Commentary
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Part One: Rules common to all types of insurance
- Chapter 1: Introductory provisions
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Chapter 2: General rules relating to the scope of the insurance
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Section 1: Insurable interest and insurable value
- General
- Clause 2-1. Insurance unrelated to any interest
- Clause 2-2. Insurable value
- Clause 2-3. Agreed insurable value
- Clause 2-4. Under-insurance
- Clause 2-5. Over-insurance
- Clause 2-6. Liability of the insurer when the interest is also insured with another insurer
- Clause 2-7. Recourse between the insurers where the interest is insured with two or more insurers
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Section 2: Perils insured against, causation and loss
- General
- Clause 2-8. Perils covered by an insurance against marine perils
- Clause 2-9. Perils covered by an insurance against war perils
- Clause 2-10. Perils insured against when no agreement has been made as to what perils are covered by the insurance
- Clause 2-11. Causation. Incidence of loss
- Clause 2-12. Main rule relating to the burden of proof
- Clause 2-13. Combination of perils
- Clause 2-14. Combination of marine and war perils
- Clause 2-15. Losses deemed to be caused entirely by war perils
- Clause 2-16. Loss attributable either to marine or war perils
- Clause 2-17. Sanction limitation and exclusion
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Section 1: Insurable interest and insurable value
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Chapter 3: Duties of the person effecting the insurance and of the assured
- General remarks
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Section 1: Duty of disclosure of the person effecting the insurance
- Clause 3-1. Scope of the duty of disclosure
- Clause 3-2. Fraudulent misrepresentation
- Clause 3-3. Other failure to fulfil the duty of disclosure
- Clause 3-4. Innocent breach of the duty of disclosure
- Clause 3-5. Cases where the insurer may not invoke breach of the duty of disclosure
- Clause 3-6. Duty of the insurer to give notice
- Clause 3-7. Right of the insurer to obtain particulars from the vessel's classification society, etc.
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Section 2: Alteration of the risk
- Clause 3-8. Alteration of the risk
- Clause 3-9. Alteration of the risk caused or agreed to by the assured
- Clause 3-10. Right of the insurer to cancel the insurance
- Clause 3-11. Duty of the assured to give notice
- Clause 3-12. Cases where the insurer may not invoke alteration of the risk
- Clause 3-13. Duty of the insurer to give notice
- Clause 3-14. Loss of the main class
- Clause 3-15. Trading areas
- Clause 3-16. Illegal undertakings
- Clause 3-17. Suspension of insurance in the event of requisition
- Clause 3-18. Notification of requisition
- Clause 3-19. Suspension of insurance while the vessel is temporarily seized
- Clause 3-20. Removal of the vessel to a repair yard
- Clause 3-21. Change of ownership
- Section 3: Safety regulations
- Section 4: Measures to avert or minimise loss, etc.
- Section 5: Casualties caused intentionally or negligently by the assured
- Section 6. Identification
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Chapter 4: Liability of the insurer
- General
- Section 1: General rules relating to the liability of the insurer
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Section 2: Costs of measures to avert or minimise the loss, including salvage awards and general average
- General
- Clause 4-7. Compensation of the costs of measures to avert or minimise loss
- Clause 4-8. General average
- Clause 4-9. General average apportionment where the interests belong to the same person
- Clause 4-10. Damage to and loss of the object insured
- Clause 4-11. Assumed general average
- Clause 4-12. Costs of particular measures taken to avert or minimise loss
- Section 3: Liability of the assured to third parties
- Section 4: The sum insured as the limit of the liability of the insurer
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Chapter 5: Settlement of claims
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Section 1: Claims adjustment, interest, payments on account, etc.
- Clause 5-1. Duty of the assured to provide information and documents
- Clause 5-2. Claims adjustment
- Clause 5-3. Rates of exchange
- Clause 5-4. Interest on the compensation
- Clause 5-5. Disputes concerning the adjustment of the claim
- Clause 5-6. Due date
- Clause 5-7. Duty of the insurer to make a payment on account
- Clause 5-8. Payment on account when there is a dispute as to which insurer is liable for the loss
- Section 2: Liability of the assured to third parties
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Section 3: Claims by the assured for damages against third parties
- Clause 5-13. Right of subrogation of the insurer to claims by the assured for damages against third parties
- Clause 5-14. Waiver of claim for damages
- Clause 5-15. Duty of the assured to assist the insurer with information and documents
- Clause 5-16. Duty of the assured to maintain and safeguard the claim
- Clause 5-17. Decisions concerning legal proceedings or appeals
- Clause 5-18. Salvage award which entails compensation for loss covered by the insurer
- Section 4: Right of the insurer to take over the object insured upon payment of a claim
- Section 5: Limitation, etc.
