The Norwegian Marine Insurance Plan

1
The Norwegian Marine Insurance Plan

• A brief introduction by CEFOR

2
The Norwegian Marine Insurance Planor simply
the Plan

• A unique set of insurance conditions for hull and
  machinery, loss of hire and war risks,
• The marine perils cover is based on the all risks
  principle, which means that every risk is covered
  unless specifically excluded,
• An agreed document, drafted by a committee of
  shipowners and insurers under the auspices of a
  professor of law at the Scandinavian Institute of
  Maritime Law at the University of Oslo, Norway

3
The Plan cont.

• The Plan is supported by the Commentary
• clarifies many issues of interpretation and
  practice, reducing the probability of disputes
• The Plan is designed to support the Nordic claims
  handling model
• entails active support and cooperation by the
  insurer when dealing with claims
• The Plan is a tried and tested solution
• which gives great certainty to is users

4
The structure of the Plan

• Part I contains common rules for all types of
  insurance dealt with in the Plan such as general
  rules relating to the scope of the insurance,
  the liability of the insurer and general
  provisions for the settlement of claims
• Part II contains the rules for hull and
  machinery insurance
• Part III contains the rules for loss of hire
  (LOH), war risks and total loss only insurances
  
• Part IV contains a cover for fishing vessels and
  small freighters, builders risk
  insurance and insurance of offshore vessels

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Perils covered by the Plan - I

• Marine perils
• The Plans marine perils cover is a so-called all
  risks covers, which means that all marine perils
  are covered, unless specifically excluded, cf.
  Clause 2-8. In order to reject a claim, the
  insurer must prove that a relevant exclusion
  applies, cf. Clause 2-12.
• Excluded perils are
• war risks
• intervention by a State power
• Insolvency
• nuclear radiation or weapons, chemical,
  biological, bio- chemical, or electromagnetic
  weapons as described in the RACE II Clause

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Perils covered by the Plan - II

• War Risks
• The Plans war risk cover is a named perils
  cover, cf. Clause 2-9.
• War perils covered
• war and war-like conditions, military exercises
  and astray weapons of war (mines and torpedoes)
• capture at sea, confiscation and other similar
  interventions by a foreign State power
• riots, strikes, lockouts, sabotage, acts of
  terrorism
• piracy and mutiny
• measures taken by a State power to avert or limit
  damage caused by the abovementioned risks
• Excluded perils
• Insolvency
• nuclear radiation and weapons mentioned in the
  RACE II Clause

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Losses and costs covered by the Plan

• Total loss
• Damage
• Measures taken to avert or minimise loss,
  including salvage and general average, Clauses
  4-7 to 4-12
• Costs of providing security, etc., Clause 4-3
• Costs of litigation, Clause 4-4
• Costs in connection with the settlement of
  claims, Clause 4-5
• Costs in connection with measures relating to
  several interests, Clause 4-6
• NOT covered unless agreed by the parties
• General financial loss
• Loss due to unfavourable trade conditions
• Loss of markets
• Loss resulting from delay

8
Hull Insurance general rules, Chapter 10

• What the insurance covers objects insured
• The ship (hull and machinery)
• Equipment on board and spare parts belonging to
  or used by the assured (borrowed, leased etc.)
• Bunkers and lubricating oil on board
• Objects not covered
• Supplies, engine and deck accessories etc.
  intended for consumption
• Boats and equipment used for fishing, whaling,
  sealing, etc.
• Loose cargo containers and loose cargo equipment

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Hull Insurance cover options, Chapter 10

• Full cover, Clause 10-4
• Covers total loss, damage and collision liability
  in accordance with Chapters 11 to 13
• Total loss only (TLO), Clause 10-5
• Total loss as defined in Chapter 11
• Total loss and general average contribution,
  Clause 10-6
• As defined in Chapters 11 and 4
• Total loss, general average contribution and
  collision liability, Clause 10-7
• As defined in Chapters 11, 4 and 13
• Stranding terms, Clause 10-8
• Cover as in Clause 10-7
• Plus losses arising from the vessel having run
  aground, capsized, collided or suffered fire or
  explosion

10
Hull Insurance Total Loss, Chapter 11

• The main rule - the ship is an actual total loss
  if the ship can not be recovered or is damaged
  beyond repair, Clause 11-1.
• The ship is a constructive total loss (CTL) if
  the cost of repairing the ship amounts to at
  least 80 of the insurable value or the market
  value, whichever is the higher.
• The costs to be included are defined in Clause
  11-3. The calculation is made after the ship has
  been salvaged and salvage costs are not taken
  into account.
• The ship is deemed to be a CTL if it is missing
  or abandoned for more than three months in
  accordance with the terms in Clause 11-7.
• The hull cover is extended until the ship drops
  anchor or is moored at the first port if the
  insurance expires during the period of missing or
  abandonment.

