The Plan

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Section 1: Insurable interest and insurable value

  • Clause 2-1. Insurance unrelated to any interest

    A contract concerning insurance which does not relate to any interest is void.

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    Clause 2-1. Insurance unrelated to any interest

    This provision is identical to Cl. 6 of the 1964 Plan. The provision establishes the traditional precondition for a valid insurance contract, i.e. that the assured must have an economic interest in the subject-matter insured. A “wager insurance”, where it has been clear from the outset that no...

  • Clause 2-2. Insurable value

    The insurable value is the full value of the interest at the inception of the insurance. The parties may by agreement fix the insurable value at a certain amount, hereinafter called agreed insurable value, cf. Cl. 2-3. 

    The sum or sums insured in the insurance contract shall be deemed to constitute the agreed insurable value(s) unless the circumstances clearly indicate otherwise. 

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    Clause 2-2. Insurable value

    Sub-clause 1, second sentence, and sub-clause 2 were added in 2016. Sub-clause 1, first sentence, states  that the insurable value is the full value of the interest at the inception of the insurance. This provision differs from general insurance law, where the insurable value is deter­mined at th...

  • Clause 2-3. Agreed insurable value

    The insurer may demand to have the agreed insurable value set aside only if the person effecting the insurance has given misleading information about characteristics of the subject-matter insured that are relevant for the agreement.

    If, due to market fluctuations, the value of the interest insured has changed significantly after the insurance contract was entered into, both parties may require that the agreed insurable value be changed by giving fourteen days' notice.

    If the parties disagree as to whether the conditions for changing the agreed insurable value according to sub-clause 2 are fulfilled, the question shall be submitted for final decision to a Nordic adjuster to be chosen by the assured.

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    Clause 2-3. Agreed insurable value

    The word “assessed” was replaced with “agreed" throughout the Plan and the Commentary in 2016. Cl. 2-3 regulates the extent to which an agreed insurable value is binding on the insurer. For the shipowners, it is important that a valuation is unconditionally binding on the insurer: an expanding...

  • Clause 2-4. Under-insurance

    If the sum insured is lower than the insurable value, the insurer shall only compensate a portion of the loss corresponding to the proportion that the sum insured bears to the insurable value. If a valuation has been set aside in accordance with Cl. 2-3, sub-clause 1, above, it shall nevertheless be regarded as the insurable value when the rule in this sub-clause is applied.

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    Clause 2-4. Under-insurance

    This Clause is identical to Cl. 9 of the 1964 Plan and corresponds to relevant Nordic Insurance Contracts Acts (Nordic ICAs).  The provision maintains the principle of under-insurance if the sum insured is less than the insurable value, which means that the insurer shall merely compensate the par...

  • Clause 2-5. Over-insurance

    If the sum insured exceeds the insurable value, the insurer shall only compensate the loss up to the insurable value.

    If the interest is over-insured with fraudulent intent, the contract is not binding on the insurer.

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    Clause 2-5. Over-insurance

    This provision is identical to the provision in Cl. 10 of the 1964 Plan. The same result follows indirectly from relevant Nordic Insurance Contracts Acts (Nordic ICAs). Sub-clause 1 is identical to the earlier provision and requires no comments. Sub-clause 2 relating to fraud is not found in Nord...

  • Clause 2-6. Liability of the insurer when the interest is also insured with another insurer

    If the interest is insured against the same perils with two or more insurers, each of them is liable to the assured in accordance with their respective contracts until the assured has received the full compensation to which he is entitled.

    If one of the insurers has disclaimed liability where the interest is also insured with another insurer, he shall only be liable to the extent that the assured has not obtained cover with other insurers.

    If all of the insurers have disclaimed liability where the interest is also insured with another insurer, the rules contained in sub-clause 1 shall apply.

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    Clause 2-6. Liability of the insurer when the interest is also insured with another insurer

    The provision corresponds to Cl. 11 of the 1964 Plan and relevant Nordic Insurance Contracts Acts (Nordic ICAs). Sub-clause 1 establishes the principle of primary joint and several liability in the event of “double insurance”, i.e. when the same peril is insured with two or more insurers, and...

  • Clause 2-7. Recourse between the insurers where the interest is insured with two or more insurers

    If the interest is insured against the same perils with two or more insurers, the total amount of compensation shall, in the recourse settlement, be apportioned on the basis of the amounts for which each insurer was liable.

    If all of the insurers have disclaimed liability where the interest is also insured with another insurer and the assured has received settlement under the rules contained in Cl. 2-6, sub-clause 3, the rule concerning recourse in sub-clause 1 shall apply correspondingly.

    If the assured is entitled to recover costs incurred to prevent or minimise loss from an insurer, that insurer shall, to the extent of his liability, bear the full amount of such costs in the recourse settlement. This applies even if all the insurers have disclaimed liability where the interest is also insured with another insurer.

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    Clause 2-7. Recourse between the insurers where the interest is insured with two or more insurers

    This Clause corresponds to Cl. 12 of the 1964 Plan and relevant Nordic Insurance Contracts Acts (Nordic ICAs). Sub-clause 1 maintains the principle from Cl. 12, first sentence, of the 1964 Plan of a proportional apportionment among the insurers in the recourse settlement. The formulation is,...