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Section 1: Claims adjustment, interest, payments on account, etc.
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Chapter 6: Premium
- General
- Clause 6-1. Payment of premium
- Clause 6-2. Right of the insurer to cancel the insurance in the event of non-payment of premium
- Clause 6-3. Premium in the event of total loss
- Clause 6-4. Additional premium when the insurance is extended
- Clause 6-5. Reduction of premium
- Clause 6-6. Reduction of premium when the vessel is laid up or in similar situations
- Clause 6-7. Claim for a reduction of premium
- Chapter 7: Co-insurance of mortgagees
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Chapter 8: Co-insurance of third parties
- General
- Clause 8-1. Rights of third parties against the insurer
- Clause 8-2. Protection of third parties against subrogation claims from the insurer
- Clause 8-3. Application of the rules in Chapter 3 and Clause 5-1
- Clause 8-4. Amendments and cancellation of the insurance contract
- Clause 8-5. Handling of claims, claims adjustment, etc.
- Clause 8-6. Other insurance
- Clause 8-7. Independent co-insurance of mortgagees or named third parties
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Chapter 9: Relations between the claims leader and co-insurers
- General
- Clause 9-1. Definitions
- Clause 9-2. The right of the claims leader to act on behalf of the co-insurers
- Clause 9-3. Lay-up plan
- Clause 9-4. Notification of a casualty
- Clause 9-5. Salvage
- Clause 9-6. Removal and repairs
- Clause 9-7. Provision of security
- Clause 9-8. Disputes with third parties
- Clause 9-9. Claims adjustment
- Clause 9-10. Insolvency of a co-insurer
- Clause 9-11. Interest on the disbursements of the claims leader
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Part Two: Hull insurance
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Chapter 10: General rules relating to the scope of the hull insurance
- Clause 10-1. Objects insured
- Clause 10-2. Objects, etc. temporarily removed from the vessel
- Clause 10-3. Loss due to ordinary use
- Clause 10-4. Insurance "on full conditions"
- Clause 10-5. Insurance “against total loss only” (T.L.O.)
- Clause 10-6. Insurance “against total loss and general average contribution only”
- Clause 10-7. Insurance “against total loss, general average contribution and collision liability only”
- Clause 10-8. Insurance "on stranding terms"
- Clause 10-9. Duration of voyage insurance
- Clause 10-10. Extension of the insurance
- Clause 10-11. Liability of the insurer if the vessel is salvaged by the assured
- Clause 10-12. Reduction of liability in consequence of an interest insurance
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Chapter 11: Total loss
- Clause 11-1. Total loss
- Clause 11-2. Salvage attempts
- Clause 11-3. Condemnation
- Clause 11-4. Condemnation in the event of a combination of perils
- Clause 11-5. Request for condemnation
- Clause 11-6. Removal of the vessel
- Clause 11-7. Missing or abandoned vessel
- Clause 11-8. Extension of the insurance when the vessel is missing or abandoned
- Clause 11-9. Liability of the insurer during the period of clarification
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Chapter 12: Damage
- General
- Clause 12-1. Main rule concerning liability of the insurer
- Clause 12-2. Compensation for unrepaired damage
- Clause 12-3. Inadequate maintenance, etc.
- Clause 12-4. Error in design, etc.
