Clause 7-1. Rights of a mortgagee against the insurer
If the interest covered by the insurance is mortgaged, the insurance also covers the mortgagee’s interest, but the insurer may invoke the rules relating to identification in Cl. 3-36 to Cl. 3-38.
If the insurer has been notified of the mortgage, the rules contained in Cl. 7-2 to Cl. 7-4 shall apply. If the co-insurers are represented by a claims leader, it is sufficient that such notice is submitted to the claims leader, cf. Cl. 9-2, sub-clause 3 (a). The notice takes effect from the time it reaches the insurer or the claims leader.
The insurer shall inform the mortgagee that it has been notified about the mortgage as per sub-clause 2 above. If the co-insurers are represented by a claims leader and the claims leader was provided such notification, the claims leader shall convey such information to the mortgagee.
Any special requirements of the mortgagee to be included in the insurance contract other than the rules contained in Cl. 7-2 to Cl. 7-4 shall not take effect unless and until they are specifically agreed by the insurer. If the co-insurers are represented by a claims leader, the claims leader is authorized to accept such special requirements on behalf of the co-insurers, provided that the special requirements are within customary market practice according to Cl. 9-2, sub-clause 3 (b).
If a vessel is insured as part of a fleet, each of the vessels thereunder shall be deemed to be separately insured in respect of: (i) amendment or cancellation (cf. Cl. 7-2), and (ii) set-off (cf. Cl. 7-4, sub-clause 6).
Clause 7-2. Amendments and termination of the insurance
If the insurance contract has been amended or terminated, the rights of the mortgagee shall not be affected unless the insurer has given the mortgagee specific notice of not less than fourteen days. However, this shall not apply to
- termination due to the risk of sanctions exposure cf. Cl. 2-17, or
- termination in the event of loss of the main class cf. Cl. 3-14, or
- if the insurance ceases to be in effect as per Cl. 3-15 and Cl. 15-9, or
- suspension due to requisition cf. Cl. 3-17, or
- termination due to change of ownership cf. Cl. 3-21, and
- war risks insurance, cf. Chapter 15, Section 2.
View Commentary Hide Commentary
Clause 7-2. Amendments and termination of the insurance
The Commentary to this Clause was amended in the 2027 Version of the Plan.
Clause 7-3. Handling of claims, claims adjustments, etc.
Decisions required in respect of casualties, adjustments, claims against third parties or provision of security for loss or liability covered under the insurance may be made without the participation of the mortgagee.
The right to compensation for a total loss may not be waived, wholly or in part, to the detriment of the mortgagee.
View Commentary Hide Commentary
Clause 7-3. Handling of claims, claims adjustments, etc.
Sub-clause 1 was amended in the 2023 revision.
Clause 7-4. Payment of compensation
In the event of a total loss, the mortgagee’s interests take priority.
Compensation for loss from a single casualty exceeding 5 % of the sum insured, or as otherwise agreed, shall, in the absence of consent from the mortgagee, only be paid by the insurer upon presentation of a receipted invoice for repairs carried out. If the vessel is insured with two or more insurers against the same perils, this restriction applies to the combined payments from the insurers.
Compensation under Cl. 12-1, sub-clause 4, and Cl. 12-2, may not be paid without the consent of the mortgagee.
Compensation for loss of time may not be paid without the consent of the mortgagee who has a mortgage on the vessel’s freight income.
Liability to a third party covered by the insurance may only be settled upon presentation of a receipt from the third party. If the claims leader has provided security as per Cl. 7-3, sub-clause 1, Cl. 9-7, sub-clause 2 applies.
In the absence of the mortgagee’s consent, the insurer may only set off claims which have arisen out of the insurance contract relating to the vessel in question and which have fallen due in the course of the last two years prior to the settlement of a claim.
View Commentary Hide Commentary
Clause 7-4. Payment of compensation
The Clause was amended in the 2023 Version.
Clause 7-5. Independent co-insurance of mortgagees
If it has been explicitly agreed that the interest of a mortgagee shall be independently co-insured, the insurer may not plead that it has no liability due to an act or omission from the person effecting the insurance or another assured under the rules contained in Chapter 3 and Cl. 5-1.
View Commentary Hide Commentary
Clause 7-5. Independent co-insurance of mortgagees
The Clause was new in the 2027 Version of the Plan. The purpose of the Clause is to move the independent co-insurance of mortgagees from Cl. 8-7 into Chapter 7, which deals with the rights of the mortgagees. The language is the same as previously in Cl. 8-7, and there…
View Commentary Hide Commentary
Clause 7-1. Rights of a mortgagee against the insurer
The Commentary to this Clause was rewritten in the 2016 Version.
In the 2023 Version, sub-clauses 2 and 3 were amended, new sub-clauses 4 and 5 were added, and the Commentary to sub-clause 1 was amended.