The wording was amended editorially in the 2013 Plan in order to better protect the insurer form being subject to a direct action in a non-Nordic country, cf. the corresponding amendments made to Cl. 4-17.
Sub-clause 1 contains a specific statement of the liability the hull insurer shall cover.
(1) The insured ship, (with accessories, etc.) must have caused a loss “through collision or striking”. The word “striking” in actual fact also covers “collision”, i.e. striking against another ship, but the expression “collision or striking” is well established in practice and has therefore been maintained.
“Striking” presupposes that the physical contact between the ship and another object is a consequence of a (relative) movement so that the movement energy results in a pressure. “Striking” also includes pressure against or the touching of another object, e.g. where the ship causes damage by bumping or pressing against a quay. “Striking” may be the result of “pulling” or “sucking”, e.g. where the ship sucks or draws an object towards itself. However, “pulling” is not in itself “striking”, and is traditionally covered under P&I insurance. Pulling without striking contact with the insured ship will not normally result in any mutual damage, and it is therefore not expedient to involve the hull insurer in the liability settlement.
Damage caused by waves or backwash cannot be described as damage caused by striking.
(2) The object against which the insured ship strikes may be another ship or another object floating in the sea, e.g. logs from timber rafting, or an installation on shore, e.g. a quay, a bridge or a dock gate. Grounding is also “striking”.
Normally the object against which the ship strikes will belong to a third party. This is not a requirement, however. Objects owned by the assured or ownerless objects are also covered, in principle. This is first and foremost of practical significance if the assured becomes liable towards a third party because the striking against an ownerless object or an object belonging to the assured is transmitted to an object belonging to a third party. An example is where the insured ship strikes an ice floe that in turn bumps against a quay that is damaged. In such cases the hull insurer is liable.
(3) It is the insured “ship, its accessories, equipment or cargo” which must have struck against another object. The term “equipment” is new and is included in order to cover equipment trailing after the ship, such as seismic cables and fishing equipment, and where there may be doubt whether the objects can be classified as “accessories”. The ship’s “accessories” include everything that the ship has on board, whether or not the object is co-insured under Cl. 10-1, sub-clause 1, and regardless of whether it is a shipowner or a third party who owns the relevant accessories or equipment.
The wording “the ship, its accessories” etc. implies that the hull insurer is only liable for striking damage caused by the ship’s movements being transmitted via the accessories, equipment and cargo. Striking damage which accessories and cargo cause by independent movements must be covered by the P&I insurer. If, for example, a lifeboat, a derrick or the deck cargo juts out over the ship’s side, thereby causing damage to a shore installation during the ship’s manoeuvring to go alongside the quay, liability will be covered by the hull cover. If, however, a crate or a bale or the like slips out of the heave during discharging and hits a car on the quay, or a wire snaps with the result that a derrick falls down on top of and damages a crane, liability must be covered under the P&I insurance. Where equipment strikes against another object, there is nevertheless reason to be somewhat more liberal and cover the collision liability, even if the striking cannot be deemed to have been caused by the ship’s movements. An example of such a situation would be where the ship is lying with its engines switched off and the ship’s nets drift down onto another net and damage it.
If the ship has suffered a casualty that gives rise to total-loss compensation, the question is whether the hull insurer is liable for a possible subsequent collision liability. The point of departure must be that the hull insurer covers collision liability resulting from a peril that struck during the insurance period, as long as total-loss compensation has not been paid, and the insurer has not exercised his right under Cl. 4-21 to pay the sum insured. The hull insurer may therefore become liable for collision liability if the ship in a sunken state causes damage to cables on the sea bottom, see ND 1990.8 S. “Dispasch” Vinca Gorthon. However, after total-loss compensation has been paid, the insurer is no longer liable, unless he has taken over the title to the wreck under Cl. 5-19.
(4) The hull insurer must further cover the liability imposed on the assured due to the fact that the tug used by the ship causes damage by collision or striking. Such liability may be imposed on the assured according to the general liability rules under maritime law, or as a result of more far-reaching liability provisions in the towage contract. However, the insurer is protected by the limitation in Cl. 4-15 as regards unusual or prohibited contractual terms. The Cl. 13-1 also includes the assured’s liability towards the tug if the ship collides with it. The hull insurer shall, therefore, cover all liability for collision damage which the tow may incur under a towage contract on ordinary terms. In the 1996 version of the Commentary this intention was expressed in a way that caused practitioners to be unsure whether the previous practice really was to be abolished. Hence, the matter was tried before arbitrators, cf. ND 2000.442 NV SITAKATHRINE. The arbitrators decided unanimously that the Commentary in sufficiently clear terms bindingly determined that the previous practice should no longer be followed. The wording “caused through collision or striking” means therefore that the hull insurer shall also cover the insured vessel’s liability for damage to the tug resulting from its collision with a third party.
