Commentary

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Section 1: General rules relating to the scope of war risks insurance

  • Clause 15-1. Perils covered

    Sub-clause 2 was edited in 2016 by deleting the word “are”.

    Sub-clause 1 sets out the perils covered under the war risks insurance and is, strictly speaking, unnecessary, since the same effect follows from the general part of the Plan. For pedagogical reasons, however, it is a logical step to have a separate provision on perils covered in the introductory part of the war risks chapter.

    Under sub-clause 2, war risks insurance also covers marine perils if the marine perils insurance has been suspended as specified in Cl. 3-19. This will apply in relation to all of the interests covered under Cl. 15-2 and not just in relation to the hull cover.

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    Clause 15-1. Perils covered

    The insurance covers war perils, cf. Cl. 2-9. If the insurance against marine perils has been suspended under such circumstances as mentioned in Cl. 3-19, the insurance also covers marine perils, cf. Cl. 2-8.

  • Clause 15-2. Interests insured

    As a starting point all the interests listed in Cl. 15-2 can be part of a war risks cover based on Chapter 15, but in order to get this comprehensive war risks cover the parties must agree in each individual contract which interests that shall be included in the cover, see further Cl. 15-3.

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    Clause 15-2. Interests insured

    Subject to Cl. 15-3 the insurance covers: total loss and damage, cf. Chapter 10-12 and Section 4 and 5 below, collision liability, cf. Chapter 13, hull interest/freight interest, cf. Chapter 14, loss of hire, cf. Chapter 16 and Section 6 below, owner’s liability (P&I), cf. Section 7 below includi...

  • Clause 15-3. Sum insured

    The reference to Cl. 14-1 (a) was corrected in 2016 to Cl. 14-1 (b). Cl. 4-18 is not set aside by Cl. 15-3 apart from what is expressly stated in sub-clause 2 (a), see further below.

    Cl. 15-3 sub-clause 1 requires that a separate sum insured is agreed and inserted in the individual contract of insurance for each interest listed in Cl. 15-2. If not so inserted, the interest in question will not be deemed insured apart from what follows from sub-clause 2, see further below.

    For Loss of Hire insurance, the sum insured is normally a product of the daily amount and the maximum number of days covered. Hence, the second sentence of sub-clause 1 requires that the daily amount, the deductible period as well as the number of days of indemnity per casualty and in all shall be agreed in order to give effect to letter (d).

    Under the Loss of Hire insurance pursuant to Cl. 15-2 (d) there will be no extra sum insured available pursuant to Cl. 4-18, sub-clause 1, second sentence for costs of preventive measures. This follows from Cl. 16-11, sub-clause 2 which generally limits the cover for costs of preventive measures to avoid loss of time to what the insurer would have had to pay if such measures had not been taken.

    Sub-clause 2 (a) contains a default combined sum insured for P&I and occupational injuries insurance equal to the sum insured for the hull insurance, which means that once a sum insured is agreed for the total loss and damage interest, Cl. 15-2 (a), the cover pursuant to Cl. 15-2 (e) is at the same time in place. If a sum insured is agreed also for hull interest - and/or freight interest insurance, the combined sum insured for the P&I and occupational injuries insurance is increased correspondingly. Also in this context the limitations contained in Cl. 14-4, cf. Cl. 10-12 is relevant. Thus the default combined sum insured for the P&I and occupational injuries insurance is limited to maximum 150% of the sum insured under the hull insurance. The parties are free to agree any other sum insured for the P&I and occupational injuries insurance.

    Wreck removal liability is included in the combined sum insured for P&I and occupational injuries in war risk insurance covered on the basis of Chapter 15.

    The P&I clubs’ have since 2005 provided an excess cover against war and terrorism risks, which currently is limited to USD 500 million. This cover is in excess of what actually is covered under the P&I and occupational injuries insurance pursuant to Cl. 15-2 (e), but always provided that the sum insured under the Cl. 15-2 (e) P&I and occupational injuries insurance is at least equal to the market value of the vessel at the time of the casualty resulting in the liability in question.

