Clause 4: Termination

This Clause 4 shall prevail notwithstanding any provision whether written typed or printed in this insurance inconsistent therewith.

Unless the Underwriters agree to the contrary in writing, this insurance shall terminate automatically at the time of

4.1 change of the Classification Society of the vessel, or change, suspension, discontinuance, withdrawal or expiry of her Class therein, provided that if the vessel is at sea such automatic termination shall be deferred until arrival at her next port.  However where such change, suspension, discontinuance or withdrawal of her Class has resulted from loss or damage covered by Clause 6 of this insurance or which would be covered by an insurance of the vessel subject to current Institute War and Strikes Clauses Hulls-Time such automatic termination shall only operate should the vessel sail from her next port without the prior approval of the Classification Society,

4.2 any change, voluntary or otherwise, in the ownership or flag, transfer to new management, or charter on a bareboat basis, or requisition for title or use of the vessel, provided that, if the vessel has cargo on board and has already sailed from her loading port or is at sea in ballast, such automatic termination shall if required be deferred, whilst the vessel continues her planned voyage, until arrival at final port of discharge if with cargo or at port of destination if in ballast.  However, in the event of requisition for title or use without the prior execution of a written agreement by the Assured, such automatic termination shall occur fifteen days after such requisition whether the vessel is at sea or in port.

A pro rata daily net return of premium shall be made.

Clause 4 was designed to protect insurers from unintended changes in the course of the insurance period.

Sub-Clause 4.1 deals primarily with situations where the Vessel’s class is changed, suspended, discontinued, withdrawn or has expired.

Sub-Clause 4.2 addresses other changes to the operation of the vessel, such as ownership change, management change, charter on a bareboat basis or requisition for title or use.

 

 

NMIP deals with termination issues and change of risk primarily in its Chapter 3 which outlines the duties of the person effecting the insurance and of the assured.

The main rule in respect of the loss of main class can be found in Cl. 3-14 which is to be read together with Cl.3-8 regarding alteration of risk. Cl. 3-14 notes that unless the insurer explicitly consents to a continuation, the insurance contract automatically terminates in the event of loss, suspension or withdrawal of main class.

 

The ITCH Sub-Cl. 4.1 provides that automatic termination of the cover for a sailing vessel is deferred until the vessel arrives at her next port. In a slightly more restrictive manner the NMIP provides that a vessel at sea will be held covered only until the ship arrives at the nearest safe port in accordance with the Insurers ‘instructions.

Under the NMIP the cover continues normally in the case of change of classification society, State of registration, manager of the ship or company responsible for technical/maritme operations of the ship. However, these changes are considered an alteration of risk, ref. Cl. 3-8, and the insurer may cancel the insurance by giving 14 days` notice, ref. Cl. 3-10.

 

If, subsequent to the conclusion of the insurance contract, the assured agrees to an alteration of risk the insurer is not automatically free from liability. In order to reject cover, the Insurer must prove that he would not have accepted the risk had he known that the alteration of risk would take place. If it can be proven that the insurer would accept the risk but on different terms, than such terms shall apply, ref. Cl. 3-9.

 

For further information, contact:

Viggo Thomas Kristensen
Phone: +47 23 08 65 54
E-mail: