This Clause is new in the 2013 Plan. The Clause has been placed in Chapter 19, Section 5, which means that it is a “supplementary cover” that may be agreed on and included in the ordinary builders’ risks insurance contract.
The rationale for incorporating a clause regarding towage under the builders’ risks insurance is that more and more hulls/sections and modules are being built at yards other than the outfitting yard, including foreign yards, while outfitting and commissioning largely take place at the yard that has taken out the builders’ risks insurance. Up until now, the towage risk has often been covered separately under the builders’ risks insurance, while this risk can now be covered through such supplementary cover as part of the ordinary builders’ risks insurance. However, this is conditional on the supplementary cover having been agreed in advance with the company and on this being stated in the insurance certificate. It will also be logical to include in the insurance certificate particulars regarding the agreed sum insured, the locations from and to which the tow is to be carried out, and the time period for the tow.
The provision regarding the range of perils covered in Cl. 19-1 will also apply when the subject-matter insured is under tow. The provisions of Chapter 19 otherwise apply. This means, for instance, that the condemnation limit applicable to towage is determined by the provision in Cl. 19-11, which means that the condemnation limit is set at 100% (and not 80% as stated in Chapter 11 of the Plan). Correspondingly, some of the clauses in Chapter 12 of the Plan (damage) will be excluded in accordance with the content of Cl. 19-14. If there should be a desire to expand or limit the scope of cover during towage in this connection, it will be logical to do so by using one of the alternative covers in Chapter 10 of the Plan, cf. Cl. 10-4 to Cl. 10-8, for instance Cl. 10-5, Insurance “against total loss only”.
With regard to liability arising during towage, it follows from Cl. 19-7 that the insurance covers liability up to the sum insured per casualty. Any payment made under the liability insurance will be additional to compensation paid for damage/total loss and salvage costs. If a special insurance for towage under Cl. 19-27 has been taken out, the sum insured agreed for the tow will be the limitation amount, as opposed to the total sum insured for the entire builders’ risks cover.
The tow can be carried out as an ordinary “wet tow”, where the subject-matter insured is towed floating in the water. But the insurance also covers “dry tows”, where the subject-matter insured is placed on a barge. In such event, the range of perils is the same as for tows in the sea. The insurance also covers the transport of the subject-matter insured or components thereof on board a vessel during land or air transport.
Sub-clause 2 deals with the special risk related to loading and discharge operations, which has been treated slightly differently. When the tow has arrived at the destination – which will as a rule be the outfitting yard - the builders’ risks insurance will continue to apply until the work is completed and the subject-matter insured is delivered. In other words, if additional cover has been taken out for the tow, the discharge from a barge will take place during the actual insurance period. For the same reason, it is specified in sub-clause 2 that the discharge of the subject-matter insured, is covered by the supplementary cover for the tow.
On the other hand, loading on board a barge will not automatically be covered. Whether such loading is for the account and risk of the hull yard or the outfitting yard is determined by the delivery conditions set out in the agreement between the two. If the outfitting yard takes over the sections/modules before they are loaded on board the barge, the yard in question will usually include this operation in its insurance. In such case, this must be specified in the builders’ risks insurance contract in connection with the inception of the insurance cover, which will thus be prior to the commencement of the tow.
Sub-clause 3 sets out the safety regulations for towage. Tows must always be surveyed and approved by a surveyor that is approved in advance by the insurer. Admittedly, there are no formal requirements or standard templates for the survey report on the towage risk. Large, reputable surveyors will normally use their own approved “Certificates of Approval”. These documents generally contain provisions regarding the securing of the tow for the voyage, stability requirements, permitted towing speed, “weather windows” (i.e. maximum wind speeds and wave height) and sometimes also provisions specifying when and where the tug must put into a port of refuge. This certificate is routinely signed by the tugmaster, i.e. the captain of the tug that is to be used for the voyage/another representative of the owner, after which it is sent to the yard and its leading insurer. If the assured has ensured that the safety regulations in Cl. 19-27, sub-clause 3 (a)-(d), are complied with prior to the commencement of the tow, any loss that may be incurred as a result of the tug not following the orders issued by the assured will not be attributed to him.
The requirement that the tow must be surveyed does not apply to internal berth shifts and removals of the subject-matter insured on the yard’s own site, cf. the last sub-clause of the Clause. Such removals could, for instance, be a transfer from the building site to the yard’s own outfitting dock. It makes no difference whether the subject-matter insured is moved by means of winches, is towed or proceeds under its own power. The decisive factor is that it must at all times remain within the yard’s own area in order not to trigger the survey obligation.
If the insurer wishes to make the towage risk subject to special safety regulations, this must also be specified in the insurance certificate.
Sub-clause 4 establishes that if the subject-matter insured is moved in other ways, the safety regulations in sub-clause 3 apply correspondingly. When the subject-matter insured or components thereof are transported by ship, over land or by air, this operation will also have to be surveyed and approved.
Cefor - The Nordic Association of Marine Insurers