The American Hull Clauses VS The Nordic Plan: A Comparative Study
Mind the gaps
This comparative study identifies some of the common pitfalls inherent to changing insurance coverages from a policy subject to the American Institute Hull Clauses of June 2, 1977 (a.k.a. the ‘AIHC77’) to a policy incorporating the Nordic Marine Insurance Plan version 2023 (a.k.a. the ‘Plan’), and vice versa.
We have delved deeply into the wordings, examined them clause by clause, and also provided practical examples to highlight the significant differences that may result from comparable hull insurance claim circumstances.
Highlights
Here are the foremost differences to keep in mind:
- Perils Insured Against: whereas the Plan offers ‘All Risks’ coverage, on its own the AIHC77 only covers perils named in the policy wording. When switching risks from the Plan to the AIHC77, it is important to include the American Hull Insurance Syndicate Liner Negligence Clause in order to achieve equivalent coverage.
- Causation: The AIHC77 and the Plan are derived from different legal traditions and this can have dramatic effects when establishing the cause of a loss and determining which policy pays the claim. When switching from the AIHC77 to the Plan, make sure to add CEFOR’s “Change of Conditions” clause to avoid any gap in coverage.
- Interest on Claim Payments: The Plan provides for the payment of interest on an assured’s covered claim disbursements based on the US prime rate in effect at inception of the policy year, whereas no interest is paid on claimed amount covered by the AIHC77.
- Depreciation in a vessel’s market value because of an insured claim: although the AIHC77 was not designed to cover such depreciation, under the Plan’s coverage an insurer is liable for a vessel’s loss of market value in certain circumstances.
- Cost of superintendence of repairs: Under the Plan’s rules, superintendence is considered a common repair expense, and as such, its cost is only allowed in the proportion that damage repairs bear to the overall cost of work carried out at the shipyard. Conversely, under the AIHC77, the cost of superintendence is not treated as a common expense, and is allowable in full to the claim, subject always to being fair and reasonable.
For further details
For an in-depth review, the full text of the Comparitive Study may be found on our LinkedIn page: https://lnkd.in/erSrJJau
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For over 25 years, Independent Average Adjusters has staunchly supported the Greek shipowning community and their insurers, in tackling the consequences of every conceivable type of marine casualty. For further information, please don’t hesitate to contact our office, or visit our website at: www.independent-adjusters.com.gr