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Hull Insurance Damage I, Chapter 12

• The main rule is that the insurer is liable for
  the costs of repairs necessary to restore the
  ship to the condition it was in prior to the
  damage, Clause 12-1
• Compensation for unrepaired damage may be claimed
  for when the insurance period expires, Clause
  12-2
• The cost of repairs plus depreciation can be
  claimed in cases where it is impossible to make
  complete repairs, Clause 12-1 subparagraph 3

12
Hull Insurance Damage II, Chapter 12Costs of
speeding up repairs

• Clause 12-7. Costs up to the amount saved by
  postponing permanent repairs are covered or up to
  20 percent of the hull valuation for the time the
  assured saves, if the latter is higher.
• Clause 12-8. Costs of speeding up repairs by
  extraordinary measures are covered up to 20
  percent of the hull valuation for the time the
  assured saves.

13
Hull Insurance Damage III, Chapter 12Choice of
repair yard, Clauses 12-11 and 12-12

• The assured chooses the repair yard but the
  Insurer may insist on tenders being taken.
• Time lost waiting for tenders in excess of 10
  days is compensated according to the 20 rule.
• The Assured may choose a more expensive repair
  alternative if the additional cost is justified
  by the value of the time saved calculated in
  accordance with the 20 rule.

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Hull Insurance Standard Deductibles, Ch. 12

• Subject to agreement between the parties.
• Clause 12-18. The deductible does not apply to
  claims settlement costs or measures to avert or
  minimise loss.
• Clause 12-18. Heavy weather damage or ice damage
  occurring on a port to port voyage is regarded as
  one casualty.
• Clause 12-16 states how machinery damage
  deductibles are to be applied.
• Clause 12-15. Damage due to striking against or
  contact with ice is subject to a deductible of ¼
  of the gross claim. The deductible does not apply
  to collisions with ice bergs in open sea.

15
Loss of Hire Insurance (LOH), Chapter 16

• Covers loss of a vessels income arising as a
  consequence of physical damage to the vessel that
  is recoverable under the Plans hull cover or
  other hull covers if agreed
• Also covers time lost as a consequence of 1)
  stranding, 2) GA events, 3) trapping by physical
  obstructions, or 4) cargo removal, cf. Clause
  16-1
• A fixed daily amount may be agreed under Clause
  16-6

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Loss of Hire Insurance (LOH), Chapter 16unique
features

• Time lost is calculated in days, hours and
  minutes.
• Slow steaming and other cases of partial
  operation can be transformed into the appropriate
  amount of time lost.
• Clause 16-9 coordinates LOH with the choice of
  repair yard rules in Chapter 12. The assured is
  never faced with a gap in the cover. The LOH
  insurer is liable for time lost during the
  shortest repair, the costs of which the HM
  insurer is obliged to cover in full.

17
Total loss only insurances, Chapter 14

• Clause 14-1 offers insurance against total loss
  excess collision liability, so-called hull
  interest insurance.
• Clause 14-2 offers insurance against loss of
  long-term freight income, so-called freight
  interest insurance.
• Hull interest insurance may not exceed 25 of
  the assessed insurable value under the hull
  insurance. The same applies to freight interest
  insurance. Cf. Clause 14-4.

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War Risk Insurance, Chapter 15

• Chapter 15 deals with war risk insurance. All
  interests are included in one package.
• War risks as defined in Clause 2-9.
• The losses (interests) covered are
• HM - total loss, damage and collision liability,
  
• hull interest, freight interest,
• loss of hire,
• owners liability and occupational injuries

19
Claims handling according to the Plan - I

• Recognising that ships and fleets in most cases
  are covered by
• several insurers, the Plan has rules for
  efficient claims handling
• The assured appoints a Claims Leader (CL) whose
  role is defined in Chapter 9. The CL has the
  overall responsibility for proper and efficient
  claims handling on behalf of the insurers
• The CLs decisions regarding salvage, removal of
  the ship and repairs are binding on the
  co-insurers, cf. Clauses 9-5 and 9-6
• The CL is entitled to make decisions regarding
  claims against the assured from third parties
  when it comes to legal proceedings, appeals and
  amicable settlements

20
Claims handling according to the Plan II

• The CL is entitled to provide a guarantee or
  counter-guarantee on behalf of the insurers for
  the assureds liability arising from collision,
  striking or salvage.Provided the co-insurers are
  notified of the guarantee, they are not entitled
  to pay compensation for the liability directly to
  the assured, cf. Clause 9-7
• A unique feature of the Plan is the insurers
  duty to pay interest on the compensation as from
  1 month after the claims notice was sent to the
  insurer. Clause 5-4 gives rules for fixing the
  interest level and how interest is calculated