- Clause 12-5. Losses that are not recoverable
- Clause 12-6. Deferred repairs
- Clause 12-7. Temporary repairs
- Clause 12-8. Costs incurred in expediting repairs
- Clause 12-9. Repairs of a vessel that is condemnable
- Clause 12-10. Survey of damage
- Clause 12-11. Invitations to tender
- Clause 12-12. Choice of repair yard
- Clause 12-13. Removal of the vessel
- Clause 12-14. Apportionment of common expenses
- Clause 12-15. Ice damage deductions
- Clause 12-16. Machinery damage deductions
- Clause 12-17. Compensation without deductions
- Clause 12-18. Deductible
- Clause 12-19. Basis for calculation of deductions according to Clauses 12-15 to 12-18 and Clause 3-15
- Chapter 13: Liability of the assured arising from collision or striking
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Chapter 10: General rules relating to the scope of the hull insurance
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Part Three: Other insurances for ocean-going vessels
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Chapter 14: Separate insurances against total loss
- General
- Clause 14-1. Insurance against total loss and excess collision liability (hull interest insurance)
- Clause 14-2. Insurance against loss of long-term freight income (freight interest insurance)
- Clause 14-3. Common rules for separate insurances against total loss
- Clause 14-4. Limitations on the right to effect separate insurances against total loss
- Chapter 15: War risks insurance
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Chapter 16: Loss of hire insurance
- General
- Clause 16-1. Main rules regarding the liability of the insurer
- Clause 16-2. Total loss
- Clause 16-3. Main rule for calculating compensation
- Clause 16-4. Calculation of the loss of time
- Clause 16-5. The daily amount
- Clause 16-6. Agreed daily amount
- Clause 16-7. Deductible period
- Clause 16-8. Survey of damage
- Clause 16-9. Choice of repair yard
- Clause 16-10. Removal to the repair yard, etc.
- Clause 16-11. Extra costs incurred in order to avert or minimise loss
- Clause 16-12. Simultaneous repairs
- Clause 16-13. Loss of time after completion of repairs
- Clause 16-14. Repairs carried out after expiry of the insurance period
- Clause 16-15. Liability of the insurer when the vessel is transferred to a new owner
- Clause 16-16. Relationship to other insurances and general average
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Chapter 14: Separate insurances against total loss
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Part Four: Other insurances
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Chapter 17: Insurance for fishing vessels
- General
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Section 1: General provisions
- Clause 17-1. Scope of application
- Clause 17-2. Renewal of the insurance/Ref. Clause 1-5
- Clause 17-3. Trading areas for fishing vessels/Ref. Clause 3-15
- Clause 17-4. Classification and vessel inspection/Ref. Clause 3-14 and Clause 3-8
- Clause 17-5. Safety regulations/Ref. Clause 3-22 and Clause 3-25
- Clause 17-6. Savings to the assured
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Section 2: Hull insurance
- General
- Clause 17-7. The relationship to Chapters 10-13
- Clause 17-7A. Fixed equipment temporarily removed from the vessel
- Clause 17-8. Change of the open or agreed insurable value/Ref. Clause 2-2 and Clause 2-3
- Clause 17-9. Damage to lifeboats, fishing, whaling and sealing tackle and catch/Ref. Clause 4-7 to Clause 4-12 and Clause 4-16
- Clause 17-10. Hull and freight-interest insurance/Ref. Clause 10-12
- Clause 17-11. Condemnation/Ref. Clause 11-3
- Clause 17-12. Damage to the hull of vessels which are not built of steel/Ref. Clause 12-1
- Clause 17-13. Limited cover of damage to machinery
- Clause 17-14. Costs incurred in saving time/Ref. Clause 12-7, Clause 12-8, Clause 12-11 and Clause 12-12
- Clause 17-15. Deductions/Ref. Clause 12-15, Clause 12-16 and Clause 12-18
- Clause 17-16. Collision liability for fishing vessels/Ref. Clause 13-1
- Clause 17-17. Collision liability/Ref. Clause 13-1
- Section 3: Hull insurance - extended cover
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Section 4: Catch and equipment insurance - standard cover
- General
- Clause 17-19. Objects insured
- Clause 17-20. Insurable value
- Clause 17-21. Extraordinary handling costs
- Clause 17-22. Excluded perils/Ref. Clause 2-8
- Clause 17-23. Deck cargo
- Clause 17-24. Total loss
- Clause 17-25. Damage to or loss of catch
- Clause 17-26. Damage to other objects
- Clause 17-27. Survey of damage
- Clause 17-28. Deductible
- Section 5: Supplementary cover for nets and seines in the sea
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Section 6: Loss of hire insurance for fishing vessels
- General comments
- Clause 17-33. Relationship to Chapter 16
- Clause 17-34. Liability of the insurer/applies instead of Clause 16-1
- Clause 17-35. Total loss/applies instead of Clause 16-2
- Clause 17-36. Calculation of compensation for fishing vessels/Ref. Clause 16-3
- Clause 17-37. The daily amount for fishing vessels/applies instead of Clause 16-5
- Clause 17-38. Agreed daily amount for fishing vessels/applies instead of Clause 16-6
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Chapter 18: Insurance of mobile offshore units (MOUs)
- Overview
- Section 1: General rules relating to the scope of the insurance
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Section 2: Hull insurance
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Section 2-1: General rules relating to the scope of the H&M insurance
- Clause 18-2. Objects insured
- Clause 18-3. Objects temporarily removed or separated etc. from the MOU
- Clause 18-4. Loss due to ordinary use
- Clause 18-5. Extension of the insurance
- Clause 18-6. Liability of the insurer if the MOU is salvaged by the assured
- Clause 18-7. Reduction of liability in consequence of an interest insurance
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Section 2-2: Total loss
- Clause 18-8. Total loss
- Clause 18-9. Salvage attempts
- Clause 18-10. Condemnation
- Clause 18-11. Condemnation in the event of a combination of perils
- Clause 18-12. Request for condemnation
- Clause 18-13. Removal of the MOU
- Clause 18-14. Missing or abandoned MOU
- Clause 18-15. Extension of the insurance when the MOU is missing or abandoned
- Clause 18-16. Liability of the insurer during the period of clarification
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Section 2-3: Damage
- General
- Clause 18-17. Main rule concerning liability of the insurer
- Clause 18-18. Compensation for unrepaired damage
- Clause 18-19. Inadequate maintenance
- Clause 18-20. Error in design, etc.
- Clause 18-21. Losses that are not recoverable
- Clause 18-22. Damage to the drill string
- Clause 18-23. Deferred repairs
- Clause 18-24. Temporary repairs
- Clause 18-25. Costs incurred in expediting repairs
- Clause 18-26. Repairs of an MOU that is condemnable
- Clause 18-27. Survey of damage
- Clause 18-28. Invitations to tender
- Clause 18-29. Choice of repairers
- Clause 18-30. Removal for repairs
- Clause 18-31. Apportionment of common expenses
- Clause 18-32. Ice damage deductions
- Clause 18-33. Deductible
- Clause 18-34. Basis for calculation of deductions according to Clauses 18-32, 18-33 and 3-15
- Section 2-4: Liability of the assured arising from collision or striking
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Section 2-1: General rules relating to the scope of the H&M insurance
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Section 3: Separate insurances against total loss
- Clause 18-39. Insurance against total loss and excess collision liability (hull interest insurance)
- Clause 18-40. Insurance against loss of long-term freight income (freight interest insurance)
- Clause 18-41. Common rules for separate insurances against total loss
- Clause 18-42. Limitations on the right to insure separately against total loss
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Section 4: Loss of hire insurance
- Clause 18-43. Main rules regarding the liability of the insurer
- Clause 18-44. Total loss
- Clause 18-45. Main rule for calculating compensation
- Clause 18-46. Calculation of the loss of time
- Clause 18-47. The daily amount
- Clause 18-48. Agreed daily amount
- Clause 18-49. Deductible period
- Clause 18-50. Survey of damage
- Clause 18-51. Choice of repairer
- Clause 18-52. Move to the repair location, etc.
- Clause 18-53. Extra costs incurred in order to avert or minimise loss
- Clause 18-54. Simultaneous works
- Clause 18-55. Loss of time after completion of repairs
- Clause 18-56. Repairs carried out after expiry of the insurance period
- Clause 18-57. Liability of the insurer when the MOU is transferred to a new owner
- Clause 18-58. Relationship to other insurances and general average
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Section 5: War risks insurance
- Section 5-1: General rules relating to the scope of war risks insurance
- Section 5-2: Termination of the insurance
- Section 5-3: Areas of operation
- Section 5-4: Total loss
- Section 5-5: Damage
- Section 5-6: Loss of hire
- Section 5-7: Owner’s liability, etc. (P&I)
- Section 5-8: Occupational injury insurance, etc.
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Section 6: Construction risks insurance
- Section 6-1: General rules relating to the scope of construction risks insurance
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Section 6-2: Loss of or damage to the MOU
- Clause 18-87. Objects insured/Ref Clause 18-2
- Clause 18-88. Insurable value
- Clause 18-89. Compensation in the event of a total loss/Ref. Clause 4-1
- Clause 18-90. Total Loss/Ref. Section 2-2
- Clause 18-91. Damage/Ref. Section 2-3
- Clause 18-92. Error in design, etc.
