Traditionally, hull insurance has covered both marine and war perils. In principle marine and war hull-insurance are separate insurances provided by different insurers or groups of insurers. The borderline between marine and war perils is clearly defined, see Clauses 2-8 and 2-9 of the Plan.
Loss of hire insurance may likewise cover both marine and war perils and often the same insurer covers both risks under the same policy. In such a case of dual coverage, the issue of apportionment of responsibility between more than one insurer is eliminated and there is consequently no practical reason to distinguish between marine and war perils.
War risk cover under Chapter 15 of the Plan also includes war risk loss of hire insurance. Therefore, those assureds who are covered for war risks pursuant to Chapter 15 of the Plan do not need to include any war risks extension to their ordinary loss of hire insurance for marine perils.
Loss of hire insurance for marine perils will cover loss of income resulting from damage to the vessel caused by a marine peril. Cl. 2-10 of the Plan provides that unless otherwise agreed, the insurance covers only marine perils. This means that it must be expressly agreed if the loss of hire insurance is also to cover war perils. Without such express agreement, the loss of hire insurance will be deemed to be a marine peril insurance.
Cl. 2-8 of the Plan defines marine perils insurance as an "all perils insurance" with four exceptions:
The all-risk principle means that it is not necessary to look for which perils are positively covered, since there is no such listing. Every risk is covered unless it is expressly excepted by one of the four heads listed above. This means that damage to the vessel and any loss of income caused by grounding, fire, explosion, collision or perils of the sea such as heavy weather etc. is covered under a marine loss of hire insurance.
Since Cl. 2-8 (a) expressly refers to war risk cover as defined in Cl. 2-9, there will be no overlap or gap in the cover between marine and war risk insurance under the Plan. Thus, if a peril is not a war peril pursuant to Cl. 2-9, it is by definition a marine peril under Cl. 2‑8, unless excepted pursuant to letters (b) to (d).
This is different from the English and American conditions (both for hull and loss of hire insurance) which are based on the "named peril" principle. The named peril principle has exactly the opposite effect of the all risk principle. Only those perils expressly listed or named in the policy or the insurance conditions will be covered. Owners which are familiar with the English conditions, but not with the Plan all risk principle may be confused and feel uncomfortable at not seeing a list of the perils covered in the policy or conditions. Under the Plan conditions it is important to look for the exceptions rather than the perils covered.
The real difference between the perils covered under the various systems is not great and may be unimportant to the assured if no dispute arises. However, the Plan all risk principle is more beneficial to the assured than the English named peril principle in the event of any dispute or uncertainty. According to the Plan Cl. 2-12, sub-clause 2, it is the insurer who bears the burden of proving that the loss has been caused by an excepted peril, while under the English conditions, the burden is on the assured to prove that the loss was caused by a named peril. This means that English insurers, once they decide to dispute a claim, simply inform the assured that the claim is rejected because the loss was not caused by an insured peril.
Loss of hire insurance for war perils will cover loss of income resulting from damage to the vessel caused by a war peril as defined in Cl. 2-9. A war peril insurance based on the Plan is a named peril insurance as an exception to the general all risk principle adopted for marine peril insurance under Cl. 2-8 (see 2.2.1above). Similarly, under English conditions the war peril insurance is also a named peril insurance.
The war peril concept is, in practical terms, almost identical under the Plan and the English systems with one important difference: piracy and mutiny are marine perils under the English system whilst they are war perils under the Plan Cl. 2-9, sub-clause 1 (d). For the assured, this difference will be irrelevant as long as there is a consistent choice of conditions. However, the assured may either have an overlap or a gap in cover if the Plan and English conditions are mixed. There will be a gap in cover if the Plan marine and English war peril insurance is taken out, whilst there will be an overlap of cover in the reverse situation. It is, of course, possible to fill the gap or eliminate the overlap by appropriate clauses in the policy. For further discussion on the war peril concept, see the Commentary to Cl. 2-9 and Brækhus and Rein: Kaskoboken, pages 55 et seq.
The war perils insurance covers, inter alia, damage to the vessel caused by war or war-like conditions; the use of weapons etc. in the course of military exercises in peacetime, or in acts guarding against the infringement of neutrality, as well as riots strikes, lockouts, sabotage, acts of terrorists etc.
Where a certain peril results in a series of events or consequences, which in and of themselves may constitute insured perils, it will be the original peril which will be determinative in classifying the insured event. A classic example is the "Torrey Canyon" casualty where the vessel, which had begun leaking oil as a result of grounding, was deliberately bombed to prevent oil pollution damage and consequently sank. According to Cl. 2-8 (b), such loss and the damage caused by the measure taken is a marine peril because the original peril (the grounding) is a marine risk. If, however, the original peril had been a war risk (e.g. damage by torpedo), the loss and consequential damage would, according to Cl. 2-9, sub-clause 1 (e), be a war peril.