In 2016 the word “supplies” in sub-clause 2 (a) was replaced by “provisions”. The reason was that the word “supplies” is too wide and may unintentionally expand the scope of the exception from cover under the hull insurance.
The heading has been changed in connection with the extension of the scope of the Plan to include also bunkers and lubricating oil, cf. sub-clause 1 (c) and below.
Sub-clause 1 states the objects covered by hull insurance. Sub-clause 1 (a) and (b) distinguish between “ship”, “equipment” and “spare parts”. “The ship” comprises the hull as well as the machinery. “Equipment” is a collective term for loose objects that accompany the ship in its trade, but which cannot be deemed to be part of it, e.g. radio and radar equipment, search lights, loose shifting beams, furniture and other fixtures and fittings. The prerequisite for covering equipment and spare parts under the ship’s hull insurance is nevertheless that they are normally on board, cf. the term ”on board”, which indicates that the object in question shall be on board for an indefinite or prolonged period of time. Objects brought on board while the ship is in port and taken ashore when the ship is leaving, such as a fork-lift truck to be used during loading and discharging, are therefore not covered whilst on board, cf. ND 1972.302 NV Balblom, notwithstanding the fact that the object is used only on board this one particular ship.
As under the 1964 Plan, ownership is irrelevant. The hull insurance also covers equipment and spare parts that the owner has borrowed, rented or bought with a seller’s lien or similar encumbrances. This means that an owner does not have to take out a separate property insurance for equipment that he does not own, but for which he bears the risk. Under the 1964 Plan, reference was made to “retention of ownership”. However, the concept “purchase with retention of ownership” has been superseded in Norwegian law by “purchase with a seller’s lien”. The term “or similar encumbrances” has been incorporated in order to cover similar systems under the laws of other countries. According to the Plan, the cover of third parties’ interests also includes spare parts; this is new in relation to the 1964 Plan.
The fact that the relevant objects are automatically included in the ship’s hull insurance nevertheless does not mean that the ownership interest or the mortgagee interest is automatically co-insured under the insurance. If a third party is to acquire status as a co-assured, this has to be agreed specifically, cf. Cl. 8-1. A third party’s rights will in that event be determined by the provisions in Cl. 8-1 et seq. Chapter 7 does not apply where the mortgage rights only concern equipment or spare parts.
Under Norwegian law, the provision relating to the cover of third parties’ interests is of little practical importance concerning the purchase of equipment or spare parts with a seller’s lien. Under Section 45 of the Norwegian Maritime Code, mortgages and other encumbrances on ships that shall or may be entered in the ship’s register shall also comprise equipment which is on board or which has been temporarily removed. No special encumbrances on such equipment can be created. For ships that are insured on the Plan’s conditions for ocean-going vessels, this provision accordingly rules out seller’s liens on the equipment, cf. Brækhus: Omsetning og Kreditt 2 (Sales and credit), pp. 173-174. Actual leasing of ship’s equipment is accepted, however, provided the notice period satisfies the requirements of the law, cf. the six-month time-limit stipulated in Section 45, second sub-clause, of the Norwegian Maritime Code. Thus, in the event of such short-term leasing, the rule relating to the cover of third parties’ interests may become relevant. This rule may also be practical when it comes to the cover of ships where the flag State’s laws open the door to a separate provision of security in the equipment.
New equipment or new spare parts will be included in the ship’s hull insurance from the time the object concerned “is swung over the railing” to be placed on board.
Sub-clause 1 (c) is new and extends the cover in relation to the 1964 Plan to also comprise bunkers and lubricating oil on board. The extension represents a harmonisation in relation to Anglo-American marine insurance conditions, cf. MIA schedule I, no. 15. It is first and foremost of significance where bunkers and lubricating oil are lost or contaminated in connection with a major casualty. If the casualty merely results in loss of bunkers and/or lubricating oil, the fact is that the economic loss will rarely exceed the deductible. If the owner wants an extended cover in respect of these consumer articles, he will therefore either have to take out a separate insurance, or agree on a lower deductible for them.
The cover in sub-clause 1 (c) concerns bunkers and lubricating oil. However, the assumption is that they belong to the ship’s owner. Bunkers belonging to a time-charterer or another third party is not covered by the ship’s hull insurance unless the person concerned is co-insured under Cl. 8-1. Such status as a co-assured party must be reflected in the insurance contract, cf. Cl. 8-1 and above concerning equipment, etc. The loss of bunkers will not be covered if the owner of the bunkers, etc. is not co-insured.
Sub-clause 2 lists the objects that are excluded from hull cover and which may have to be covered by an insurance for fishing vessels, cf. Chapter 17, Sections 4 and 5, or some other separate insurance.
Firstly, provisions, deck accessories and other articles intended for consumption are excluded. Paint will be a typical example of “other articles intended for consumption” in the same way as zinc and magnesium blocks, etc. for protection against corrosion were excluded under the 1964 Plan, cf. Cl. 176 (k) of the 1964 Plan, which stated this explicitly. However, as mentioned, it follows from sub-clause 1 that the hull insurance now covers bunkers and lubrication oil.
The exclusion of articles intended for consumption does not comprise objects that are fixtures on the ship, even if they are of such a nature that they have to be replaced fairly often; fixed ceilings in the holds, insulation and other fixed installations in connection with the carriage of cargo are thus covered by the insurance.
Secondly, in concordance with the 1964 Plan, boats and whaling, sealing and fishing tackle are excluded. However, even if a boat is used for one of those purposes, it will be covered by the insurance if it was under any circumstances required to be on board as a lifeboat.
Thirdly, the Plan excludes “loose objects exclusively intended for securing or protecting the cargo”. The exclusion is limited to objects that are merely necessary in order for the cargo to arrive in as good a condition as possible. If, on the other hand, the objects are also intended for the protection and safety of the ship, they are covered by the hull insurance. Thus, loose ceilings which protect the cargo against dampness from the ship’s side, and dunnage, which prevents the various types of cargo and units from damaging each other during the voyage, qualify as equipment that falls outside the scope of the hull insurance. However, hull insurance will cover objects such as hatches, tarpaulins and loose bulkheads which are used for the carriage of bulk cargoes. Similarly, hull insurance will also cover objects which must be regarded more as a means of rationalising the transport operation than as a protection of the cargo, such as fork-lift trucks used in the hold. However, the prerequisite is that the objects constitute “equipment” as defined in sub-clause 1 of the provision, cf. above and ND 1972.302 NV Balblom.
Finally, loose containers intended for the carriage of cargo are excluded from the hull cover. According to the Commentary on the 1964 Plan, such containers were covered by the hull insurance, but this solution was abandoned in the Special Conditions. Such containers must in any event be covered by property insurance during the period of time that they are on shore and not just temporarily removed from the ship, cf. Cl. 10-2, which makes it unnecessary to cover them under the ship’s hull insurance as well.