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Section 2: Alteration of the risk

  • Clause 3-8. Alteration of the risk

    An alteration of the risk occurs when there is a change in the circumstances which, according to the contract, are to form the basis of the insurance, and the risk is thereby altered contrary to the implied conditions of the contract.

    A change of the State of registration, of the manager of the ship or of the company which is responsible for the technical/maritime operation of the ship shall be deemed to be an alteration of the risk as defined by sub-clause 1. The same applies to a change of classification society.

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    Clause 3-8. Alteration of the risk

    Sub-clause 2, second sentence, was added in the 2007 version. Sub-clause 2 was amended in the 2003 version. The provision is otherwise identical to earlier versions of the 1996 Plan and corresponds to Cl. 31 of the 1964 Plan and the relevant Nordic Insurance Contracts Acts (Nordic ICAs). The...

  • Clause 3-9. Alteration of the risk caused or agreed to by the assured

    If, after the conclusion of the contract, the assured has intentionally caused or agreed to an alteration of the risk, the insurer is free from liability, provided that it may be assumed that he would not have accepted the insurance if, at the time the contract was concluded, he had known that the alteration would take place.

    If it may be assumed that the insurer would have accepted the insurance, but on other conditions, he is only liable to the extent that the loss is proved not to be attributable to the alteration of the risk.

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    Clause 3-9. Alteration of the risk caused or agreed to by the assured

    This Clause is identical to Cl. 32 of the 1964 Plan. Reference is made to the Commentary on Cl. 3-3 with respect to the burden of proof and combination of causes.

  • Clause 3-10. Right of the insurer to cancel the insurance

    If an alteration of the risk occurs, the insurer may cancel the insurance by giving fourteen days’ notice.

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    Clause 3-10. Right of the insurer to cancel the insurance

    This Clause is identical to Cl. 33 of the 1964 Plan. The rule corresponds to the relevant Nordic Insurance Contracts Acts (Nordic ICAs), although the Nordic ICASs contains the additional requirement that the cancellation be reasonable. the Nordic ICAs also contains rules on how the cancellation i...

  • Clause 3-11. Duty of the assured to give notice

    If the assured becomes aware that an alteration of the risk will take place or has taken place, he shall, without undue delay, notify the insurer. If the assured, without justifiable reason, fails to do so, the rule in Cl. 3-9 shall apply, even if the alteration was not caused by him or took place without his consent, and the insurer may cancel the insurance by giving fourteen days' notice.

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    Clause 3-11. Duty of the assured to give notice

    This Clause corresponds to Cl. 34 of the 1964 Plan. The first sentence imposes on the assured a duty to inform the insurer in the event of an alteration of the risk. The second sentence allows the insurer, in the event of a failure to notify, to cancel the contract or take other action. The perio...

  • Clause 3-12. Cases where the insurer may not invoke alteration of the risk

    The insurer may not invoke Cl. 3-9 and Cl. 3-10 after the alteration of the risk has ceased to be material to him.

    The same applies if the risk is altered by measures taken for the purpose of saving human life, or by the insured ship salvaging or attempting to salvage ships or goods during the voyage.

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    Clause 3-12. Cases where the insurer may not invoke alteration of the risk

    This Clause is identical to Cl. 35 of the 1964 Plan. Sub-clause 1 sets out the same rule for alteration of the risk as that in Cl. 3-5, second sentence, regarding the duty of disclosure. However, it is only the rights referred to in Cl. 3-9 and Cl. 3-10 which are lost by the insurer once...

  • Clause 3-13. Duty of the insurer to give notice

    If the insurer becomes aware that an alteration of the risk has taken place, he shall, without undue delay and in writing, notify the assured of the extent to which he intends to invoke Cl. 3-9 and Cl. 3-10. If he fails to do so, he forfeits his right to invoke those provisions.

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    Clause 3-13. Duty of the insurer to give notice

    This Clause corresponds to Cl. 36 of the 1964 Plan and has a parallel in the relevant Nordic Insurance Contracts Acts. The provision is identical to the one regarding the duty to notify in Cl. 3-6 above.

  • Clause 3-14. Loss of the main class

    When the insurance commences the ship shall be classed with a classification society approved by the insurer.

    The insurance terminates in the event of loss of the main class, unless the insurer explicitly consents to a continuation of the insurance contract. If the ship is under way when the main class is lost, the insurance cover shall nevertheless continue until the ship arrives at the nearest safe port in accordance with the insurer's instructions.

    Loss of  the main class occurs where the assured, or someone on his behalf, requests that the main class be cancelled, or where the main class is suspended or withdrawn for reasons other than a casualty.

    Cl. 3-8, sub-clause 2, second sentence, shall apply to a change of classification society.

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    Clause 3-14. Loss of the main class

    In the 2013 Plan it has been expressly stated what previously was implied in the text and the Commentary that Cl. 3-14 only apply to loss of the main class. The provision is otherwise identical to earlier versions of the 1996 Plan. In addition to the main class the vessel with its equipment may b...

  • Clause 3-15. Trading areas

    The ordinary trading area under the insurance comprises all waters, subject to the limitations laid down in the Appendix to the Plan as regards conditional and excluded areas. The person effecting the insurance shall notify the insurer before the ship proceeds beyond the ordinary trading area.

    The insurer may consent to trade outside the ordinary trading area and may require an additional premium. The insurer may also stipulate other conditions which shall constitute safety regulations, cf. Cl. 3-22 and Cl. 3-25, sub-clause 1.

