Marine Insurance: Law and Practice
CHAPTER 12
VARYING COVER
Introduction
12.1 It is in the interests of both insurers (who wish to confine their exposure) and assureds (who will have to pay higher premiums for wide-ranging cover) to restrict the scope of marine insurance contracts. But both parties are aware that the policy may not apply to all the circumstances which may arise during a marine adventure; and the assured wants to provide as far as possible that his insurance cover is uninterrupted. There are various ways in which this may be done. One possibility is to provide within an insurance contract for automatic renewal of its cover. This is appropriate where the parties wish to continue their existing relationship on similar terms, for example where they are members of a mutual insurance association. In other cases, the most obvious method might appear to be to negotiate fresh cover to begin immediately the original cover ceases. But this may not always be feasible in practice, especially if it is to apply to perils which have caused the original cover to terminate. A further possibility is to agree an effective variation of the terms of the existing contract. However, this is not helpful in practice, if the assured wants cover in place before the eventuality arises against which he wishes to protect himself. 12.2 The traditional solution to this difficulty, therefore, has been to include within the terms of marine insurance contracts, either as part of a wider term or as an independent clause, a provision whereby cover can be extended in the event that the original cover ceases or is liable to cease. A policy containing a clause providing for its extension is no longer subject to the, now repealed, rule invalidating contracts of sea insurance for more than 12 months;1 and a time policy may still be described as such though its operation may be extended by such a clause.2 12.3 Such clauses have most commonly been employed to provide for cover after unjustifiable deviation has discharged the insurer from liability; and in earlier times they have been referred to as “deviation clauses”.3 However, their use is not confined to cases of deviation; and more recently such clauses have generally been known by the somewhat restrictive description of “held covered clauses”. In current marine insurance contracts, such cover is provided for in clauses with more specific titles, which combine statements of the effects of non-compliance with the contract with terms for continuing or reviving cover. Under one type of clause, cover that would normally terminate may be prevented from doing so on satisfaction of certain conditions. Thus, the Institute Cargo Clauses Termination of Contract of Carriage Clause provides that, in the case of premature termination of the contract of carriage or of transit,4 “then this insurance shall also terminate unless prompt notice is given to the Insurers and continuation of cover is requested when this insurance shall remain in force, subject to an additional premium if required by the Insurers”.5 A more conventional type of clause is one that contemplates cover ceasing but enables the assured to resuscitate it on compliance with certain conditions. However, although there may be a distinction between a clause under which cover continues and one under which it revives, in practice both types of clause appear to operate in similar fashion. So, for convenience, and given the nature of such clauses, it seems appropriate to refer to them in this book generally as extension clauses. 12.4 However, the use of this general description does not mean that all such clauses should be treated identically. In each case it remains necessary to ascertain the proper construction of the clause in issue.6 In particular, a different interpretation may be required for a simple held covered clause and an extension provision which is “an extensive and elaborately drawn clause laying down a detailed series of stipulations … for various purposes”.7Standard form cover
Cargo
12.5 The Institute Cargo Clauses Transit Clause8 provides as follows (the first alternative in the first and last sets of square brackets appearing in the 1982 clauses, the second in the 2009 clauses):“8.3 This insurance shall remain in force (subject to termination as provided for [above / in Clauses 8.1.1 to 8.1.4 above] and to the provisions of Clause 9 [the Termination of Contract of Carriage Clause] below) during delay beyond the control of the Assured, any deviation, forced discharge, reshipment or transhipment and during any variation of the adventure arising from the exercise of a liberty granted to [shipowners or charterers under the contract of affreightment / carriers under the contract of carriage].”