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Chapter 11: Total loss

  • Clause 11-1. Total loss

    The assured may claim compensation for a total loss if the ship is lost without there being any prospect of it being recovered or if the ship is so badly damaged that it cannot be repaired.

    No deductions shall be made in the claims adjustment for unrepaired damage sustained by the ship in connection with an earlier casualty.

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    Clause 11-1. Total loss

    This Clause is identical to Cl. 161 of the 1964 Plan. The Commentary was amended in the 2007 version in connection with the amendment to Cl. 12-2. Sub-clause 1 states when the assured may claim compensation for a total loss. The provision covers both actual loss and so-called “unrepairability”....

  • Clause 11-2. Salvage attempts

    The insurer is entitled to attempt to salvage the ship at his own expense and risk. The assured shall in that event do his utmost to enable the insurer to carry out the salvage operation.

    If the salvage operation has not been completed within six months from the date the insurer was notified of the casualty, the assured is entitled to claim compensation for a total loss. If the salvage operation is delayed due to difficult ice conditions, the time-limit shall be extended correspondingly, but not by more than six months.

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    Clause 11-2. Salvage attempts

    This Clause corresponds to Cl. 162 of the 1964 Plan. The Clause constitutes a necessary supplement to the preceding clause and regulates the situation where the ship is lost under such circumstances that it is uncertain whether it can be salvaged. The time-limit within which the salvage operation...

  • Clause 11-3. Condemnation

    The assured may claim compensation for a total loss if the conditions for condemnation of the ship are met.

    The conditions for condemnation are met when casualty damage is so extensive that the cost of repairing the ship will amount to at least 80 % of the insurable value, or of the value of the ship after repairs if the latter is higher than the insurable value. If two or more insurances have been effected against the same perils but with different valuations, the highest valuation shall form the basis of the calculation.

    The value of the ship after repairs shall be determined on the basis of the market value at the time when the assured makes his request for a condemnation.

    Casualty damage shall be deemed to include only such damage as has been reported to the insurer concerned and surveyed by him in the course of the last three years prior to the casualty that gives rise to the request for condemnation. Costs of repairs are deemed to include all costs of removal and repairs which, at the time when the request for condemnation is submitted, must be anticipated if the ship is to be repaired except, however, salvage awards or compensation for depreciation in value under Cl. 12-1, sub-clause 4.

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    Clause 11-3. Condemnation

    This Clause is identical to Cl. 163 of the 1964 Plan. The Commentary was adjusted in the 2010 version. In the 2007 version the Commentary was adjusted in accordance with the amendments to Cl. 3-22 and Cl. 12-2. Sub-clause 1 sets out the principle that the total-loss cover also extends to...

  • Clause 11-4. Condemnation in the event of a combination of perils

    If the casualty which gives rise to the condemnation is also caused by perils not covered by the insurance, the compensation shall be reduced correspondingly, cf. Cl. 2-13, Cl. 2-14 and Cl. 2-16.

    If the casualty is caused by such combination of marine and war perils as referred to in Cl. 2-14, second sentence, cf. Cl. 2-16, the decision whether the conditions for a condemnation are met shall be based on the valuation applicable to the insurance against marine perils.

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    Clause 11-4. Condemnation in the event of a combination of perils

    This Clause is identical to Cl. 164 of the 1964 Plan. The provision regulates the position where the casualty which gives rise to the condemnation is partly due to perils not covered by the insurance, cf. Cl. 2-13, Cl. 2-14 and Cl. 2-16. The situation may be that the assured has breached safety...

  • Clause 11-5. Request for condemnation

    If the assured wishes the ship to be condemned, he must submit a request to the insurer without undue delay after the ship has been salvaged and he has had an opportunity to survey the damage. This request may be withdrawn as long as it has not been accepted by the insurer.

    Whether the assured or the insurer salvages or fails to salvage the ship shall not imply an approval or waiver respectively of the right to condemnation.