    The last sentence of Cl. 15-3 sub-clause 2 (a) contains an exception from Cl. 4-18. The Commentary to Cl. 4-18 makes it clear that the second sentence of Cl. 4-18 sub-clause 1 means that the extra sum insured for costs of preventive measures “comprises the total costs of measures to avert or minimise loss for the relevant insurance under the Plan”, cf. definition of the word “loss” in Cl. 1-1 (d). The word “loss” also comprises liability according to this definition. Thus costs of preventive measures to avoid liability under the P&I and occupational injuries insurance pursuant to Cl. 15-2 (e) would potentially be covered under this extra sum insured pursuant to Cl. 4-18. However, in P&I insurance there is no extra sum insured for costs of measures to avert or minimise loss. Such costs are covered within the ordinary limit of liability for the P&I insurer. The same rule applies for P & I insurance under the war risk cover in the Plan. Cl. 15-3 sub-clause 2 (a), second sentence therefore makes it clear that no such extra sum insured is available for costs of preventive measures to avoid liability under the P&I and occupational injuries insurance pursuant to Cl. 15-2 (e).

    Sub-clause 2 (b) is probably unnecessary as the same would follow from Cl. 4-18, sub-clause 2, but it was deemed advisable to include the provision to avoid any potential misunderstanding. Pursuant to Cl. 14-1 (b) it is only the hull interest insurance that covers collision liability in excess of the cover provided under the hull insurance. Cl. 14-2 on freight interest insurance does not provide any cover for collision liability. Thus the default sum insured for collision liability is limited to maximum 125 % of the sum insured under the hull insurance. 

    The Commentary to Cl. 4-18 makes it clear that the costs of measures incurred to avert collision liability are included in the extra sum insured available pursuant to Cl. 4-18, sub-clause 2, second sentence. Cl. 15-3, sub-clause 2 (b) contains no exception from Cl. 4-18 in this regard.

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    Clause 15-3. Sum insured

    Cover in respect of each of the interests listed in Cl. 15-2 is conditional upon the parties having agreed a separate sum insured for each interest. In the case of loss of hire insurance the insurance contract must also state the amount of the daily indemnity, cf. Cl. 16-5 and Cl. 16-6, the...

  • Clause 15-4. Safety regulations

    Sub-clause 2 was amended in 2016 by deleting the references to Cl. 3-25, sub-clause 1.

    Sub-clause 1 gives the insurer the right to stipulate safety regulations while the insurance is running. The regulations will, in reality, be an instruction to the assured to do or refrain from doing certain things. The provision sets out a number of aspects which the instruction may consist of or be aimed at. The enumeration is not exhaustive, however, cf. the wording "inter alia". As long as the instruction can be said to be "measures for the prevention of loss", cf. Cl. 3-22, it will fall within the scope of the provision.

    Sub-clause 2 sets out the effect of the stipulated safety regulations not being followed. The assured loses cover if negligence is demonstrated and there is a causal connection between the breach and the loss. It must be emphasized in connection with the reference to Cl. 3-25, sub-clause 2, that safety regulations under Cl. 15-4 are to be viewed as special safety regulations, with the consequence that expanded identification is to apply.

    It follows from Cl. 15-18, cf. Cl. 15-13, that if the insurer's instructions under that provision lead to loss of hire for the assured, he will be entitled to be compensated for that loss of hire and possibly also to total loss compensation if the loss of hire lasts for more than six months.

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    Clause 15-4. Safety regulations

    During the insurance period the insurer may, by means of special safety regulations, cf. Cl. 3-22, issue instructions that inter alia: the ship shall not embark on a planned voyage or complete a voyage in progress, the ship shall or shall not follow a specific itinerary, the ship shall deviate, b...