(5) The insurer must (within the limits of the sum insured) cover the assured’s liability for the loss caused by the striking. In contrast to the English conditions where hull insurers are liable for 3/4 of the collision liability, the Plan stipulates a 4/4 liability.
The cover includes not only liability for damage to objects which are, directly or indirectly, affected by the striking, and damage which affects interests connected with these objects, but also liability for consequential damage resulting from the striking, provided that the assured is held liable for this.
(6) The insurer is only liable for liability that may be imposed on the assured according to the laws of the country under which the collision is judged. It is irrelevant whether it is liability based on fault, strict liability, or liability pursuant to agreement, cf. however, Cl. 4-15 concerning unusual or prohibited contractual terms. The assured must furthermore exercise any right he might have to demand limitation of liability.
It is not a requirement that the liability is established by judgment, cf. Cl. 4-17.
(7) The rules of the Plan on measures to avert or minimise loss shall apply in the normal manner. The hull insurer must therefore cover expenses, e.g. in the event of damage or liability incurred in order to avert collision liability.
Sub-clause 2 lists under (a) to (j) exceptions to the main rule in sub-clause 1.
Sub-clause 2 (a) excludes liability arising while the ship is engaged in “towing”. Towage of other vessels, a dry dock, a raft, etc., limits the towing vessel’s freedom of movement and creates a corresponding increase of the risk of collision.
Under the Plan, the hull insurer’s cover of collision liability is suspended for the duration of the towage. The insurer is therefore free from liability, even if there is no causal connection between the towage and the damage. The purpose is to avoid discussions about difficult questions of causation where the significance of the towage in the course of events is uncertain.
The insurer is further free from liability where the collision occurs before towage has commenced, i.e. before the towage connection has been established, or after the towage has been concluded, if it is proved that the collision was caused by the towage. The insured ship collides, e.g. with the ship that is to be towed during an attempt to establish the towing connection, cf. “caused by the towage”.
The limitation in the cover of liability does not apply where liability arises in connection with a salvage operation or a salvage attempt undertaken by the insured ship, provided that the salvage operation or salvage attempt is “permitted” under Cl. 3-12, sub-clause 2. The insurers’ general interest in encouraging salvage operations makes it natural that they should automatically give the assured normal liability cover in such cases.
Collision liability which falls outside the scope of the hull insurance is, as mentioned above, normally covered by the P&I insurer. However, liability referred to in sub-clause 2 (a) may be covered by the hull insurers by special agreement, possibly in return for an additional premium.
Sub-clause 2 (b) excludes “liability for personal injury” from the hull cover. This liability is traditionally covered by the P&I insurer regardless of whether the injured persons were on board the insured ship, on board the oncoming ship, or ashore.
According to sub-clause 2 (c), liability for “other loss suffered by passengers or crew on the insured ship” also falls outside the scope of the hull insurance. Examples of such liability include liability for the loss of time which the passengers suffer as a result of the collision, liability for the crew’s repatriation expenses (cf. Section 4-6 of the Norwegian Ship Labour Act), and liability for loss of luggage and crew’s effects. As regards the latter case, it will also follow from sub-clause 2 (d) that liability falls outside the scope of the hull cover.
Sub-clause 2 (d) excludes liability for cargo, other effects on board “the insured ship”, or equipment which the ship uses. Liability for damage to the cargo of the insured ship is a typical P&I risk which should be covered by the P&I insurer, including cases where it is a result of collision or striking. The wording “equipment which the ship uses” is new and is aimed at covering seismic cables and other equipment trailing after the ship which are consequently not on board.
