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Section 2-3: Damage

  • Clause 18-17. Main rule concerning liability of the insurer

    If the MOU has been damaged without the rules relating to total loss being applicable, the insurer is liable for the costs of repairing the damage in such a manner that the MOU is restored to the condition it was in prior to the occurrence of the damage.

    Liability arises as and when the repair costs are incurred.

    If the repairs have resulted in special advantages for the assured because the MOU has been strengthened or the equipment improved, a deduction from the compensation shall be made limited to the additional costs caused by the strengthening or the improvement.

    If complete repairs of the damage are impossible but the MOU meets technical and operational safety requirements and may be made fit for its intended use by less extensive repairs, the insurer is, in addition to the repair costs, liable for the depreciation in value. If complete repairs of the damage will result in unreasonable costs, the insurer may demand that his liability be limited to the costs of the less extensive repairs plus the depreciation in value.

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    Clause 18-17. Main rule concerning liability of the insurer

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 12-1. Reference is made to the Commentary to Cl. 12-1. 

  • Clause 18-18. Compensation for unrepaired damage

    Even if repairs have not been carried out, the assured may claim compensation for the damage when the insurance period expires.

    Compensation is calculated on the basis of the estimated reduction in the market value of the MOU due to the damage at the time of expiry, but shall not exceed the estimated costs of repairs. Estimated common expenses are not recoverable, except for 50 % of estimated dock and quay hire.

    The insurer is not liable for unrepaired damage if the MOU becomes a total loss or qualifies for condemnation under Cl. 18-10 before the insurance terminates. This also applies if the total loss is not covered under this insurance.

    In the event of a transfer of ownership of the MOU, the assured may transfer claims for known damage to the new owner.

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    Clause 18-18. Compensation for unrepaired damage

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 12-2. Reference is made to the Commentary to Cl. 12-2. 

  • Clause 18-19. Inadequate maintenance, etc.

    The insurer is not liable for costs incurred in renewing or repairing a part or parts of the hull, machinery, plant or equipment which were in a defective condition as a result of wear and tear, corrosion, rot, inadequate maintenance and the like.

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    Clause 18-19. Inadequate maintenance

    This Clause was new in the 2013 Plan w and is verbatim the same as Cl. 12-3. Reference is made to the Commentary to Cl. 12-3. 

  • Clause 18-20. Error in design, etc.

    If the damage is a result of error in design or faulty material, the insurer is not liable for the costs of renewing or repairing the part or parts of the MOU, machinery, plant or equipment which were not in proper condition, unless the part or parts in question had been approved by the classification society.

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    Clause 18-20. Error in design, etc.

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 12-4. Reference is made to the Commentary to Cl. 12-4. 

  • Clause 18-21. Losses that are not recoverable

    The insurer is not liable for:

    • crew’s wages and maintenance, except for crew who are engaged in  repairs, 
    • ordinary expenses connected with the running of the MOU during the period of repair, 
    • expenses of shifting, storing and removal of cargo,
    • accommodation of third party personnel and visitors.
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    Clause 18-21. Losses that are not recoverable

    The Clause corresponds to Cl. 18-12 of the 1996 Norwegian Plan, which made an amendment to Cl. 12-5 (a). In the 2013 Plan, Cl. 12-5 has been partly incorporated into Cl. 18-21 and has been partly re-written.  Cl. 18-21 (e) was deleted in 2016. Cl. 18-21 (a): Clause 12-5 (a) has been split into Cl...

  • Clause 18-22. Damage to the drill string

    The insurer is not liable for loss of or damage to the drill string:

    • whilst in the well or in the water, unless the loss or damage is a result of  external circumstances, for which the drilling contractor is liable under  contractual conditions which are regarded as customary within the relevant area concerned, or
    • when it has been left in the well for purposes other than drilling.
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    Clause 18-22. Damage to the drill string

    This Clause is the same as Cl. 18-11 of the 1996 Plan, but with some editorial amendments in the 2013 Plan. The provision establishes certain limitations to the cover, which are additional to the limitations in Cl. 12-3 to Cl. 12-5. The provision concerns “loss of or damage to the drill string …...

  • Clause 18-23. Deferred repairs

    If the repairs have not been carried out within five years after the damage was discovered, the insurer is not liable for any increase in the cost of the work that is incurred later.

