Section 2: Perils insured against, causation and loss

• Clause 2-8. Perils covered by an insurance against marine perils

  An insurance against marine perils covers all perils to which the interest may be exposed, with the exception of:

  • perils covered by an insurance against war perils in accordance with Cl. 2-9,
  • capture at sea, confiscation, expropriation and other similar interventions by own State power provided any such intervention is made for the furtherance of an overriding national political objective. Own State power is understood to mean the State power in the vessel’s State of registration or in the State where the major ownership interests are located. Own State power does not include individuals or organisations exercising supranational authority,
  • requisition by State power,
  • insolvency or lack of liquidity of the assured or the operation of ordinary legal process to enforce payment of any fine, penalty, debt or right to security unrelated to a claim or liability covered by the insurance,
  • perils covered by the RACE II Clause:
    1. ionising radiations from or contamination by radioactivity from any nuclear fuel or from any nuclear waste or from the combustion of  nuclear fuel, 
    2. the radioactive, toxic, explosive or other hazardous or contaminating properties of any nuclear installation, reactor or other nuclear assembly or nuclear component thereof, 
    3. any weapon or device employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter,
    4. the radioactive, toxic, explosive or other hazardous or contaminating properties of any radioactive matter. The exclusion in this sub-clause does not extend to radioactive isotopes, other than nuclear fuel, when such isotopes are being prepared, carried, stored, or used for commercial, agricultural, medical, scientific or other similar peaceful purposes,
    5. any chemical, biological, bio-chemical, or electromagnetic weapon.
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  Clause 2-8. Perils covered by an insurance against marine perils

  The Commentary was amended in 2016 to remove some history and reference to the special cover provided by the Norwegian Shipowner’s Mutual War Risks Insurance Association in Chapter 15.  Letter (b) was amended in the 2019 Version and split into two letters (b) and (c) whereas the other letters (c)...

• Clause 2-9. Perils covered by an insurance against war perils

  An insurance against war perils covers:

  • war or war-like conditions, including civil war or the use of arms or other implements of war in the course of military exercises in peacetime or in guarding against infringements of neutrality,
  • capture at sea, confiscation, expropriation and other similar interventions by a foreign State power, provided any such intervention is made for the furtherance of an overriding national or supranational political objective. Foreign State power is understood to mean any State power other than own State power as defined in Cl. 2-8 (b), second sentence, as well as organisations and individuals exercising supranational authority or who unlawfully purport to exercise public or supranational authority, 
  • riots, sabotage, acts of terrorism or other social, religious or politically motivated use of violence or threats of the use of violence, strikes or lockouts,
  • piracy and mutiny,
  • measures taken by a State power to avert or limit damage, provided that the risk of such damage is caused by a peril referred to in sub-clause 1 (a) - (d).

  
  The insurance does not cover:

  • insolvency or lack of liquidity of the assured or the operation of ordinary legal process to enforce payment of any fine, penalty, debt or right to security unrelated to a claim or liability covered by the insurance,
  • perils covered by the RACE II Clause:
    1. ionising radiations from or contamination by radioactivity from any nuclear fuel or from any nuclear waste or from the combustion of nuclear fuel,
    2. the radioactive, toxic, explosive or other hazardous or contaminating properties of any nuclear installation, reactor or other nuclear assembly or nuclear component thereof,
    3. any weapon or device employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter, 
    4. the radioactive, toxic, explosive or other hazardous or contaminating properties of any radioactive matter,
    5. any chemical, biological, bio-chemical, or electromagnetic weapon,
  • requisition by State power.
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  Clause 2-9. Perils covered by an insurance against war perils

  The Commentary was amended in 2016 to remove some history and references to the special cover provided by the Norwegian Shipowner’s Mutual War Risks Insurance Association in Chapter 15.  In addition, the Commentary was substantially amended in the 2019 Version in connection with the amendments to...

• Clause 2-10. Perils insured against when no agreement has been made as to what perils are covered by the insurance

  Unless otherwise agreed, the insurance covers only marine perils.

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  Clause 2-10. Perils insured against when no agreement has been made as to what perils are covered by the insurance

  This Clause is identical to Cl. 17 of the 1964 Plan. In practice, it will almost always be clear between the parties whether it is an insurance against war perils or an insurance against marine perils which is effected. Even though the provision is thus rendered less significant, the clarificatio...

• Clause 2-11. Causation. Incidence of loss

  The insurer is liable for loss incurred when the interest insured is struck by an insured peril during the insurance period.

  If an unknown defect results in damage to the insured vessel, the defect shall be deemed to be a marine peril that strikes the interest insured at the time the damage starts to develop.

  If unknown damage in one part of the vessel results in damage to another part or parts of the vessel, the original damage shall be deemed to be a marine peril that strikes the interest insured at the time the damage to the other part or parts starts to develop.

  Where a defect or damage existing at the inception of the insurance, which is known to the assured but not to the insurer, gives rise to damage (in the case of defects) or new damage to other parts (in the case of existing damage), the liability of the insurer shall not exceed the amount the assured would have been able to recover under the insurance on risk at the time the assured first acquired knowledge of the relevant defect or damage.