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    Clause 11-5. Request for condemnation

    This Clause is identical to Cl. 165 of the 1964 Plan. Sub-clause 1 regulates the conditions for the request for condemnation. The provision must be interpreted antithetically: It is only the assured who can request condemnation. Hence, the insurer may not take advantage of an upward turn in the...

  • Clause 11-6. Removal of the ship

    If the assured has requested a condemnation of the ship, the insurer may demand its removal to a place where the damage may be properly surveyed. The demand must be made without undue delay after the ship has been salvaged.

    The insurer shall bear the costs of the removal and liability for any loss arising during or as a consequence of the removal which is not covered by other insurers.

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    Clause 11-6. Removal of the ship

    This Clause is identical to Cl. 166 of the 1964 Plan. When the assured makes a request for condemnation, it is important that the insurer be given the opportunity to have the ship inspected in a proper manner, e.g. in dock. The insurer therefore has an unconditional right to demand that the ship ...

  • Clause 11-7. Missing or abandoned ship

    If the ship is reported missing, the assured may claim for a total loss when three months have elapsed from the date on which the ship was, at the latest, expected to arrive at a port. If the ship is reported missing under circumstances that give reason to assume that it is icebound and will subsequently be recovered, the time-limit is twelve months.

    If the ship has been abandoned by the crew at sea without its subsequent fate being known, the assured may claim for a total loss when three months have elapsed from the day when the ship was abandoned. If it was abandoned because it was icebound, the time-limit is twelve months. If the ship has been seen after being abandoned, the time-limit runs from the day on which it was last seen.

    If, before expiry of the time-limit mentioned in sub-clauses 1 and 2, it is clear that the assured will not recover the ship, he may at once claim for a total loss.

    If the time-limit has expired and the assured has submitted a claim for a total loss, the insurer may not reject the claim because the ship is subsequently recovered.

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    Clause 11-7. Missing or abandoned ship

    This Clause corresponds to Cl. 168 and Cl. 170 of the 1964 Plan. The 1964 Plan contained rules on missing or abandoned ships in Cl. 168, on seizure, requisition and piracy in Cl. 169 and joint rules for the two groups of cases in Cl. 170. In the new Plan, rules on seizure, etc. have been moved to...

  • Clause 11-8. Extension of the insurance when the ship is missing or abandoned

    If, upon expiry of the insurance period, a situation exists as referred to in Cl. 11-7, and the ship is subsequently recovered without the assured being entitled to claim for a total loss, the insurance is extended until the ship has dropped anchor or has been moored in the first port. If the ship is damaged, the rules contained in Cl. 10-10 shall thereafter apply.

    However, the insurance shall under no circumstances be extended beyond two years after the expiry of the insurance period.

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    Clause 11-8. Extension of the insurance when the ship is missing or abandoned

    This Clause corresponds to Cl. 171 of the 1964 Plan. Sub-clause 1 states that the insurance will be extended if the ship, on expiry of the insurance period, is missing or abandoned and is subsequently recovered without the assured being entitled to claim for a total loss. The provision is based o...

  • Clause 11-9. Liability of the insurer during the period of clarification

    If the assured is entitled to claim for a total loss in accordance with Cl. 11-2, sub-clause 2, Cl. 11-3 and Cl. 11-7, an insurer who is not liable for the total loss shall not be liable for new casualties occurring after the casualty that resulted in a total loss.

    The insurer who is liable for the total loss shall cover the assured's liability for damages in accordance with the rules contained in Chapter 13, regardless of whether such liability has arisen as a result of marine perils or war perils, provided that the liability has arisen subsequent to the casualty that resulted in the total loss, but before the claim was settled and, at the latest, within two years of the expiry of the insurance period.

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    Clause 11-9. Liability of the insurer during the period of clarification

    If the ship has sustained extensive damage as a result of a casualty and the assured claims for a total loss, there will be a period of uncertainty when it is not known whether or not the condemnation conditions under Cl. 11-3 are met. The same applies when the ship is stranded and the insurer...