Collision liability in respect of own cargo will rarely occur. If the collision is judged under Nordic law or other rules based on the Collision Convention of 1910, the cargo owner will only have a claim against the oncoming ship for such proportion of the loss as is equal to the degree of fault of that ship. There will be no question of any recourse claim from the oncoming against the transporting ship. As regards the relationship between the cargo owners and the transporting ship, the Hague Rules as well as the Hague-Visby Rules will normally exclude liability. Any errors committed by the assured are normally errors “in the navigation or handling of the ship”, and the assured will in that event be protected against liability, cf. Section 276, first sub-clause 1, no. 1, of the Norwegian Maritime Code. However, direct liability is conceivable, e.g. where the collision is due to unseaworthiness which existed at the commencement of the voyage and of which the master of the ship was aware, cf. Section 276, second sub-clause, of the Norwegian Maritime Code. Furthermore, liability for damage to a ship’s own cargo may arise in connection with collisions that are judged under American law. The United States have not ratified the Collision Convention of 1910 and do not have the Convention’s rule to the effect that the colliding ships only have pro-rata liability to the cargo owners. In principle, the cargo owners may hold the ships jointly and severally liable. The transporting ship is first of all protected by the Hague Rules (US COGSA 1936). However, if the cargo owners bring a claim against the oncoming ship, the transporting ship will in the recourse round be allocated a share of the liability that corresponds to the transporting ship’s share of fault. Traditionally, it is assumed that such “indirect” liability shall be regarded as liability vis-à-vis own cargo in relation to the rules regarding the hull insurer’s cover of collision liability, cf. ND 1936.237 NH Terje, cf. also ND 1959.19 NV Fernside and ND 1963.175 NH Fernstream. This must also, from a realistic point of view, be regarded as the most fortunate solution, cf. Brækhus: Cross liabilities-oppgjør i sjøforsikring (Cross-liabilities settlements in marine insurance) in AfS 4.488-494. It has therefore been explicitly maintained in sub-clause 2 (j) of this Clause.
Sub-clause 2 (e) excludes liability to charterers or others who have an interest in the insured ship. A collision may lead to a more or less lengthy suspension of the running of the ship, and hence to a loss for cargo owners who have to wait for the cargo, or for time-charterers, who are forced to charter replacement tonnage at higher freight rates, etc. If the collision is wholly or partly attributable to the assured’s people, the assured will, according to general rules of maritime law, be liable for the loss. Such liability is a typical contractual liability and does not belong under the hull cover. Furthermore, the assured will normally have excluded liability in the contract of affreightment.
According to sub-clause 2 (f), liability for pollution damage and damage from fire or explosions caused by oil or other liquid or volatile substances and contamination damage caused by radioactive substances and damage to coral reefs and other environmental damage is excluded from the hull cover. This provision is new and taken from the Special Conditions, cf. Cefor I.11 and PIC Cl. 5.26. It shall in any event apply in connection with collisions or striking, including grounding, and regardless of where the damage-causing substance is derived from. It may be oil that leaks out of the insured ship, an oncoming ship, a shore tank, etc. The leak does not necessarily have to be a direct consequence of the striking damage. The provision shall also apply if the collision results in an explosion that causes a ship to spring a leak or emit oil.
The term “pollution damage” includes both damage caused by soiling and damage from contamination of cargo. Pollution damage shall have been caused either by oil or by other liquid or volatile substances. By “oil” is meant first and foremost petroleum products, but the term also includes animal and vegetable oils. The wording “other liquid or volatile substances” is aimed at substances that pollute in the same way as oil, e.g. chemicals.
The provision further excludes liability for “damage resulting from fire or explosion caused by oil or other liquid or volatile substances”. This covers first and foremost cases where the fire or the explosion of the relevant substance is a direct consequence of the collision. However, in cases where a collision results in fire or explosion of oil or other substances, and this fire or explosion subsequently leads to fire or explosion in another cargo, the total damage shall also be regarded as “caused” by oil, etc. However, the provision does not apply where the collision leads to fire in another cargo, which in turn results in “oil or other liquid or volatile substances” igniting, with ensuing fire or explosion. In such cases, there will be major practical difficulties in singling out the part of the damage that is attributable to the oil fire.
The exception for damage caused by radioactive substances is limited to “contamination damage”, and accordingly does not cover all nuclear damage. Nuclear damage is, however, excluded on a more general basis in Cl. 2-8 (d) nos. 1 - 4.