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  Clause 2-11. Causation. Incidence of loss

  The Commentary was amended in the 2019 Version. Introduction Cl. 2-11 regulates the issues of causation and incidence of loss. The provision firstly states the general requirement that there should be a causal connection between the insured peril and the loss suffered by the assured, the insured...

• Clause 2-12. Main rule relating to the burden of proof

  The assured has the burden of proving that it has suffered a loss of the kind covered by the insurance and of proving the extent of the loss.

  The insurer has the burden of proving that the loss has been caused by a peril that is not covered by the insurance, unless other provisions of the Plan provide to the contrary.

  The assured has the burden of proving that the loss has not been caused by such perils as are mentioned in Cl. 2-8 (e) and Cl. 2-9, sub-clause 2 (b).

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  Clause 2-12. Main rule relating to the burden of proof

  The wording of Cl. 2-12 has not been amended, but the Commentary has been rewritten for the 2013 Plan. Burden of proof rules identify which party in a legal dispute carries the risk that doubt exists in relation to facts that are essential for a party’s case. In insurance cases as in other privat...

• Clause 2-13. Combination of perils

  If the loss has been caused by a combination of different perils, and one or more of these perils are not covered by the insurance, the loss shall be apportioned over the individual perils according to the influence each of them must be assumed to have had on the occurrence and extent of the loss, and the insurer shall only be liable for that part of the loss which is attributable to the perils covered by the insurance.

  If a peril that is excluded from cover in Cl. 2-8 (e) and Cl. 2-9, sub-clause 2 (b), has directly or indirectly caused or contributed to the loss, the entire loss shall be attributed to that peril.

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  Clause 2-13. Combination of perils

  Sub-clause 2 was amended in the 2007 version. The Clause is otherwise identical to earlier versions of the 1996 Plan. The provision maintains the rule of apportionment as the causation principle when a loss is caused by a combination of perils, i.e. when a loss is caused partly by a peril covered...

• Clause 2-14. Combination of marine and war perils

  If the loss has been caused by a combination of marine perils, cf. Cl. 2-8, and war perils, cf. Cl. 2-9, the whole loss shall be deemed to have been caused by the class of perils which was the dominant cause. If neither of the classes of perils is considered dominant, both shall be deemed to have had equal influence on the occurrence and extent of the loss.

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  Clause 2-14. Combination of marine and war perils

  This Clause is identical to Cl. 21 of the 1964 Plan. The provision maintains the solution from the 1964 Plan with a modified dominant-cause rule for a combination of war and marine perils. The rule was introduced in connection with the revision in 1964 because the “free” rule of apportionment had...

• Clause 2-15. Losses deemed to be caused entirely by war perils

  War perils shall always be deemed to be the dominant cause of:

  • loss arising when the vessel is damaged through the use of arms or other implements of war for war purposes, or in the course of military manoeuvres in peacetime or in guarding against infringements of neutrality,
  • loss attributable to the vessel, in consequence of war or war-like conditions, having a foreign crew placed on board which, wholly or partly, deprives the master of free command of the vessel,
  • loss of or damage to a life-boat caused by it having been swung out due to war perils, and damage to the vessel caused by such a boat.
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  Clause 2-15. Losses deemed to be caused entirely by war perils

  This Clause is identical to Cl. 22 of the 1964 Plan. As mentioned above, the application of the modified dominant-cause rule in Cl. 2-14 will entail that the war peril must be deemed to be the dominant cause in all cases where the war peril must be accorded 60% weight or more in the course of...

• Clause 2-16. Loss attributable either to marine or war perils

  If it is evident that a loss has been caused either by marine perils, cf. Cl. 2-8, or by war perils, cf. Cl. 2-9, without it being possible to identify one or the other class as the more probable cause, the rule contained in Cl. 2-14, second sentence, shall apply correspondingly.

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  Clause 2-16. Loss attributable either to marine or war perils

  This Clause is identical to Cl. 23 of the 1964 Plan. Special problems arise when the casualty has occurred under such circumstances that it is uncertain whether it is attributable to marine or war perils. The 1964 Plan introduced a rule of apportionment which is maintained in the new Plan. If it ...

• Clause 2-17. Sanction limitation and exclusion

  This Clause shall be paramount and shall override any other clauses inconsistent therewith.

  No insurer shall be deemed to provide cover and no insurer shall be liable to pay any claim or provide any benefit hereunder to the extent that the provision of such cover, payment of such claim or provision of such benefit may expose that insurer or its reinsurers to any sanction whether primary or secondary, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, the United Kingdom, the United States of America or any State where the insurer or its reinsurers have their registered office or permanent place of business.

  In the event of the subject-matter insured having been engaged or engaging in any activity whatsoever that may expose the insurer or its reinsurers to any sanction whether primary or secondary, prohibition, restriction, law or regulation as described in sub-clause 1 above, the insurer shall be entitled to terminate the insurance by giving 14 days’ notice. Termination also applies to the rights of the mortgagee, but the insurer shall immediately notify the mortgagee of the termination.

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  Clause 2-17. Sanction limitation and exclusion

  The Clause was new in 2016, corresponding to the Cefor Sanction Limitation and Exclusion Clause of 2014 that was already widely used in the market. Similar clauses are used in the international marine insurance and reinsurance market, cf. Lloyd’s LMA 3100. Sub-clause 1 was amended in 2023. The...