Clause 3: Breach of warranty
Held covered in case of any breach of warranty as to cargo, trade, locality towage, salvage services or date of sailing, provided notice be given to the Underwriters immediately after receipt of advices and any amended terms of cover and any additional premium required by them be agreed.Compare
Comment to ITCH
This clause was designed to counteract the strict rules in MIA Sections 33 and 34 which state that any warranty must be strictly complied with and that the insurer is discharged from liability from the time of the breach. In the new MIA 2015 the liability of the insurer is not completely discharged rather suspended until the breach of warranty has been remedied. Nor may the insurer avoid liability for losses that occur after the breach of warranty but which are unrelated to the matters dealt with in the warranty.
The ITCH Cl.3 requires that the assured give immediate notice after receipt of advices and in the case of e.g. a breach of trading warranties the assured will be without cover for losses related to the increased risks that are typical for the conditional or excluded area.
There are no directly corresponding clauses in NMIP, however in Chapter 3, several clauses deal with issues relating to change of risk including navigation outside normal trading limits.
An alteration of the risk occurs when there is a change in the circumstances which, according to the contract, are to form the basis of the insurance as defined in Cl. 3-8. The assured shall notify the insurer without delay, cf. Cl. 3-11. The consequences of a change in risk are dealt with in Cl. 3-9 and Cl. 3-10. However, the most practical cases are dealt with specifically in clauses 3-14 to 3-21.
In the case of trading areas Cl. 3-15 states that the person effecting the insurance shall notify the insurer before the ship proceeds beyond the ordinary trading areas as defined in the Appendix to the NMIP.
The vessel is held covered for trade in the conditional trading areas, but if damage occurs while the ship is in a conditional area with the consent of the assured and without notice having been given, the claim shall be settled subject to a deduction of one fourth, maximum USD 200,000. If the insurer has been duly notified of trade within the conditional trading areas, the insurance remains in full force and effect cf. Cl. 3-15, sub-clauses 3 and 4.
If the vessel proceeds into an excluded trading area, the insurance is suspended, unless the insurer has given his consent in advance. The insurance will again come into effect if the vessel leaves the excluded area before the insurance period expires cf. Cl. 3-15, sub-clause 5.