- Clause 18-93. Costs incurred in order to save time/Ref. Clauses 18-24, 18-28 and 18-29
- Section 6-3: Supplementary covers
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Chapter 19: Builders’ risks insurance
- General
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Section 1: Common provisions
- Clause 19-1. Perils covered/Ref. Clause 2-8, cf. Clause 2-10
- Clause 19-2. Insurance period/Ref. Clause 1-5
- Clause 19-2A. Premium in the event of total loss
- Clause 19-3. Co-insurance/Ref. Clause 8-1
- Clause 19-4. Transfer of the building contract/Ref. Clause 3-21
- Clause 19-5. Place of insurance
- Clause 19-6. The sum insured as the limit of the liability of the insurer/Ref. Clause 4-18 and Clause 4-19
- Clause 19-7. Escalation of the sum insured
- Clause 19-8. Deductible
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Section 2: Loss of or damage to the subject-matter insured
- Clause 19-9. Objects insured/Ref. Clause 10-1
- Clause 19-10. Insurable value
- Clause 19-11. Total loss in the event of condemnation
- Clause 19-12. Total loss where the yard’s obligation to deliver no longer applies
- Clause 19-13. Compensation in the event of a total loss/Ref. Clause 4-1
- Clause 19-14. Damage/Ref. Chapter 12
- Clause 19-15. Limitation of the insurer’s liability/Ref. Clause 12-1
- Clause 19-16. Compensation for unrepaired damage/Ref. Clause 12-2
- Clause 19-17. Costs incurred in order to save time/Ref. Clause 12-7, Clause 12-11 and Clause 12-12
- Section 3: Indemnification of additional costs incurred in an unsuccessful launching and costs of wreck removal
- Section 4: Liability insurance
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Section 5: Supplementary covers
- Clause 19-22. Applicable rules
- Clause 19-23. Insurance of additional costs in connection with rebuilding and/or building of a new subject-matter insured
- Clause 19-24. Insurance of the yard’s liability for the buyer’s interest claim for instalments paid
- Clause 19-25. Insurance of the yard’s loss of interest in the event of late delivery
- Clause 19-26. Insurance of the yard’s daily penalties in the event of late delivery
- Clause 19-27. Towage and removal of the subject-matter insured
- Section 6: Supplementary cover for war risks
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Chapter 20: Insurance for vessels with trading certificates
- General
- Section 1: Common provisions
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Section 2: Hull insurance
- General
- Clause 20-6. The relationship to Chapters 10-13
- Clause 20-7. Hull and freight-interest insurance/Ref. Clause 10-12
- Clause 20-8. Condemnation/Ref. Clause 11-3
- Clause 20-9. Damage to the hull of vessels which are not built of steel/Ref. Clause 12-1
- Clause 20-10. Limited cover of damage to machinery
- Clause 20-11. Costs incurred in saving time/Ref. Clause 12-7, Clause 12-8, Clause 12-11 and Clause 12-12
- Clause 20-12. Deductions/Ref. Clause 12-15, Clause 12-16 and Clause 12-18
- Clause 20-13. Collision liability/Ref. Clause 13-1
- Section 3: Hull insurance - extended cover
- Section 4: Hull insurance - limited cover
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Chapter 21: Liability insurance
- Clause 21-1. Scope of application
- Clause 21-2. Renewal of the insurance/Ref. Clause 1-5
- Clause 21-3. Classification and vessel inspection/Ref. Clause 3-14 and Clause 3-8
- Clause 21-4. Savings to the assured
- Clause 21-5. Perils covered
- Clause 21-6. Liability for personal injury
- Clause 21-7. Liability for property damage
- Clause 21-8. Liability for description
- Clause 21-9. Liability for the misdelivery of goods
- Clause 21-10. General average contributions
- Clause 21-11. Liability for removal of wrecks
- Clause 21-12. Liability for special salvage compensation
- Clause 21-13. Liability for bunker oil pollution damage and damage to the environment
- Clause 21-14. Stowaways
- Clause 21-15. Liability for fines, etc.
- Clause 21-16. Liability for social benefits for the crew
- Clause 21-17. Travel expenses for replacement crew
- Clause 21-18. Expenses for disinfection and quarantine
- Clause 21-19. Limitation due to other insurance, etc.
