The Nordic Marine Insurance Plan of 2013 The plan versus the Danish Marine Insurance Convention Seminar Copenhagen, 8 October 2012
Nordic Marine Insurance Plan of 2013 - NOSPL versus Danish Marine Insurance Convention of 2. April 1934 - DSK Danish Hull and Machinery Conditions - DAKA General Conditions - DAFÆ (both based on Danish Time Clauses - Hulls 1.1.1992(revised 1.1. and 30.6.1998) as an agreed document) Danish War Conditions - DAKR Danish Loss of Hire Conditions DATI Danish conditions for vessel under construction - DANY
Part one Introduction NOSPL clause 1-1 Chapter 1 DSK 107-108 Definitions of The Insurer The person effecting the insurance The assured Particular loss and particular damage Definitions of Particular loss and particular damage Partial loss as opposed to total loss
NOSPL clause 1-3 Sub-clause 1 The broker shall be deemed to be acting on behalf of the person effecting the insurance Sub-clause 2 The broker shall only be regarded as acting on behalf of the insurer if written instructions have been given by the insurer DSK No regulation
NOSPL clause 1-4 DSK Reference to jurisdiction and choice of law Reference to Norwegian law if leading Underwriters are non - Nordic No reference Policy clause usually refers to venue at the Maritime and Commercial court in Copenhagen.
Chapter 2 General Rules NOSPL clause 2-3 Assessed insurable value fixed at a certain amount is binding unless certain misleading information has been given but Sec.2 gives both parties the right to change the assessed insurable value if the value has changed significantly after entering the insurance contract DSK 10 Same No rule about misleading information The insurer must prove that the value is unreasonable higher than the insurable value The value is always binding for the assured
Perils insured against Marine Insurance NOSPL clause 2-8 An insurance against marine perils covers ALL PERILS but not: War perils (clause 2-9) Intervention by State power Insolvency Perils covered by RACE II DSK 50 - DAKA 1.2 An insurance covers ALL PERILS caused by a fortuitous accident but not: DAFÆ 4.4 no cover for war or seizure DAFÆ 3.2+ DAKR 1 Intervention by State power covered under certain conditions Insolvency is no fortuitous accident hence no cover Clause 370 in the policies exclude perils covered by RACE II
War insurance ( cf.chapter 15) NOSPL clause 2-9 An insurance against war perils includes (a) War or warlike conditions (b) Capture etc. (c) Riots, sabotage, terrorism etc. (d) Piracy and mutiny (e) Measures taken by State power DSK 75 Definition of war DAKR 1 subclause 1.1 and 1.2 More detailed definition of war including war or warlike events Riots, civil commondations, revolution, rebellion, insurrection, sabotage, vandalism, malicious damage Clause includes terrorism
War insurance cont. NOSPL clause 2-9 Sub-clause 1 (a) Includes damages due to arms used under military exercises in peacetime (war insurance) DAFÆ 4.4. Sub-clause 2 Includes damages due to arms without nuclear device not activated in wartime (marine insurance)
War insurance cont. DAKR 1 sub-clause 1.1 and 1.2. Cover only provided if weapon of war are used or the loss or damage is attributable to or otherwise occasioned by war There seems to be no demand for use of arms in NOSPL
War insurance cont. NOSPL clause 2-9 (d) piracy and mutiny Included in the war cover DAKR 1 Piracy or violent theft included in the war cover by special clause in the policies Piracy was in principal a civil risk but has been referred to war risk by clauses
Causation. Incidence of loss NOSPL clause 2-11 Sub-clause 1 contains the main rule: The insurer is liable for loss when the interest insured is struck by an insured peril DSK 50 The Underwriter covers any damage caused by a fortuitous accident afflicting the insured interest When the peril occurs When the damage strikes
Causation. Incidence of loss NOSPL clause 2-11 Sub-clause 2 If an unknown defect results in a damage to the vessel, the defect shall be deemed to be a peril that strikes at the time the damage starts to develope When the damage strikes
Combination of perils NOSPL clause 2-13 If the loss is caused by a combination of different perils, the loss shall be apportioned over the individual perils Main cause doctrine The main cause for the damage or loss will be predominant Danish Insurance practise Except Clause 2-8 (d) and 2-9 subclause 2 (b)(race II clause)
Combination of perils cont. NOSPL clause 2-14 and 2-16 Combination of marine and war perils coverage under the dominant peril or if no dominant peril equal coverage DSK No rule but reference to the main cause doctrine DAFÆ 4-4 sub-clause 4 and DAKR 3 equal coverage
Chapter 3 Duties of the person effecting the insurance and of the assured NOSPL clause 3-14 Loss of the main class Sub-clause 1 The vessel shall be classed with a classification society Sub-clause 2 the insurance terminates in the event of loss of main class Sub-clause 4 the insurance terminates when changing classification society DSK No explicit clause demanding classification DAFÆ 2.3 sub-clause 1 nr.1 the insurance terminates in the event of changing of society or of classification conditions, suspension, cancellation or withdrawal of the classification
Trading areas NOSPL clause 3-15 Sub-clause 1 Ordinary trading area Sub-clause 2 conditional trading areas additional premium + possibly other conditions BUT: deduction in compensation of 1/4 max $200.000 if insurer not informed but with consent of assured DAFÆ 7.3 The insurance covers navigation within the trading area specified in the policy (clause 301) Conditional trading areas additional premium BUT: No deduction in compensation in case of damage
Right of the insurer to demand a survey of the ship NOSPL clause 3-23 The insurer has the right during in insurance period to investigate the ship in order to verify if the ship meets the technical and operational requirements described by authorities or classification society if necessary discharging of cargo DSK No regulation
Breach of safety regulations NOSPL clause 3-25 If safety regulations have been breached, the insurer shall only be liable to the extent that the loss is not a consequence of the breach, or that the insured has not breached the safety regulation through negligence The concept seaworthiness is no longer used DSK 116 Safety regulations prescribed by public authorities- same as cl.3-25 DSK 49 Safety regulations given in the policy same as cl.3-25 DSK 114 Insurer not liable if the ship is not seaworthy on its departure from last port or place which may also be a breach of safety regulations
Chapter 4 Liability of the insurer NOSPL clause 4-5 Sub-clause 1 Necessary costs in connection with settlement of claims Sub-clause 2 Necessary expenses for assureds own surveyor if reasonable grounds for employment DSK DAKA 3.6 Sub-clause 1 Same Sub-clause 2 No cover for assured s own surveyor Policy clauses can provide cover
General Average NOSPL clause 4-8 Sub-clause 1 Underwriters liable for General Average contribution on vessel But: Also liable for contributions on freight and charterparty hire if assured is owner of these interests DSK DAFÆ 5.1 Same Contributions to be settled by the interest in question or by the insurer, who has insured this interest
General Average cont. NOSPL clause 4-8 Sub-clause 3 General Average absorption clause The insurer is liable, at assured s option, for (a) loss,damage,liability or costs up to amount in policy or (b) the ship s general average contribution DSK 51 Sub-clause 3 If no adjustment has been issued the insurer pays the estimated contribution according to Adjustment, if such an Adjustment had been issued Various policy clauses of General Average Absorption
General Average cont. Assumed general average (for ship in ballast) NOSPL clause 4-11 Compensation allowed except wages and maintenance but including interest as stated in the plan DSK 165 DAKA 6.1 Compensation allowed inclusive wages and maintenance but exclusive commission and interest
Section 4 The sum insured as the limit of the liability of the insurer NOSPL clause 4-18 Sub-clause 1 The insurer is liable for loss caused by any one casualty a) Up to the sum insured for loss b) Up to an equivalent amount for costs of measures taken to avert or minimise the loss c) Up to the sum insured for liability to third party in respect collision or striking DSK 61 DAKA 2.7 The insurer is liable for loss caused by any one casualty a) Up to the amount insured for loss b) Up to the amount insured for 1. general average contribution on ship 2. costs of measures taken to avert or minimise the loss if reasonable 3. compensation to third party in respect of collision or striking
Chapter 5 Settlement of claims NOSPL clause 5-2 The insurer shall issue the claims adjustment as prompt as possible. The insurer may give responsibility for drafting the adjustment to an average adjuster DSK 83.2 If one of the parties involved wishes so, responsibility for drafting is given to an average adjuster
Interest on compensation NOSPL clause 5-4 CIBOR, NIBOR, STIBOR, LIBOR + 2 % DSK 88-89 DAFÆ 6.3 sub-clause 2: DSK 88-89 deleted and no interest to be calculated Policy clauses on interest on compensation
Section 5 Limitation, etc. Time-limit for notification of a casualty NOSPL clause 5-23 Sub-clause 1 The assured loses the right to claim compensation if notice is not given within 6 months after assured, master or chief engineer became aware of the casualty Sub-clause 2 In any event the assured loses the right to claim compensation 24 months after the date of the casualty (unless for damages below waterline) DSK 77 No decidedly time-limit But notice of the casualty to be given to the insurer without unnecessary delay
Limitation NOSPL 5-24 Claim for compensation has a time-bar of 3 years after the assured acquired knowledge of the casualty but Time-barred 10 years after the casualty took place in any event DSK 105 Claim for compensation is time-barred 2 years after the assured acquired knowledge of the claim Time-barred 5 years after the claim was due
Chapter 7 Co-insurance of mortgagees NOSPL clause 7-1 Rights of a mortgagee is covered by this clause if the insured interest is mortgaged DSK 4 Sub-clause 3 The insurance covers only the interest of the party named in the policy, and a mortgagee is not automatically covered Mortgagee clauses are inserted in the policies
