Commentary

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Section 5: Damage

  • Clause 15-14. Relationship to Chapter 12

    Sub-clause 1 determines, by way of introduction, that the rules in Chapter 12 apply fully to war hull insurance as well.

    Cl. 15-14 does differ from Chapter 12 on one important point, however. The provision is aimed at solving an underlying problem when the assured has both hull cover and loss-of-hire cover and a conflict arises between the hull insurer's wish for a reasonably-priced (but slow) repair and the loss-of-hire insurer's wish for a fast (but expensive) repair. An arrangement for "comprehensive cover" was drawn up in the loss of time conditions of 1972, (see the Commentary on Cl. 6 of the Special Conditions and Appendix 2), but was not implemented at the time. Since the war risk insurer does cover against both hull damage and loss-of-hire, though, it is both reasonable and logical to attempt to give the assured full cover under the war risk insurance. Accordingly, this provision, and the accompanying provision, Cl. 15-19, in the Loss-of-Hire Section, are based entirely on the arrangement which was proposed in 1972 although, formally speaking, it has been simplified somewhat, precisely because it was desirable to only have to deal with one type of insurance and one insurer. The assured then has a repair alternative which ensures him full cover for both the repair bill and the loss of time, with the limitations which follow from the agreed-upon deductibles. The simplification lies in the fact that it is the hull insurance which is primarily "charged with" the costs of full cover, instead of these costs being entirely apportioned between the hull cover and the loss-of-hire cover, as was the situation under the 1972 conditions. When it is ultimately the same insurer who will cover the overall costs anyway, the only logical step is to place most of the burden on one insurance, the hull cover, thereby freeing the loss-of-hire cover from its share of these costs, see Cl. 15-19. On this point a solution has been chosen in the war chapter that is different from those in Chapters 12 and 16, see the Commentary on Cl. 12-12 and Cl. 16-9.

    Sub-clause (a) entails that the war hull insurance is "cleansed of" those elements of loss of time cover which are placed in Chapter 12 (and Cl. 4-11), so that that portion of war risk insurance stands apart as a pure property damage insurance.

    Sub-clause (b), Sub-clause 1, first sentence, corresponds entirely to Cl. 12-12, Sub-clause 1. The second sentence states that the adjusted tenders shall be accompanied by an amount corresponding to the daily amount under the ship's loss-of-hire insurance, multiplied by the number of days the ship will be out of income-generating operations if the repair yard in question is used. "Daily amount under the loss-of-hire insurance" means the daily amount which, in the event, will be used for settlement under the loss-of-hire insurance, i.e. usually the agreed daily amount, but sometimes the actual loss of income per day, cf. .Cl. 16-5 and Cl. 16-6. The daily amount shall serve as a basis for calculations even though the sum insured at the time is lower. Thus reasonable account shall be taken of the uninsured portion of the shipowner's loss of time as well. The third sentence states that the sum of the adjusted tenders and loss-of-hire costs due to the choice of the repair yard in question shall constitute the total cost of repairs.

    Sub-clause (b), second paragraph corresponds entirely to Cl. 12-12, sub-clause 3.

    Sub-clause (b), third paragraph is based on Cl. 12-12, sub-clause 2, and maintains the principle that the assured decides where the ship is to be repaired, although liability under the hull cover is limited to the amounts referred to in the preceding sub-clauses. At the purely practical level, this implies, firstly, that the insurer will compensate what is referred to as total costs under sub-clause (b), sub-clause 1, insofar as the assured accepts the tender which leads to the lowest total costs. Secondly, it means that the insurer will not cover more than the total costs according to the lowest tender, even though the assured accepts another tender. Sub-clause (b) imposes a limitation here, however: if the tender with the lowest total costs is submitted by a shipyard which the assured demands be disregarded, he will not be penalised as long as he accepts the next lowest offer.

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    Clause 15-14. Relationship to Chapter 12

    The provisions in Chapter 12 shall apply, subject to the following exceptions: The insurance does not cover costs mentioned in Cl. 12-8 and Cl. 12-11, sub-clause 2. Nor does the insurance cover crew's wages, maintenance and similar expenses in connection with the running of the ship which fall un...

  • Clause 15-15. Deductible

    The provision follows Cl. 12-18, which establishes that rules relating to the deductible should be stated in the insurance contract. The provision defines the concept of casualty when the ship is returned following a seizure or requisition, and establishes that all damage, etc., sustained by the ship during that period is to be deemed as being caused by a single casualty. Thus, only one deductible is to be calculated in these cases.

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    Clause 15-15. Deductible

    If a deductible is stipulated in the insurance contract , cf. Cl. 12-18, the following shall apply: If the ship has been seized or requisitioned for use by a foreign State power, and is returned without the assured being entitled to claim for a total loss, any loss that has arisen during this...