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    Clause 18-23. Deferred repairs

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 12-6. Reference is made to the Commentary to Cl. 12-6. 

  • Clause 18-24. Temporary repairs

    The insurer is liable for the costs of necessary temporary repairs when permanent repairs cannot be carried out at the place where the MOU is located.

    If temporary repairs of the damaged object are carried out in other cases, the insurer is liable for costs up to the amount he saves through the postponement of the permanent repairs, or up to 20 % p.a. of the insurable H&M value as per Cl. 18-1, (a) for the time the assured saves, if the latter amount is higher.

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    Clause 18-24. Temporary repairs

    This Clause was new in the 2013 Plan and corresponds to Cl. 12-7. Reference is made to the Commentary to Cl. 12-7. When the MOU with disconnectable equipment are insured with separate sums insured as per Cl. 18-1 (a), sub-clause 2, and the loss or damage occurs whilst disconnected as per Cl. 18-1...

  • Clause 18-25. Costs incurred in expediting repairs

    If the assured, in order to limit his loss of time, expedites repairs of the damaged object by extraordinary measures, the insurer’s liability for the costs thereby incurred is limited to 20 % p.a. of the insurable H&M value as per Cl. 18-1, (a) for the time saved by the assured. The time saved for the assured and the liability of the insurer are to be calculated collectively in relation to all repairs that are carried out concurrently.

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    Clause 18-25. Costs incurred in expediting repairs

    This Clause was new in the 2013 Plan and corresponds to Cl. 12-8. Reference is made to the Commentary to Cl. 12-8. When the MOU with disconnectable equipment are insured with separate sums insured as per Cl. 18-1 (a), sub-clause 2, and the loss or damage occurs whilst disconnected as per Cl. 18-1...

  • Clause 18-26. Repairs of a MOU that is condemnable

    If a MOU is repaired despite the fact that the conditions for condemnation are met, the insurer’s liability is limited to the sum insured plus additional costs under Cl. 4-19, if applicable, but with the deduction of the value of the wreck.

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    Clause 18-26. Repairs of an MOU that is condemnable

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 12-9. Reference is made to the Commentary to Cl. 12-9. 

  • Clause 18-27. Survey of damage

    Before any damage is repaired, it shall be surveyed by a representative of the assured and a representative of the insurer.

    The representatives shall submit survey reports, in which they describe the damage and state their opinions as regards the probable cause of each individual item of damage, the time of its occurrence and the costs of repair.

    If one of the parties so requires, the representatives shall, before the damage is repaired, submit preliminary reports in which they give an approximate estimate of the costs of repairs.

    If there is disagreement between the representative of the assured and the representative of the insurer, the parties may appoint an umpire who shall give a reasoned opinion of the questions submitted to him. If the parties cannot agree on the choice of an umpire, he shall be appointed by a Nordic average adjuster.

    Neither the assured nor the insurer may petition for a judicial valuation of the damage, unless this is required by the laws of the relevant country.

    If the assured, without compelling reasons, has the MOU repaired without any survey being held or without notifying the insurer of such survey, he has, in addition to the burden of proof under Cl. 2-12, the burden of proving that the damage is not attributable to causes not covered by the insurance.

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    Clause 18-27. Survey of damage

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 12-10. Reference is made to the Commentary to Cl. 12-10. 

  • Clause 18-28. Invitations to tender

    The insurer may demand that tenders be obtained from repairers of his choice. If the assured does not obtain such tenders, the insurer may do so.

    If the time taken to obtain tenders exceeds ten days as from the date the invitation to submit tenders is sent out, the insurer is liable to compensate the loss of time at the rate of 20 % p.a. of the insurable H&M value as per Cl. 18-1, (a) during the excess period.

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    Clause 18-28. Invitations to tender

    This Clause was new in the 2013 Plan and corresponds to Cl. 12-11. Reference is made to the Commentary to Cl. 12-11. When the MOU with disconnectable equipment are insured with separate sums insured as per Cl. 18-1 (a), sub-clause 2, and the loss or damage occurs whilst disconnected as per Cl 18-...

  • Clause 18-29. Choice of repairers

    The tenders received shall, for the purpose of comparison, be adjusted by the costs of removal being added to the tender amount.