The exclusion for “damage to coral reefs and other environmental damage” is new in the 2010 version. This exclusion is related to the fact it has become common in recent years to seek indemnification for this type of damage for environmental reasons, and there was therefore a need to provide a precise definition of hull liability in relation to such damage as well. Previously, damage to coral reefs was only excluded if it was a question of pollution damage. The amendment entails that damage to coral reefs that is not attributable to pollution, but to the fact, e.g., that the ship has been in physical contact with the coral reef is excluded. Such damage is to be regarded as environmental damage. “Other” environmental damage means damage to other types of living organism on the sea bottom or the seashore as a result of physical contact with a ship.
It follows from the second sentence that an exception from the exclusion is stipulated in cases where the insured ship has collided with another ship. In that event, the hull insurer’s collision liability shall cover the liability of the assured for pollution damage, etc. set forth in the first sentence, provided that the damage is inflicted on the oncoming ship with equipment and cargo.
According to sub-clause 2 (g), liability for loss caused by cargo or bunkers after grounding or striking against ice is excluded from the hull cover. The provision is identical to Cl. 194, sub-clause 2 (f) of the 1964 Plan. Given the new exception for contamination, etc. in sub-clause 2 (f), this exclusion will be of little practical significance, but it has nevertheless been maintained unchanged.
In the event of collision or grounding, the ship’s cargo will often be damaged and spill out of the ship, causing damage to the surroundings. The most frequent examples are pollution damage or fire and explosion resulting from oil or similar substances spilling out or igniting. This type of damage is excluded under sub-clause 2 (f). However, it is also conceivable that another type of cargo may cause damage, e.g. dynamite which may explode in the event of collision damage, emission of prussic acid, cargo being washed over board and obstructing traffic, etc. In the event of a collision with another ship, striking against a quay, etc. the hull insurer shall cover the liability of the assured for damage caused by such cargo. This is the most expedient solution in these types of situations because the hull insurer is already liable for the actual striking damage. If cargo causes damage following grounding or striking against ice, however, normally no liability to third parties for striking damage will arise. Accordingly, liability for damage caused by the cargo should come under the P&I cover in this situation.
In this respect as well, however, the rules relating to liability for measures to avert or minimise loss prevail over the special rules of cover. If cargo is thrown overboard in order to make the ship lighter after a grounding, liability for damage caused by the cargo may have to be covered by the hull insurer according to the rules in Chapter 4 of the Plan, subject to the limitations following from YAR 1994, Rule C.
Sub-clause 2 (h) excludes liability for loss caused by the ship’s use of anchor, mooring lines, etc. The provision was amended in the 2003 version by changing the wording “loading and discharging pipes” to “loading and discharging appliances” in order to bring it into conformity with the term used in the Regulations of 17 January 1978 No. 4 concerning Cargo-Handling Appliances in Ships. The purpose of this exclusion is to avoid difficult borderline questions between damage caused by striking by “the ship, its accessories, equipment or cargo”, where liability under Cl. 13-1, sub-clause 1, shall be covered by the hull insurer, and the situation where objects on board cause “striking damage” on their own. The latter situation falls outside the scope of the hull cover. Especially as regards equipment which in one form or another is connected to the ship, typically anchor and chain or gangways, it may be difficult to distinguish between damage caused by the ship’s use of the equipment and damage caused by the equipment on its own. Liability for loss caused by the ship’s use of such objects is therefore excluded in general. This liability will rarely arise in connection with actual collisions. Realistically speaking, it is therefore quite remote from ordinary collision liability, and it is thus natural for it to be covered by the P&I insurer.
The exclusion applies whether the object belongs to the assured or to a third party, and comprises both liability for the damage inflicted on others by the use of the object and liability for damage to the object itself as a result of the use. The latter is relevant where it is a third party who owns the object, e.g. where the insured ship by pulling or dragging severs a loading line belonging to the cargo consignee. However, as a result of the rule in Cl. 4-16, the limitation will also be of significance where damage is caused to objects belonging to the assured.
It is only liability for damage caused “by the ship’s use of” the anchor, etc., which is excluded from the hull cover. The anchor is in use when it is not in the hawsepipe. As regards the gangway, the cover shall apply as long as the gangway has not been hoisted up and fastened to the ship’s side. Thus, if a gangway which has been hoisted up and fastened causes damage by striking against an oncoming ship, this does not constitute damage caused by the use of the gangway.
