Commentary

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Section 6: Supplementary cover for war risks

The supplementary cover for war risk under the builders´ risks insurance contract has been tied to Chapter 15 of the Plan. The war risks cover is set out in three Clauses: Cl. 19- specifies the perils insured, Cl. 19-30 prescribes rules regarding the insurance period, and Cl. 19-31 states which rules from Chapters 15 and 19 apply correspondingly to the war risk insurance.

  • Clause 19-28. Perils insured

    The range of perils insured under the builders’ risks insurance contract has been reduced as regards war perils, cf. Cl. 19-1. The main rule is that only marine perils are covered by the insurance. Cl. 19-1 refers to Cl. 2-8, which means that the distinction between marine perils and war perils applied in builders’ risks insurance basically also concords with the provisions of the Plan. An exception is damage arising from strikes and lockouts. Under the builders’ risks insurance, these two elements have been moved from the range of war perils insured to civil perils. As a consequence, it is not necessary to include strikes and lockouts in the supplementary cover for war perils under the present Clause. 

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    Clause 19-28. Perils insured

    The insurance covers war perils, cf. Cl. 2-9, with the exception of strikes and lock-outs.

  • Clause 19-29. Insurance period

    Sub-clause 1 states that the insurance does not attach until the subject-matter insured has been launched. While the subject-matter insured is on land it thus has no war risk cover. The limitation has to do with the fact that it is not until after the subject-matter insured has been launched that it can be moved out of the war zone. However, the ordinary builders’ risks insurance against marine perils also covers strikes and lockouts so that the subject-matter insured is protected against these perils whilst in dry-dock, cf. above under Cl. 19-1.

    The Committee considered extending the war risk insurance to cover the entire building period, thereby achieving a distinction between marine perils and war perils which concords with Cl. 2-8 and Cl. 2-9 of the Plan. However, it is difficult to implement such a solution because the reinsurance market has so far not been willing to reinsure such cover. Moreover, the condition that the subject-matter insured must be launched concords with international builders’ risks conditions.

    Sub-clause 2 differs from sub-clause 1, and states that machinery, parts and materials are not covered by the war risks insurance until the parts, etc., are on board the subject-matter insured.

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    Clause 19-29. Insurance period

    The insurer’s liability attaches when the subject-matter insured has been launched. However, for machinery, components and materials liability does not attach until they have been placed on board the launched subject-matter insured.

  • Clause 19-30. Other applicable provisions

    Sub-clause 1 states that the provisions in Sections 1 to 4 shall apply to the war risks insurance. The war risks insurance thus partly covers hull insurance, partly damage and costs recoverable under Section 3, and partly liability insurance for the yard under Section 4.

    Sub-clause 2 refers to Cl. 15-5 concerning the outbreak of war between the major powers, which entails the immediate termination of the insurance in the event of a war or war-like conditions between the powers specified in Cl. 15-5.

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    Clause 19-30. Other applicable provisions

    The rules in Chapter 19, Sections 1 to 4, shall apply correspondingly to this insurance. The insurance is also subject to Cl. 15-5, Cl. 15-6 and Cl. 15-8.