    The assured decides which repairers shall be used, but the insurer’s liability for the costs of repairs and removal is limited to an amount corresponding to the amount that would have been recoverable if the lowest adjusted tender had been accepted with an addition of 20 % p.a. of the insurable H&M value as per Cl. 18-1, (a) for the time the assured saves by not choosing that tender.

    If the assured, because of special circumstances, has justifiable reason to object to the repairs being carried out by one of the repairers that have submitted tenders, he may demand that the tender from that repairer be disregarded.

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    Clause 18-29. Choice of repairers

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 12-12. Reference is made to the Commentary to Cl. 12-12. 

  • Clause 18-30. Removal for repairs

    Subject to the limitation that follows from Cl. 18-29, the insurer is liable for the costs of moving the MOU to the repair location, including wages and maintenance for necessary crew, bunkers and similar direct expenses in connection with the running of the MOU during the period of time involved. If the removal results in costs savings for the assured, a corresponding amount shall be deducted.

    If another insurer has expressly disclaimed liability during the removal in accordance with Cl. 3-20, the insurer who is liable for the damage to the MOU shall also be liable for any loss that arises during or in consequence of the removal, and which would otherwise have been recoverable from the other insurer. 

    The insurer may disclaim any liability during the removal in accordance with Cl. 3-20.

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    Clause 18-30. Removal for repairs

    This Clause was new in the 2013 Plan and corresponds to Cl. 12-13. Reference is made to the Commentary to Cl. 12-13. There have been discussions whether the costs involved in getting an MOU back to the place of operation are covered in a case where the MOU has been brought to shore for repairs. I...

  • Clause 18-31. Apportionment of common expenses

    Expenses incurred which are common to repair work for which the insurer is liable and other work which is not covered by the insurance, shall be apportioned on the basis of the cost of each category of work. However, common expenses which depend on the length of the period of repairs shall be apportioned on the basis of the time that the recoverable and the non-recoverable work would have required if the two classes of work had been carried out separately.

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    Clause 18-31. Apportionment of common expenses

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 12-14. Reference is made to the Commentary to Cl. 12-14. 

  • Clause 18-32. Ice damage deductions

    Damage due to striking against or contact with ice, except collision with icebergs on the open sea, is recoverable subject to any deduction stated in the insurance contract.

    The following are recoverable without deductions:

    • loss recoverable under Cl. 18-17, sub-clause 4, Cl. 18-28, sub-clause 2,  and Cl. 18-30,
    • unused spare parts that are damaged or lost,
    • temporary repairs.
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    Clause 18-32. Ice damage deductions

    The sub-clause 1 was new in the 2013 Plan and is verbatim the same as Cl. 12-15. Reference is made to the Commentary to Cl. 12-15. The sub-clause 2 was new in the 2013 Plan and is verbatim the same as Cl. 12-17. Reference is made to the Commentary to Cl. 12-17. Cl. 12-16 is not incorporated into...

  • Clause 18-33. Deductible

    For each casualty the amount stated in the insurance contract shall be deducted.

    Damage caused by heavy weather occurring as a result of the same atmospheric disturbance shall be regarded as a single casualty.

    Costs in connection with the claims settlement, cf. Cl. 4-5, and loss arising from measures to avert or minimise the loss, see Cl. 4-7 to Cl. 4-12, are recoverable without any deductible.

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    Clause 18-33. Deductible

    This Clause corresponds to Cl. 18-13 of the 1996 Plan, but incorporates with amendments Cl. 12-18 in the 2013 Plan. Reference is made to the Commentary to Cl. 12-18. Damage caused by bad weather arising as a result of the same atmospheric disturbance shall be regarded as one casualty. All loss or...

  • Clause 18-34. Basis for calculation of deductions according to Clauses 18-32, 18-33 and 3-15

    Deductions under Cl. 3-15, sub-clause 3, Cl. 18-32 and Cl. 18-33 are calculated on the basis of the full amount of compensation according to the Plan and the insurance conditions before deductions under any of these Sections are made.

    Deductions are also made if damage to the MOU is recoverable under Cl. 4-7, cf. Cl. 4-12, sub-clause 1.

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    Clause 18-34. Basis for calculation of deductions according to Clauses 18-32, 18-33 and Clause 3-15

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 12-19. Reference is made to the Commentary to Cl. 12-19.