Clause 1: Navigation
1.1 The vessel is covered subject to the provisions of this insurance at all times and has leave to sail or navigate with or without pilots, to go on trial trips and to assist and tow vessels or craft in distress, but it is warranted that the vessel shall not be towed, except as is customary or to the first safe port or place when in need of assistance, or undertake towage or salvage services under a contract previously arranged by the Assured and/or Owners and/or Managers and/or Charterers. This Clause 1.1 shall not exclude customary towage in connection with loading and discharging.
1.2 In the event of the vessel being employed in trading operations which entail cargo loading or discharging at sea from or into another vessel (not being a harbour or inshore craft) no claim shall be recoverable under this insurance for loss of or damage to the vessel or liability to any other vessel arising from such loading or discharging operations, including whilst approaching, lying alongside and leaving, unless previous notice that the vessel is to be employed in such operations has been given to the Underwriters and any amended terms of cover and any additional premium required by them have been agreed.
1.3 In the event of the vessel sailing (with or without cargo) with an intention of being (a) broken up, or (b) sold for breaking up, any claim for loss of or damage to the vessel occurring subsequent to such sailing shall be limited to the market value of the vessel as scrap at the time when the loss or damage is sustained, unless previous notice has been given to the Underwriters and any amendments to the terms of cover, insured value and premium required by them have been agreed. Nothing in this Clause 1.3 shall affect claims under Clauses 8 and/or 11.
CompareComment to ITCH Sub-clause 1.1 and 1.2
The clause states the main rule namely that the insured vessel is covered at all times when sailing or navigating with or without pilots and assisting and towing vessels or crafts in distress. This would be the starting position under English law in any event. On the other hand the assured is taken have warranted that the vessel shall not be towed, except as is customary, and that the vessel shall not undertake towage or salvage services. This is a clear undertaking by the assured that use of the vessel for towing would amount to a change of the risk that underwriters are accepting.
Sub- clause 1.2 makes it clear that ship to ship operations are also outside the scope of normal operations that underwriters have assumed to be the basis of their agreement.
NMIP Comparison
The Nordic plan does not have a clause that corresponds directly to ITCH Cl.1.1 and 1.2. Although the starting point is that the insurance covers all marine perils to which the interest may be exposed, Cl. 2-8. There will always be certain clear assumptions underlying the insurance agreement e.g. as to how the vessel will be employed, its ownership and class status.
Of importance is also Chapter 3 which, besides stating the general principles, deals explicitly with class status, trading limits, use of the vessel for illegal purposes, requisition, removal of a vessel to a repair yard and change of ownership. It goes without saying that the use of pilots does not amount to a change of risk as defined in Cl. 3-8, sub-clause 1. Clause 3-12, sub-clause 2, states that the insurer cannot claim that measures taken to save human life or to render assistance or salvage a vessel in distress amount to a change of risk and Cl. 13-1 stipulates that the insurance will not cover liability arising while the ship is engaged in towing, or caused by the towage, unless this takes place in connection with a salvage operation referred to in Cl. 3-12, sub-clause 2.
With the exception of loss of main class discussed below under ITCH Cl. 4 the insurer can only cancel the insurance due to a change of risk by giving 14 days notice., c.f. Cl. 3-10. Whether loss caused by a change of risk is covered or not is regulated in Cl. 3-9.
Comment to ITCH Sub-clause 1.3
This sub-clause does not really deal with navigation or employment issues but rather with insurable value. The agreed value stated in the policy is binding on underwriters as per MIA 27.3 but if the vessel is sailing with intention to be scrapped the agreed value is set aside and replaced by the scrap value at the time of the loss unless prior notice has been given and terms have been agreed. The sub-clause does not however affect collision liability, Cl. 8 or general average and salvage claims, Cl. 11.
NMIP Comparison
There is no directly equivalent provision in NMIP.