Co-insurance of mortgagees cont. NOSPL clause 7-4 Sub-clause 1 In the event of total loss, the mortgagee s interests take priority Sub-clause 2 Compensation for a single casualty exceeding 5% of the sum insured shall only be paid upon presentation of a receipted invoice for repairs carried out - unless accept from mortgagees DSK - Mortgagee clause In the event of total loss, compensation can only be paid with the consent of the (unpaid)mortgagee Compensation for a single casualty exceeding 10% of the sum insured shall only be paid with the consent of the mortgagee
Chapter 9 Relations between the claims leader NOSPL clause 9-2 Claims leader is entitled to certain steps mentioned in clauses 9-3 to 9-9 with binding effect on the coinsurers and co-insurers DSK - The relations are not regulated Policy clauses on co-insurers: Underwriters agree to follow the Leading Danish Underwriters in every respect and in all their decisions, agreements and settlements of every nature whatsoever.
NOSPL clause 10-1 Objects insured (a) The ship (b) Equipment on board and spare parts (c) Bunkers and lubricating oil Part 2 Chapter 10 Hull Insurance DSK 109 DAKA 1.1 Objects insured (a) Hull (b) Machinery (c) Equipment (d) Spare gear
Chapter 11 Total loss NOSPL clause 11-3 Conditions for condemnation: The costs of repairing 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 DSK 129 Conditions for condemnation: And The repairs costs exceeds the value in repaired condition deducted the value in damaged condition the repairs costs exceeds the insured value deducted the value in damaged condition
Total loss cont. NOSPL clause 11-7 Sub-clause 1 If ship is reported missing, the assured may claim total loss after 3 months If ship is reported missing in an icebound condition and is assumed to be recovered the time-limit is 12 months Sub-clause 3 If it is clear, before expiry of the time-limit, that ship will not be recovered total loss can be claimed at once DSK 130 Same No similar rule of extension of time-bar when ship is icebound No similar rule of cancelling time-limits
Chapter 12 Damage NOSPL clause 12-4 DAKA 2.1 Error in design If damage is a result of error in design or faulty material, the insurer is not liable for costs of renewing or repairing parts of hull, machinery or equipment, which were not in a proper condition Unless the parts are approved by the classification society Error in design: If damage is a result of error in design or faulty material, the insurer is not liable for costs of renewing or repairing parts of hull which is inflicted with error in design or faulty material Regardsless of approval of the classification society
Error in design cont. DAKA 2.1 If damage is a result of faulty material, the insurer is not liable for costs of renewing or repairing parts of the machinery Unless the parts are approved by the classification society If damage is a result of error in design, the insurer is only liable for specific damages to certain parts of the machinery And the parts are approved
Temporary repairs NOSPL clause 12-7 The insurer is liable for temporary repairs when permanent repairs cannot be carried out at the place where the ship is located In other cases, the insurer is liable for costs of temporary repairs up to the amount that is saved through postponement of permanent repairs Or up to 20% p.a. of the assessed insurable value for the time the assured saves, it the latter amount is higher DSK DAKA 3.8 Same Same No rule about 20% of the insurable amount
Ice damage deductions NOSPL 12-15 Damage due to striking against or contact with ice excluding icebergs in open sea is covered DAKA 4.11 Damage due to ice is only covered in certain areas, coverage outside these areas is subject to special agreement DAFÆ 8.5 contains a definition of ice damageany loss or damage caused by ice
Machinery damage deductions NOSPL clause 12-16 Sub-clause 1 Damage to machinery and accessories is recoverable subject to deductions set out in the policy. To this shall be added the deductible in cl. 12-18 Sub-clause 2 Damages excluded from machinery deduction DAKA 5.2 Sub-clause 1 Separate deductible for machinery claims Certain damages excluded from machinery deductible Sub-clause 3 The deductible referred to in 5.1 is not to apply where the machinery deductible is applied
Deductible NOSPL 12-18 Sub-clause 1 For each casualty the amount stated in the policy shall be deducted Sub-clause 3 Costs in connection with claims settlement, loss arising from measures to avert or minimise the loss, general average and salvage are recoverable without deductible DAKA 5.1 and 5.3 Same Same and fee for survey of damages carried out by classification society without deductible DAKA 3.5
Chapter 13 Liability of the assured arising from NOSPL clause 13-1 Sub-clause 1 The insurer will imdemnify the assured for loss which is a result of collision or striking by: the ship its accessories, equipment or cargo, or by a tug used by the ship collision or striking DAKA 4.1 Same the ship its accessories - -
