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Section 2: Loss of or damage to the subject-matter insured

  • Clause 19-9. Objects insured/Ref. Clause 10-1

    The insurance covers:

    • the subject-matter insured and components, equipment and materials  manufactured or procured for the subject-matter insured, 
    • components, equipment and materials supplied by the  buyer are, however, only covered if this is set out in the insurance contract, or transpires from circumstances in general,
    • the yard’s costs in connection with drawings and other planning of the subject-matter insured, and
    • bunkers and lubricating oil on board.
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    Clause 19-9. Objects insured/Ref. Clause 10-1

    The provision covers the financial effort made by the yard and the buyer at any given time in order to complete the subject-matter insured. Sub-clause 1 (a) and (c) and the commentaries were amended in the 2013 Plan. Sub-clause (a). The term “subject-matter insured” means whatever at any time is...

  • Clause 19-10. Insurable value

    The insurable value when the subject-matter insured is ready for delivery constitutes:

    • the original contractual building price less subsequently agreed  deductions,
    • subsequently agreed additional amounts mentioned in the insurance contract,
    • the value of the buyer’s deliveries which are covered by the insurance.


    Before the subject-matter insured is ready for delivery, the insurable value constitutes the value under sub-clause 1 with deductions for:

    • the value of the work not performed, 
    • the value of components and materials not manufactured or procured.
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    Clause 19-10. Insurable value

    The Clause defines the insurable value in builders’ risks insurance. Some editorial amendments were made in the Commentary of the 2013 Plan. Sub-clause 1 defines the insurable value when the subject-matter insured is ready for delivery. The basis for the insurable value is the contract price...

  • Clause 19-11. Total loss in the event of condemnation

    The assured may claim compensation for a total loss if the damage to the subject-matter insured is so extensive that the costs of repairs amount to more than 100 % of the sum insured.

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    Clause 19-11. Total loss in the event of condemnation

    The definition of total loss and the determination of compensation in the event of total loss are combined in a joint Clause, Cl. 1-4. In Chapter 19 the rules are split into three clauses. Cl. 19-11 and Cl. 19-12 define total loss and thus correspond to Cl. 11-1, Cl. 11-3 and Cl. 11-7 of the Plan...

  • Clause 19-12. Total loss where the yard's obligation to deliver no longer applies

    The assured may claim compensation for a total loss where the yard's obligation to deliver no longer applies as a result of:

    • damage to or loss of the subject-matter insured or parts of it,
    • damage to the yard, or
    • damage to a subcontractor's yard, provided the work there is covered by the insurance in accordance with Cl. 19-5, sub-clause 2.
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    Clause 19-12. Total loss where the yard’s obligation to deliver no longer applies

    This Clause ties total loss under the builders’ risks insurance to the termination of the yard’s obligation to deliver under the building contract due to damage to the subject-matters insured or the yard. However, due to the fact that a condemnation rule has now also been introduced, cf. Cl. 19-1...

  • Clause 19-13. Compensation in the event of a total loss/ Ref. Clause 4-1

    In the event of a total loss where the subject-matter insured is ready for delivery, the insurer covers the sum insured, but not in excess of the insurable value.

    In the event of a total loss before the subject-matter insured is ready for delivery, the insurer covers the proportion of the sum insured that is equivalent to the insurable value calculated according to Cl. 19-10, sub-clause 2.

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    Clause 19-13. Compensation in the event of a total loss/Ref. Clause 4-1

    Sub-clause 1 regulates the insurer’s liability for damages in the event of total loss when the subject-matter insured is ready for delivery. The basis for the total-loss settlement may in such cases be either the condemnation rule in Cl. 19-11, or the rule in Cl. 19-12 concerning the termination ...

  • Clause 19-14. Damage/Ref. Chapter 12

    If the subject-matter insured or components etc. have been damaged without  Cl. 19-11 or Cl. 19-12 being applicable, the rules in Chapter 12 shall apply, with the exception of Cl. 12-3, Cl. 12-4, Cl. 12-5 (d) and (e), Cl. 12-6 and Cl. 12-15 to Cl. 12-18. Cl. 12-3 shall apply to rebuilding/conversion of the subject-matter insured.

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    Clause 19-14. Damage/Ref. Chapter 12

    This Clause was edited in 2016 in order to bring the text in line with the Commentary. This provision refers to Chapter 12, which entails that if the subject-matter insured (or components and materials for the subject-matter insured) are damaged without this constituting a total loss, the insurer...

  • Clause 19-15. Limitation of the insurer’s liability/Ref. Clause 12-1

    If the damage is a result of an error in design, faulty workmanship or faulty material, the insurer is not liable for the costs of renewing or repairing the part or parts of the hull, machinery or equipment which were not in a proper condition.

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    Clause 19-15. Limitation of the insurer’s liability/Ref. Clause 12-1

    The Commentary has been rewritten in the 2013 Plan. It is patterned on the definitions in Cl. 12-4, and much of the content must be seen in conjunction with the Commentary on this Clause. Cl. 12-4 deals with the terms “error in design” and “faulty material”, and the terms in Cl. 19-15 must...

  • Clause 19-16. Compensation for unrepaired damage/ Ref. Clause 12-2

    Even if repairs have not been carried out, both parties may claim compensation for the damage upon expiry of the insurance period, cf. Cl. 19-2.

    Compensation is calculated on the basis of a discretionary estimate of the costs of repairs upon expiry of the insurance period, but is limited to the price reduction attributable to the damage.

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    Clause 19-16. Compensation for unrepaired damage/Ref. Clause 12-2

    Sub-clause 1 deals with the parties’ right to claim compensation for the damage upon expiry of the insurance period even if repairs have not been carried out. Whether the yard and/or the buyer has this right will depend on who owns the damaged interests. Sub-clause 2 states that the compensation...

  • Clause 19-17. Costs incurred in order to save time/ Ref. Clause 12-7, Clause 12-11 and Clause 12-12

    The insurer is not liable for costs incurred in connection with:

    • temporary repairs according to Cl. 12-7, sub-clause 2, beyond the amount  he saves through the postponement of the permanent repairs,
    • repairs and removal according to Cl. 12-12, sub-clause 2, beyond the  amount that would have been recoverable if the lowest adjusted tender  had been accepted, or
    • the loss of time according to Cl. 12-11, sub-clause 2.
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    Clause 19-17. Costs incurred in order to save time/Ref. Clause 12-7, Clause 12-11 and Clause 12-12

    This Clause was edited in 2016 so that loss of time appears as a new separate letter (c) in order to bring the lay-out in line with Cl. 18-93. This clause deals with the cover of the yard’s costs applied in order to expedite repairs. Such a rule is expedient also in builders’ risks insurance...