The wording “caused by the ship’s use of” must further be interpreted to mean that it presupposes that the object has been physically implicated in the transmission of the striking from the ship to the object that is damaged. The damage is only caused by the use where the striking (or dragging) is caused by or transmitted through the anchor or the mooring lines, etc. If the insured ship, by an incorrect manoeuvre, tightens the towing line with the result that the tug is pulled under, or tightens the mooring line with the result that a bollard is torn loose and the quay damaged, this will constitute damage caused by the use of the towing or mooring line, and liability is no concern of the hull insurer’s. If, however, the insured ship collides with the tug during towage, or while manoeuvring away from the quay and, before the mooring lines have been released, strikes against the quay, the striking damage shall not be regarded as caused by “the ship’s use of” the towing or mooring lines, even if it must be assumed that the collision or striking would have been averted if the ship’s freedom of movement had not been hampered by the towing or mooring lines.
If the casualty results partly in damage caused by striking, and partly in damage caused by the use of an object as mentioned in sub-clause 2 (h), the total damage must be divided between the hull insurer and the P&I insurer. If, however, striking damage is a direct result of the use of an object referred to in sub-clause 2 (h), the damage must be covered entirely by the P&I insurer, cf. ND 1976.263 NV Mosprince/Biakh.
Lastly, the wording “by the ship’s use of” presupposes that the relevant object is used in accordance with its purpose. Mooring lines must be used to moor the ship, not e.g. to secure deck cargo. However, if the object has been used according to its purpose, it must be deemed to be in use from the time preparations for use commence and until the use is completed, cf. ND 1976.263 NV Mosprince/Biakh.
The exclusion applies to the use of anchor, mooring and towing lines, loading and discharging pipelines, gangways, etc. It shall therefore also apply to objects that are not explicitly mentioned, if such objects may be equated with them (ejusdem generis). Characteristic of the objects mentioned is that they are to be used in connection with operations relating to the running of the ship, and whose purpose it is to transmit physical contact between ship and shore. The provision in Cl. 13-1, sub-clause 2 (h), is not aimed at regulating a situation where the relevant objects are used in connection with measures to avert or minimise loss in the hull insurer’s interest. In such cases, the rules in Cl. 4-7 et seq. will prevail, and liability will (wholly or in part, cf. the general average rules) have to be borne by the hull insurer. Thus, if the ship picks up a cable while using the anchor in order to avoid running aground, the hull insurer will be liable for covering the assured’s liability, cf. ND 1981.329 NV Lintind, in contrast to ND 1969.1 NV Midnatsol.
The exclusion in sub-clause 2 (i) concerns liability for “removal of the wreck of the insured ship and for obstructions to traffic created by the insured ship”. The exclusion of liability for removal of the wreck of the insured ship is taken from Cl. 194, sub-clause 2 (h) of the 1964 Plan and has a long-standing tradition in hull insurance. The wreck-removal liability is covered by the P&I insurer. It is irrelevant whether the removal is a consequence of the ship constituting a danger to navigation or an obstruction to traffic.
The exclusion of liability for obstruction to traffic is new. Obstructions to traffic may result in a loss for the owner of a port or a waterway because traffic comes to a standstill, for owners of other ships due to delays, for pilots, etc. who lose income, etc. In many cases, the cover of such consequential loss for the injured parties will admittedly be precluded, because the loss is considered unforeseeable, or because their interests are not considered protected under the law of tort. However, to the extent that the assured is held liable, such liability should be considered in the same way as the wreck-removal liability and be covered by the P&I insurance. The exclusion shall apply in all situations where the ship creates an obstruction to traffic. The extent of the damage to the ship is irrelevant.
According to sub-clause 2 (j), final refund of amounts which a third party has paid by way of compensation for loss as mentioned under sub-clause 2 (a) to (i) is excluded. This provision is identical to Cl. 194, sub-clause 2 (i) of the 1964 Plan, and is primarily aimed at indirect cargo liability under US law, see further the Commentary on sub-clause 2 (d). However, the provision may also be applicable to other cases where the assured is jointly liable with someone who pays compensation to the injured party and subsequently claims recourse against the assured. An example is the above-mentioned liability to passengers who are injured in a collision where both ships are at fault. The two shipowners are jointly and severally liable for the personal injuries. If the owner of the oncoming ship pays compensation for such injuries, he may claim a proportionate refund from the owner of the insured ship of the amount paid equivalent to the insured ship’s degree of fault. (Possible exclusions of liability are disregarded in this connection, cf. Section 161, fourth sub-clause, of the Norwegian Maritime Code). Like direct personal injury liability, such indirect personal injury liability falls outside the hull insurance, cf. sub-clause 2 (b).