Liability of the assured arising from collision or striking cont. NOSPL clause 13-1 Sub-clause 2 The insurer will not cover liabilities mentioned under (a) to (j) Some differences: (a) Liability under towage not covered (h) Liability for use of anchor, mooring and towing gear not covered DAKA 4.2 The insurer will not cover liabilities mentioned under 1 to 5. Liability under towage covered Liability for use of anchor, mooring and towing gear covered
Chapter 15 War risk insurance NOSPL clause 15-1 Sub-clause 2 If insurance against marine perils has been suspended, under circumstances mentioned in cl. 3-19, the insurance covers marine perils No rule
War cont. Interests insured NOSPL clause 15-2 Interests insured: total loss and damage collision liability hull and freight interests loss of hire P&I and occupational injuries DAKR General reference to the conditions in DSK, the vessel s Civil Marine Insurances, including clauses and special conditions Interest insured: total loss and damage collision liability - - P&I ( normally including occupational injuries) Hull/freight interests and loss of hire to be included only by special agreement
War cont. Intervention by foreign State power, piracy NOSPL clause 15-11 If the assured has been deprived of the ship by intervention by foreign State power or pirates, total loss may be claimed after 12 months DSK 132 DAKR refers to the marine conditions in DSK: If the ship has been placed under an embargo, seized or retained by foreign power, or captured by rebels or pirates, total loss may be claimed after 6 months
War cont. Section 6 Loss of hire NOSPL clauses 15-16 to 15-19 Section 6 deals with coverage of loss of hire under the war insurance No cover for loss of hire in Danish War conditions unless specifically agreed to include
Chapter 16 Loss-of-hire insurance NOSPL clause 16-7 Sub-clause 1 Each casualty is subject to a deductible period Sub-clause 3 Separate deductible for damage to machinery cf. cl. 12-16 but only if agreed on DATI 4.2 Same rule No separate deductible
Loss-of-hire cont. Loss of time after completion of repairs NOSPL clause 16-13 The insurer shall only be liable for loss of time after completion of repairs in 4 special situations mentioned under (a) to (d) DATI 1 The Loss of hire period runs while the vessel is being prevented from earning hire or freight But the insurer is not liable for loss due to the fact that the vessel has not entered any contract of affreightment after completion of damage repairs
Chapter 19 Builders risk insurance NOSPL clause 19-1 Perils covered: The insurance covers marine perils, and strikes and lock-outs Cl. 2-9 (c) strikes and lock-outs are considered war perils DANY 18 Perils covered: The insurance shall not cover war or warlike events Strikes and lock-outs are covered as the they are included under marine insurance
Builders risk insurance cont. NOSPL 19-5 Place of insurance (a) at the builder s yard or other premises in the port and in transit between these areas (b) during seatrials within a specified area DANY 4 Territorial scope at or about builder s yard or builder s shops within the place or port of contruction and in transit between these locations during 3 sea trials, during removal and shifting, and during lying outside the yards premises but within a specified area
Builders risk insurance cont. Insurable value NOSPL clause 19-10 When the subject-matter insured is ready for delivery the insurable value is the contractual building price less agreed deductions plus additional amounts mentioned in the policy and buyer s deliveries Before the subject-matter insured is ready for delivery the insurable value is as above with deductions for work not carried out and components not produced DANY 7 The sum insured shall be the final contract price including all adjustments hereto plus the value of the parts delivered by the Owners
Builders risk insurance cont. Total loss NOSPL clause 19-11 The assured may claim compensation for total loss if repairs costs of damage to the subject-matter insured exceeds 100% of the sum insured DANY No rule DANY 10 refers to DSK rules of total loss
Builder s risk insurance cont. NOSPL clause 19-12 The assured may claim compensation for total loss where the yard s obligation to deliver no longer applies as a result of (a) damage to or loss of the subject-matter insured (b) damage to the yard (c) damage to a subcontractor s yard DANY 10.1.1 The assured may claim compensation for total loss where the yard s obligation to deliver no longer applies as a result of Damage to the vessel
Builder s risk insurance cont. Limitation of the insurer s liability NOSPL clause 19-15 If the damage is a result of error in design, faulty workmanship or faulty material, the insurer is not liable for renewing or repairing the part or parts which were not in a proper condition DANY 9 (DSK 120 deleted) 9.3.c. underwriters agree to assume liability for damage arising from latent defect 9.3.d. underwriters agree to assume liability for damage arising from faulty design, except damage to such part as is effected by the fault in design.