- Clause 21-20. Safety regulations/Ref. Clause 3-22 and Clause 3-25
- Clause 21-21. Assured's fault
- Clause 21-22. The insurer's rights in the event of liability
- Clause 21-23. Liability for loss that occurred during other transport, etc.
- Clause 21-24. Limitation of liability for fishing vessels
- Clause 21-25. Limitation of the insurer's liability for measures to avert or minimise loss
- Clause 21-26. The sum insured as a limit to the insurer's liability
- Clause 21-27. Deductible
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Chapter 17: Insurance for fishing vessels
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Section 2-3: Damage
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General
This Section is a complete incorporation of the Clauses of Chapter 12 which are relevant for hull insurance of MOUs. The Clauses are amended as found necessary to suit repairs of MOUs which may be complex and involve significant costs and expenses and require different considerations than repairs of conventional vessels’ damages. An MOU will, in addition to its hull and machinery, also have special equipment and/or processing plant which represent high proportions of the MOU’s total value. Remote areas of operation compared to possible suitable repair facilities may result in significant costs in moving the MOU to a repair facility. Equipment and processing facilities for floating production units will often be specially designed for that particular unit and damage repair options of such facilities may for various reasons be limited. The availability of replacement items for damaged parts which need to be replaced will often be limited and involve extensive delivery time; 6 to 12 months is not unusual.
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Clause 18-17. Main rule concerning liability of the insurer
View Clause Go to Plan pageThis 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.
According to the Commentary to Cl. 12-1 the “insurer’s liability covers not just the actual invoice from the repair yard, but also other expenses necessary to have the repairs carried out. These are expenses particularly associated with the repairs in question, as well as accessory expenses applicable to any and all repairs which must be apportioned as common expenses pursuant to Cl. 12-14 if non-recoverable work is carried out at the same time”.
For MOUs at offshore locations, disconnection from other field infrastructure or equipment may be necessary to conduct damage repairs. Such operations will normally affect equipment insured under the hull insurance as well as equipment that is uninsured, insured under different policies, and/or equipment and other assets owned by third parties.
The hull insurance cover will respond to costs which are strictly necessary for repairs and/or replacement of insured property. Such costs may include depressurizing of equipment, safe disconnection for repairs and/or re-connection of the insured MOU upon return, and other necessary accessory expenses incurred to enable repairs of insured property.
Other consequential or indirect losses and costs may be incurred in connection with such disconnection and re-connection and/or during the period of damage repairs. Such costs may include maintenance and preservation of uninsured field properties, including flushing and inhibiting of production risers, as well as other costs which are not strictly necessary for repairs of insured property. Such costs are not recoverable under the hull insurance, cf. the exclusion in Cl. 4-2. The same applies to costs related to maintaining and preserving production capacity and/or safety of wells during damage repairs.
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Clause 18-18. Compensation for unrepaired damage
View Clause Go to Plan pageThis 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 18-18. 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...
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Clause 18-19. Inadequate maintenance
View Clause Go to Plan pageThis 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 18-19. 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 18-20. Error in design, etc.
View Clause Go to Plan pageThis 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 18-20. 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...
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Clause 18-21. Losses that are not recoverable
View Clause Go to Plan pageThe 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. 18-21 (a) regulating the coverage of crew wages and maintenance costs and Cl. 18-21 (b) regulating the exclusion of ordinary expenses connected with the running of the MOU during the period of repair.
According to Cl. 12-5 (a) the insurer does not cover costs of wages and maintenance of the crew during the period of repairs. However, in connection with insurance of MOUs the insurer has in practice covered costs of wages and maintenance of the crew that has been engaged in repair work or otherwise necessary, e.g. marine, nautical, etc. crew, during repairs carried out at sea. The reason is that often it is less costly to carry out the repairs while the MOU is offshore or in sheltered waters nearby its offshore location rather than to bring it over a long distance to a shore repair facility/yard. Hence, what was previously provided in Cl. 18-12 of the 1996 Plan is in the 2013 Plan stated in sub-clause (a).
Cl. 18-21 (b): In connection with damage to an MOU, it is conceivable that the assured engages a supply vessel which is under contract with him or the licence operator and is therefore in the area, to be used during offshore repairs. If the assured incurs additional expenses in this connection, his expenses must be covered by the insurer as part of the costs of repairs. When repairs are carried out at sea, either at the offshore location or in sheltered waters, insurers will also be liable for the costs associated with catering, accommodation and safety services for the crew engaged or necessary for the repairs at sea.
