Clause 15-9. Trading areas
This provision was rewritten in the 2027 Version. Earlier versions referred to Cl. 3-15 and made adaptations for the war risks insurance. The new provision implements relevant wording of Cl. 3-15 and is an exhaustive regulation of trading areas for war risks insurance. Cl. 3-15 shall not apply, cf. sub-clause 1.
Like Cl. 3-15, the rules are based on a tripartite division: ordinary trading area, excluded areas (areas where there is no cover unless express prior approval has been given), and conditional areas (areas where the shipowner may trade but on certain conditions such as e.g. additional premium).
Sub-clause 2, first sentence, defines the ordinary trading area, as comprising “all waters except areas listed in the insurance contract (“Listed areas”)”. Limiting the ordinary trading area by including Listed areas is commonly done by either attaching, or referring to, the list published by the Joint War Committee in London of geographical areas where vessels are considered at increased risk of war-related perils. However, there might be individual amendments to this list in the specific insurance contract. Thus, sub-clause 2 defines the Listed areas as the listed areas agreed in the individual insurance contract.
Sub-clause 2, second sentence, nominates the Listed areas as excluded area by default. The areas to be designated as conditional areas must be set out in the insurance contract.
Further, the insurer “may at any time designate new or change existing Listed areas”, cf. sub-clause 3. This means, firstly, that the insurer may stipulate more Listed areas than those set out in the insurance contract at the time this was concluded. Secondly, that the war risks insurer will be entitled to change a previously established Listed area while the insurance is running, hereunder a change from conditional area to excluded area and vice versa. The change may mean a (further) limitation of the ordinary trading area or an expansion in relation to what applied at the time the insurance was effected. If a new geographical area is included in the Listed area, it will by default be an excluded area in line with second sentence. The change must follow the procedure set out in Cl. 15-8.
Sub-clause 4, first sentence, provides that the person effecting the insurance has a duty to notify the insurer in advance whenever the vessel sails outside of the ordinary trading area. Cl. 15-9 is intended to be exhaustive as regards the consequences of sailing outside the ordinary trading area, in the sense that the general rules regarding alteration of the risk in Clauses 3-8 to 3-13 do not apply to this particular type of alteration of the risk. But other general rules may apply as explained further below.
Sub-clause 4, second sentence, provides that the insurer may give its consent to trade outside the ordinary trading area subject to payment of an additional premium and other conditions. The insurer may e.g. provide cover subject to an increased deductible for any damage occurring outside the ordinary trading area. If the insurer should make its consent subject to compliance with other conditions aiming to prevent a loss, such conditions shall constitute safety regulations, cf. Cl. 3-22 and Cl. 3-25, sub-clause 1. The insurer may make such safety regulations special safety regulations, cf. Cl. 3-22 and Cl. 3-25, sub-clause 2. If the assured has failed to notify the insurer pursuant to sub-clause 4 of trade outside the ordinary trading area, the insurer cannot retroactively impose a safety regulation unless such safety regulation is in conformity with the insurer’s normal practice for the trade in question.
Sub-clause 5 deals with navigation in conditional areas. It is expressly provided that the vessel is held covered for trade in the conditional areas, but the insurer may charge an additional premium and impose other conditions, cf. sub-clause 4. If the person effecting the insurance is not willing to accept the additional premium or any special conditions, it may request suspension of cover while the vessel is in that area.
If the insurer has not been given prior notice as required by sub-clause 4, first sentence, the additional premium and any conditions must be set when the insurer is informed that the vessel has sailed in a conditional area. In these cases, the person effecting the insurance must simply accept any additional premium and conditions the insurer might impose. As stated above under sub-clause 4, any safety regulations imposed must be in conformity with the insurer’s normal practice for the trade in question. Failure to notify will not have any other consequences for the person effecting the insurance unless damage occurs, cf. sub-clause 4, first sentence. If the vessel sails in a conditional area with the consent of the assured and without notification having been given, the claim is recoverable subject to a deduction of one fourth. The word “claim” applies to any type of claim under the interests insured as per Cl. 15-2, cf. Cl. 15-3. One such deduction will apply to each individual insurance. The rationale is that the assured would have nothing to lose if there was no sanction for a failure to give notice. It is also a requirement for application of the deduction that the assured has consented to the vessel’s entry into a conditional area. If the vessel enters into the conditional area without the consent of the assured, e.g. due to a mistake by the master or crew, any damage occurring will not trigger the extra deduction. The insurer will, however, always be entitled to charge an extra premium or impose other conditions pursuant to sub-clause 4 regardless of whether a deduction of one fourth is to be applied.
The deduction pursuant to sub-clause 5 is applicable in addition to the ordinary deductions prescribed in Cl. 12-15, Cl. 12-16 and Cl. 12-18. When calculating the deduction, the provision in Cl. 12-19 shall apply correspondingly, cf. second sentence.
Sub-clause 6 spells out that the insurance remains in full force and effect if the assured has given notice in accordance with sub-clause 4, and provided that the assured complies with the conditions, if any, as stipulated by the insurer.
If the damage is deemed to be caused by gross negligence of the assured, cf. Cl. 3-33, then the claim may be forfeited. The ordinary rules on identification will apply, cf. Cl. 3-36 to Cl. 3-38, unless otherwise is agreed.
Sub-clause 7 sets out the rules for navigation in excluded areas. It follows from the first sentence that the assured is allowed to sail in excluded areas provided it has obtained advance approval from the insurer, subject to agreed terms. If no agreement has been reached, the cover will be suspended from the moment the vessel enters the excluded area. For the insurance to be suspended, however, the master must have acted intentionally in exceeding the ordinary trading area. Suspension pursuant to sub-clause 7 will apply only as long as the vessel is inside the excluded area, cf. second sentence.
Cover will not be suspended if the vessel enters into an excluded area as part of measures being taken to save human life or to salvage vessel or goods, cf. the reference to Cl. 3-12, sub-clause 2, in the third sentence.
If a casualty has occurred after insurance cover has resumed following a deviation, the general rules on causation in Cl. 2-11 apply.
Here, as elsewhere, the rules on apportionment in the event of a combination of causes must be applied. If a subsequent casualty is partly due to known damage which occurred during the suspension period and partly due to impact during subsequent exposure, the insurer will only be liable for a proportionate share of the loss, cf. Cl. 2-13.
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Clause 15-9. Trading areas
The provision in Cl. 3-15 shall not apply.
The ordinary trading area under the insurance comprises all waters, except areas listed in the insurance contract (“Listed areas”). The Listed areas shall be designated as excluded areas unless explicitly designated as conditional areas.