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Insurance

Mandatory coverage

What maritime risks must be covered under the law and what is the mandatory level of coverage?

The Merchant Shipping Act contains a number of provisions prescribing mandatory insurance coverage for both the shipowner and the registered owner.

Pursuant to Chapter 7a of the Merchant Shipping Act, the owner of a Danish-flagged vessel with a gross registered tonnage of 300 or above must have protection and indemnity (P&I) insurance covering maritime claims. Further, the insurance certificate must be carried on board and be shown to authorities on demand. The insurance requirement applies equally to foreign-flagged vessels with a gross tonnage of 300 or above when calling on or departing from Danish ports or any other loading or unloading facility in Denmark or on the Danish continental shelf.

Under Chapter 9a, which incorporates the Bunkers Convention 2001, the registered owner of Danish-flagged vessel with a gross register tonnage of 1,000 or above must have insurance covering claims arising out of pollution damage caused by bunker oil. The insurance must cover claims under Section 183 of the Merchant Shipping Act and the global limitation rules under Section 175 of the Merchant Shipping Act. The compulsory insurance applies equally to foreign vessels with a gross register tonnage of 1,000 or above, calling at or sailing from ports or other loading or discharging locations in Denmark or on the Danish continental shelf.

Chapter 10 incorporates the Civil Liability Convention for Oil Pollution Damage. The registered owner of Danish-flagged vessel carrying oil in bulk with a gross register tonnage of 2,000 or above must have insurance covering claims under Section 191 of the Merchant Shipping Act and the special limitation rules under Section 194 of the Merchant Shipping Act. A certificate must be issued as evidence of this insurance. In the absence thereof, operation of the vessel is prohibited. The duty applies correspondingly to foreign ships carrying 2,000 tonnes of oil in bulk as cargo when calling at or sailing from ports or other loading or discharging sectors in Denmark or on the Danish continental shelf.

Insurable risks and ships

What other risks are typically covered by marine insurance contracts concluded in your jurisdiction and what ships are insurable?

The individual types of insurance include cargo insurance, P&I and hull and machinery insurance, which encompasses:

  • total loss insurance;
  • war risk insurance; and
  • loss of hire insurance.

Marine perils in hull insurance effected under the Nordic Plan cover all perils to which the ship may be exposed, with the exceptions listed in Sections 2-8(a)-(d). Therefore, compared to marine insurance policies effected on English terms, the Nordic Plan is based on the ‘all risks principle’ (ie, all risks are covered unless specifically excluded).

Insurance may be effected for ocean-going ships, fishing vessels, small freighters and mobile offshore units. Further, a builder’s risk insurance can be effected under the plan (ie, newbuildings and the rebuilding of ships).

Subrogation rights

What is the legal regime governing marine insurers’ subrogation rights?

Subrogation in insurance relations is governed by the general rule in Section 22 of the Tortious Liability Act, which stipulates that to the extent the insurer has paid out in connection with a damage covered by the insurance, the insurer subrogates into the assured’s claim against a tortfeasor. 

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