MarIus

2.3.1 The regulation in ICA

Co-insurance is governed by ICA chapter 7 Rights of third parties according to the insurance contract. The rules are generally mandatory for small risks, but even so some of the rules may be deviated from.

According to ICA § 7-1, insurance of real property benefits the policyholder and the holder of the judicially registered right of ownership, charge or other judicially registered security. The same holds for the holder of security rights in movable property which can be separately registered in a systematic register.^{(1) ICA § 7-1 sub paragraph 2 and 3, see further Bull 2008 pp. 507 ff.} These provisions may be deviated from, but if they are not, ICA § 7-3 provides for mandatory protection of the co-insured by stating that the co-insured is not identified with the policy-holder or the assured; i.e. if the policy-holder breaches the duty of disclosure or the assured breaches the duty of due care during the insurance period, this does not affect the position of the co-insured.^{(2) See further Bull pp. 530 ff.} The relevant duties of due care is defined in ICA § 4-6/§ 4-7 on change of risk, § 4-8 on breach of safety regulations and § 4-9 on causing the insured event.

Further, according to ICA § 7-5, the parties may agree on co-insurance for other parties than the ones mentioned in ICA § 7-1 – for instance contractors with economic interests in a building project. In such cases, the protection in ICA § 7-3 will apply, i.e. there is no identification between the policy-holder/assured and the co-insured unless the contract states otherwise.^{(3) See further Bull p. 517.}

On the other hand, if the co-insured himself breaches the provisions on change of risk, violation of safety regulations or deliberately or through gross negligence causes the insured event, he will be subject to the sanctions for such breaches. In regard to violation of safety regulation or causing the insured event, the sanction is that the compensation will be reduced depending on i.a. the degree of fault and causation.^{(4) ICA § 4-8 third sentence and § 4-9 second sub paragraph.} This reduction will then apply to the cover for the co-insureds economic interest in the insured object.

2.3.2 The Nordic Marine Insurance Plan

The Nordic Marine Insurance Plan 2013 version 2023 regulates co-insurance of mortgagees in chapter 7 and co-insurance of other parties in chapter 8. For the mortgagee the co-insurance is automatic, i.e. the mortgagee is co-insured even if the insurer has not been notified.^{(5) NP Cl. 7-1 sub-clause 1, Wilhelmsen/Bull p. 222.} However, contrary to the regulation in the ICA, the starting point in the NP chapter 7 is that the co-insured is identified with the assured, which means that if the assured breaches the duty of care according to NP chapter 3 and thereby causes damage to the insured property, the co-insured will normally lose his cover.^{(6) NP Cl. 7-1 cf. Cl. 3-36 to Cl. 3-38. See further Wilhelmsen/Bull p. 224-225. The regulation is complicated, but the details are outside the scope of the topic here.} Chapter 7 contains no provisions on the co-insured’s own duties of due care, but it follows from his status as co-insured that the duties addressed to the assured applies similarly to him.^{(7) Wilhelmsen/Bull p. 223-224.} Thus, in the less likely situation that the co-insured mortgagee breaches his duties of due care and thereby causes damage to the insured property, he will lose cover for his own interest according to the regulation in NP chapter 3. Whether the main assured will be identified with the co-insured in this situation, will depend of the position of the co-insured in relation to the operation of the vessel.^{(8) NP Cl. 3-37: “The insurer may not invoke against the assured faults or negligence committed by another assured or a co-owner of the insured vessel, or anyone with whom they may be identified under Cl. 3-36, sub-clause 2, unless the relevant assured or co-owner has overall decision-making authority for the operation of the vessel”.}

For other third parties with economic interests in the vessel, for instance co-owners or charterers, there is no automatic co-insurance. However, such co-insurance may be effected by expressly stating in the policy that it is effected for the benefit of a third party.^{(9) NP Cl. 8-1, see further Wilhelmsen/Bull p. 231.} For such co-insureds, the duty of disclosure and due care and identification is expressly regulated.^{(10) NP Cl. 8-3, see further Wilhelmsen/Bull p. 233-235.} The main rule is that the co-insured has the same duties as the person effecting the insurance and the assured, and that he will be identified with the assured. However, a co-insured according to chapter 8 may also effect so called independent co-insurance and thereby avoid identification with the person effecting the insurance and the assured.^{(11) NP cl. 8-7, see further Wilhelmsen/Bull p. 236-237. A mortgagee may also effect such insurance to avoid being identified with the main assured.}