    The vessel is held covered for trade in the conditional trading areas, but if damage occurs while the ship is in a conditional area with the consent of the assured and without notice having been given, the claim shall be settled subject to a deduction of one fourth, maximum USD 200,000. The provision in Cl. 12-19 shall apply correspondingly. If claims arising out of ice damage are a result of the assured’s failure to exercise due care and diligence, further reduction of the claim may be made based on the degree of the assured’s fault and the circumstances generally.

    If the insurer has been duly notified in accordance with sub-clause 1 of trade within the conditional trading areas, the insurance remains in full force and effect, subject to compliance with conditions, if any, stipulated by the insurer. 

    If the ship proceeds into an excluded trading area, the insurance ceases to be in effect, unless the insurer has given his consent in advance, or the infringement was not the result of an intentional act by the master of the ship. If the ship, prior to expiry of the insurance period, leaves the excluded area, the insurance shall again come into effect. The provision in Cl. 3-12, sub-clause 2, shall apply correspondingly. 

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    Clause 3-15. Trading areas

    The Clause was amended in 2016, due to a disagreement that had arisen on the effect of the requirement for compliance with ice class rules introduced in 2007. Hence, Cl. 3-22, sub-clause 3, was deleted in 2016. The rules are still based on a tripartite division: ordinary trading areas, excluded...

  • Clause 3-16. Illegal undertakings

    The insurer is not liable for loss which results from the ship being used for illegal purposes, unless the assured neither knew nor ought to have known of the facts at such a time that it would have been possible for him to intervene.

    If the assured fails to intervene without undue delay after becoming aware of the facts, the insurer may cancel the insurance by giving fourteen days' notice.

    The insurance terminates if the ship, with the consent of the assured, is used primarily for the furtherance of illegal purposes.

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    Clause 3-16. Illegal undertakings

    This Clause corresponds to Cl. 40 of the 1964 Plan. The provision has no direct parallel in the relevant Nordic Insurance Contracts Acts. Sub-clause 1 establishes that use of the ship for illegal purposes constitutes a special alteration of the risk. Sub-clause 3, according to which the insurance...

  • Clause 3-17. Suspension of the insurance in the event of requisition

    If the ship is requisitioned by a State power, the insurance against both marine perils and war perils is suspended. If the requisition ceases before expiry of the insurance period, the insurance comes into force again. If the ship proves to be in substantially worse condition than it was prior to the requisition, the insurer may cancel the insurance by giving fourteen days’ notice, to take effect at the earliest on arrival of the ship at the nearest safe port in accordance with the insurer’s instructions.

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    Clause 3-17. Suspension of insurance in the event of requisition

    Sub-clause 2 was moved to Cl. 15-24 (b) in the 2007 version. The sub-clause is otherwise identical to earlier versions of the 1996 Plan. Sub-clause 1, first sentence sets out the principal rule, i.e. that in the event of requisition by a State power, all of the ship’s insurances are suspended. Th...

  • Clause 3-18. Notification of requisition

    If the assured is informed that the ship has been or will be requisitioned, or that it has been or will be returned after the requisition, he shall notify the insurer without undue delay.

    The insurer may demand that the assured have the ship surveyed in a dock for his own account immediately after the ship is returned. The insurer shall be notified well in advance of the survey.

    If the assured has failed to fulfil his duties according to sub-clause 1 or 2, he has the burden of proving that any loss is not attributable to casualties or other similar circumstances that occurred whilst the ship was requisitioned.

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    Clause 3-18. Notification of requisition

    This Clause corresponds to Cl. 42 of the 1964 Plan. Sub-clause 1 imposes on the assured a duty to notify the insurer if the ship is requisitioned or is returned, while sub-clause 2 gives the insurer authority to demand a survey of the ship when the requisition is over and the ship has been...

  • Clause 3-19. Suspension of insurance while the ship is temporarily seized

    If the ship is temporarily seized by a State power without Cl. 3-17 becoming applicable, the insurance against marine perils is suspended. In that event the insurance against war perils shall also cover marine perils as defined in Cl. 2-8.

    Cl. 3-18 shall apply correspondingly.

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    Clause 3-19. Suspension of insurance while the ship is temporarily seized

    This Clause corresponds in part to Cl. 16 of the 1964 Plan, sub-clause 3. If the ship is temporarily seized by a foreign State power, without there being a requisition within the meaning of Cl. 2-9 and Cl. 3-17, it is appropriate that the insurance against marine perils be suspended, as in the...

  • Clause 3-20. Removal of the ship to a repair yard

    If there is reason to believe that the removal of a damaged ship to a repair yard will result in an increase of the risk, the assured shall notify the insurer of the removal in advance.

    If the removal will result in a substantial increase of the risk, the insurer may, before the removal commences, notify the assured that he therefore objects to the removal. If such notice has been given, or if the assured has neglected to notify the insurer in accordance with sub-clause 1, the insurer will not be liable for any loss that occurs during or as a consequence of the removal.

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    Clause 3-20. Removal of the ship to a repair yard

    The Commentary was amended in the 2010 version. This Clause corresponds to Cl. 44 of the 1964 Plan. Sub-clause 1 imposes on the assured an obligation to notify the insurer if a removal of the ship to a repair yard entails an increase in the risk. The provision is identical to Cl. 44, sub-clause 1...

  • Clause 3-21. Change of ownership

    The insurance terminates if the ownership of the ship changes by sale or in any other manner.

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    Clause 3-21. Change of ownership

    This Clause corresponds to Cl. 133, sub-clause 1 of the 1964 Plan, Cefor I.22 and PIC Cl. 5.13. As mentioned under Cl. 3-8, sub-clause 2, Cl. 133 of the 1964 Plan contained a rule on change of ownership (sub-clause 1), and on transfer of shares in the holding company and change of manager...