Builders risk insurance Section 5. Supplementary covers NOSPL clauses 19-22 to 19-27 Section 5 deals with additional cover to the Builder s risk insurance There are no similar rules in the Danish Builders risk insurance Special clauses may be inserted in the policy
Builders risk insurance cont. Section 6. Supplementary cover for war risks NOSPL clauses 19-28 to 19-30 Section 6 deals with additional cover for war risks DANY 18 War exclusion etc. This insurance shall not cover (a) loss or damage resulting from war or warlike events (b) loss or damage resulting from riots, revolution, sabotage etc, where weapons of war are used (c) loss or damage resulting from seizure, detention etc. --------------------------------- War cover demands special agreement
The all risk principle and exclusions NOSPL clause 2-8 An insurance against marine peril covers all perils DSK 50 DAKA 1.2 An insurance covers all perils caused by a fortuitous accident
Exclusions NOSPL Clause 10-1 The insurance covers: (c) bunkers and lubrication oil DAKA 1.1 sub-clause 3 This insurance excludes owner s outfit and crew s effects
Exclusions NOSPL Clause 12-3 Inadequate maintenance etc. No cover for costs incurred in renewing or repairing part or parts of hull, machinery or equipment, which were in a defective condition as a result of wear and tear, corrosion, rot, inadequate maintenance and the like DAKA 2.2 Wear and tear etc. If damage is caused by wear and tear, age, rust, corrosion or the like, this insurance does not cover damage to the affected part of the vessel
Exclusions NOSPL Clause 12-4 Error in design, etc. If the damage is a result of error in design or faulty material, the insurer is not liable for costs of renewing or repairing the part or parts of the hull, machinery or equipment which were not in a proper condition, unless the part or parts in question had been approved by the classification society DAKA 2.1 Faulty design etc. Sub-clause 1 If damage is caused by faulty design or defective material, this insurance does not cover damage to the defective part of the vessel
Exclusions NOSPL Clause 12-4 DAKA 2.1 cont. Sub-clause 2 When the vessel is classified in the highest class with a recognized classification society and the part is approved, this insurance shall irrespective of the provisions of the first paragraph cover damage to the machinery due to:
NOSPL Clause 12-4 DAKA 2.1 cont. 1. Defective material irrespective of the defective part being damaged or not 2. Faulty design if found in boiler, air receiver or parts of the main engine and if resulting in bursting, breaking,cracking, bending or similar damage.
NOSPL Clause 12-4 DAKA 2.1 cont. By main engine to be understood the propelling machinery and any units appertaining to or working together with the propelling machinery, propeller, propellershaft and sterntube.
Exclusions NOSPL DAKA This means: Never coverage of the part or parts of the hull, which is not in a proper condition due to error in design or faulty material regardless of approval from the classification society
Damages to the machinery caused by faulty material is covered - as in NOSPL cl.12-4 Only certain type of damages to the machinery due to error in design are covered (bursting, breaking, cracking etc.) on certain parts of the machinery (boiler, air receiver etc.)
Exclusions NOSPL Clause 12-5 Losses that are not recoverable: (a) Crew wages and maintanance (b) Shifting, storing, removal of cargo (c) Accomodation of passengers DAKA 3.2 Wages and maintenance etc. are not covered DSK 150 shifting etc. of cargo is possibly covered by analogy DSK 63 presumably no cover of accomodation of passengers
Exclusions NOSPL Clause 12-5 (d) Objects that are normally replaced several times during the expected life of the ship (e) zinc slabs,magnesium slabs and the like DSK DAKA 2.3 General rule of loss or damage to moverable equipment shall only be covered if caused by: 1. Fire or explosion 2. Sinking, capsizing, stranding or grounding 3. Collision between vessel or its equipment with any fixed or floating object outside the vessel 4. Malicious damage or robbery incl. piracy 5. Theft from locked room not by crew or passengers
Exclusions NOSPL (f) Loss due to lubrication oil, cooling water or feed water being contaminated DSK - DAKA No special rule Compensated under the common rules incl. clauses of the insured s and the crew s negligence
NOSPL Bottom painting No rule, therefore bottom painting will be treated like all other painting Painting of new plates after damage repairs covered as part of the damage repairs DAKA 3.1 Bottom painting This insurance does not cover expenses in respect of scraping and painting of the vessel s bottom and waterline However: Painting of new plates after damage repairs covered as part of the damage repairs
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