Clause 14: New for Old
Claims payable without deduction new for old.Compare
Comments to ITCH
A contract of marine insurance is a contract of indemnity and as such, insurers will not cover costs of betterment to the vessel, cf. MIA Section 1.
When the vessel is damaged through the operation of insured perils and new parts replace old parts that have either been lost or damaged, there might be an element of betterment.
However, Cl. 14 provides for a practical approach, eliminating any difficulties in calculating an appropriate deduction due to notional improvements and claims are
The same principle applies as under the ITCH, though not specifically stated.
According to Cl.12-1, sub-clause 1, the vessel shall be “restored to the condition it was prior to the occurrence of the damage”.
Clause 12-1, sub-clause 3 specify that if the repairs result in any “special advantages for the assured”, deductions shall be made.
It follows from the commentary that replacing a worn part with a new part does not qualify as a “special advantage” hence insurers are not entitled to make “new for old” deductions in the compensation.