to or loss of fish or structures for keeping live fish, where the loss or damage occurs in connection with a call at the relevant structure. By a cal...