Cl. 18-21 (c): This sub- clause was new in the 2013 Plan and is verbatim the same as Cl. 12-5 (b). Reference is made to the Commentary to Cl. 12-5 (b).
Cl. 18-21 (d): This sub-clause was new in the 2013 Plan and corresponds to Cl. 12-5 (c). Reference is made to the Commentary to Cl. 12-5 (c). However, as MOUs do not carry passengers under issued passenger tickets, but will accommodate third party personnel and occasional visitors which are not part of the MOU’s regular crew, “passengers” are replaced by “third party personnel or visitors”. Such personnel or visitors include the license operator’s, the operator’s contractors and sub-contractors personnel, as well as personnel of the MOU owner’s contractors or sub-contractors, unless the MOU owner contractually has assumed the responsibility for such personnel. This does not apply to repairers personnel.
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 18-22. Damage to the drill string
View Clause Go to Plan pageThis 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 … whilst in the well or in the water”. Unless due to “external circumstances, for which the drilling contractor is liable under contractual conditions which are regarded as customary within the area concerned”.
“External circumstances” comprises typically fire, blow-out, cratering, lightning, explosions above the seabed, floods, tidal waves, ice, tornadoes, storms, cyclones, hurricanes, earthquakes or collisions. The underlying drilling contracts places the risk of such causes of damage with the owner of the MOU/the drilling contractor, while the licensees/operator cover other damage. Damage attributable to wear and tear, inadequate maintenance, etc, or to the fact that the drill string for other reasons cannot take the strain to which it is subjected during the performance of the work will in this context not be deemed as “external circumstances”. However, the term “external circumstances” also covers more ordinary heavy-weather damage than hurricanes, storms, etc., e.g. where high seas or difficult current conditions result in damage to or loss of the drill string. The term does not, however, cover the situation where the drill string is left in the well due to technical problems in retrieving it, or where the string gets jammed in connection with ordinary drilling. Nor do “external circumstances” comprise damage to the string as a result of negligence on the part of the drilling contractor, or someone for whom he is liable. However, if the direct cause of damage is fire, etc., and the fire is caused by negligence, the insurer will not be free from liability. Here the question of liability must be evaluated under the general rules in Chapter 3 relating to the duties of the assured.
The cover only extends to external circumstances for which the drilling contractor is liable according to customary contractual practice within the relevant area. If, for example, it is customary for the license operator to assume the risk in respect of damage caused by fire or explosion, this damage does not concern the insurer. In that event, it is irrelevant whether the drilling contractor under the relevant contract has accepted this risk if this is contrary to customary contractual practice.
The limitation applies to the drill string, as installed, including any of its component parts such as weights, stabilisers, thread connections etc.
Sub-clause (b) excludes from cover drill strings “left in the well for purposes other than drilling” if a decision is made to that effect by the persons who are responsible for the drilling operations. The provision does not apply to cases where attempts to retrieve the string from the hole are abandoned due to technical difficulties which this entails. In such cases the string shall be considered lost, and the loss is, as mentioned, excluded from cover according to sub-clause (a). The purpose of leaving the string must be that it is intended to serve as tubing for gas or oil produced from the hole. This means that it is no longer part of the drilling equipment, and it should for that reason no longer be covered. Effectively, this also follows from the principle stated under Cl. 18-3 (b) (in respect of mooring/anchoring system which is left behind for other use than the insured MOU): the drill string left behind no longer constitutes part of the “equipment” of the MOU.
The limitations in Cl. 18-19 to Cl. 18-21 apply in addition to the limitations in Cl. 18-22.
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...
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Clause 18-23. Deferred repairs
View Clause Go to Plan pageThis 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 18-23. 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 18-24. Temporary repairs
View Clause Go to Plan pageThis 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 (a), sub-clause 3, the 20% p.a. shall be calculated of the sum insured for the part to which the loss or damaged occurred.
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 it saves through the...
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Clause 18-25. Costs incurred in expediting repairs
View Clause Go to Plan pageThis 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 (a), paragraph 3, the 20% p.a. shall be calculated of the sum insured for the part to which the loss or damaged occurred.
Clause 18-25. Costs incurred in expediting repairs
If the assured, in order to limit its 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 f...
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Clause 18-26. Repairs of an MOU that is condemnable
View Clause Go to Plan pageThis 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 18-26. 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 18-27. Survey of damage
View Clause Go to Plan pageThis 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 18-27. 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,...
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Clause 18-28. Invitations to tender
View Clause Go to Plan pageThis 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 18-1 (a), sub-clause 3, the 20% p.a. shall be calculated of the sum insured for the part to which the loss or damaged occurred.
Clause 18-28. Invitations to tender
The insurer may demand that tenders be obtained from repairers of its 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...
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Clause 18-29. Choice of repairers
View Clause Go to Plan pageThis 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 18-29. Choice of repair yard
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 yard 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...
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Clause 18-30. Removal for repairs
View Clause Go to Plan pageThis 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. It follows from the Commentary on Cl. 12-13 that the insurer’s liability for “removal” covers the entire deviation to and from the repair yard, which must imply that basically the insurer is liable for such removal back to the place of operation. However, this presupposes that the damage occurs after the MOU has arrived at the place of operation. If the damage occurs prior to that point in time, e.g. during towage from land to the first place of operation, the insurer’s liability is limited to the removal back to the place of damage, and not to the place of operation.
Liability during removal also covers wages and maintenance of the crew, provided that the crew is “necessary”, cf. for further details Cl. 12-13 and the Commentary on that provision.
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...
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Clause 18-31. Apportionment of common expenses
View Clause Go to Plan pageAn editorial amendment was made to the Clause in the 2019 Version.
The Clause regulates the apportionment of repair expenses that are common to work the insurers are liable for and work not covered by the insurance.
According to the first sentence, expenses that are common to recoverable and non-recoverable work shall be apportioned based on the cost of each category of work. The second sentence makes an exception for common expenses which depend on the length of the period of repairs, whereby the costs shall be apportioned over the time each category of work would have taken if it had been carried out separately.
The wording of the corresponding provision in Chapter 12, i.e. Cl. 12-14, was amended in 2016 where all common expenses with the exception of dry dock charges and quay rental shall be apportioned on the basis of the cost of each category of work. However, repairs of an MOU are to a certain extent different from repairs of trading vessels. It is more common to arrange for repairs offshore, with vessels and equipment where costs are based on the rental time. As such there will be more types of common expenses that reasonably and logically should be apportioned over time. Thus the wording of Cl. 18-31 provides a broader basis for apportionment of common expenses over time.
Where equipment or vessels are hired on time, there might still be lump sum costs involved, for example mobilization and demobilization fees. Here the lump sum costs shall be apportioned on a cost basis and hire on a time basis.
If the time related common expenses are so minor that it is not worthwhile making an extra calculation of them, these costs may on a discretionary basis be apportioned based on the costs of each category of work, provided that this is considered reasonable.
With exception of the broader basis for apportionment of common expenses under this Clause, the adjusting practice as explained in the commentary to Cl. 12-14 is relevant and reference is made to what is said there.
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...
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Clause 18-32. Ice damage deductions
View Clause Go to Plan pageThe sub-clause 1 was new in the 2013 Plan with further amendments in the 2019 Version 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 Section 2 of Chapter 18, hence the incorporation of Cl. 12-15 is made into Cl. 18-32.
Clause 18-32. Ice damage deductions
Damage due to striking against or contact with ice, excluding collision with icebergs on the open sea, is recoverable subject to any deduction stated in the insurance contract. To this shall be added the deductible referred to in Cl. 18-33, sub-clause 1. The following are recoverable without...
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Clause 18-33. Deductible
View Clause Go to Plan pageThis 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 damage arising from the entire atmospheric disturbance shall be regarded collectively as one casualty. This provision supersedes the rule in Cl. 18-34, sub-clause 2. ”Atmospheric disturbance” means a low atmospheric pressure which results in a severe storm pattern with strong winds combined with heavy seas, rain, snow, sleet, hail, ice, thunder and lightning, hurricane, typhoon, cyclone or tornadoes etc., as defined by a public weather bureau.
As in Chapter 12, the deductible must be calculated for each MOU. In the event of damage to several MOUs, an equivalent number of deductibles shall be calculated in the settlement.
It follows from the reference to Cl. 18-34 that no deductible shall be calculated in the event of a total loss of the insured MOU.
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...
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Clause 18-34. Basis for calculation of deductions according to Clauses 18-32, 18-33 and 3-15
View Clause Go to Plan pageThis 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.
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...
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...