Section 5. PERFORMANCE OF CONTRACTS OF MARINE INSURANCE

Article 240.- Payment of insurance premiums
The assured shall be obliged to pay the insurance premium to the insurer immediately after the conclusion of the contract or the issue of the policy or certificate of insurance, unless otherwise agreed by the involved parties.

Article 241.- Notification of increased risks
1. If, after the conclusion of the contract of insurance, there is any change in the insured perils, increasing their degree of risk, the assured shall have to notify the insurer of such change immediately after it is known to him/her.
2. Where the assured violates the provisions of Clause 1 of this Article, the insurer may refuse to indemnify part or the whole of the insured sum.

Article 242.- Obligations of the assured upon the occurrence of loss
1. Where a loss related to the maritime perils insured has occurred, the assured shall be obliged to take all necessary measures to avert the loss or lessen its extent as well as to secure the insurer’s exercise of the right to claim against the parties responsible for the loss. When performing this obligation, the assured must follow the reasonable instructions of the insurer.
2. When the assured intentionally or through gross negligence has failed to perform the obligation mentioned in Clause 1 of this Article, the insurer shall not be liable for losses caused thereby.

Article 243.- The insurer’s liability to refund
The insurer shall have to refund to the assured all reasonable and necessary expenses incurred for the purpose of averting the loss or lessening its extent; expenses incurred in the implementation of the instructions of the insurer as provided for in Article 242 of this Code, or expenses incurred for identifying the cause and extent of the loss within the scope of liability of the insurer, and expenses contributed to the general average. These expenses shall be refunded in such proportion as the insured sum bears to the insurable value.

Article 244.- The insurer’s liability for losses
1. Within the limit of the insured sum, the insurer shall be liable for losses resulting directly from the peril insured and have to refund the expenses as specified in Article 243 of this Code even though the aggregate amount to be paid to the assured may exceed the insured sum.
2. The insurer shall not be liable for losses arising from an intentional fault or a gross negligence of the assured , but still be liable for losses caused by the negligence or fault of the master who is also insured in navigation and management of the vessel as well as losses caused by the fault of another crewman or the maritime pilot.
3. The contract of insurance of ship hull may be extended to compensation for losses occurred in relation to liabilities in a collision, apart from his/her liability to compensate the assured for loss of or damage to the subject of insurance, the insurer shall be responsible for loss of or damage to a third party in the collision for which the assured is liable even though the aggregate amount of indemnity exceeds the insured sum.
4. Where the maritime perils insured under the contract of insurance occur, the insurer may indemnify the assured the total amount insured against the exemption of all other liabilities under the terms agreed in the contract. In this case, the insurer must notify the assured of his/her intention to do so within seven days from the date on which he/she receives the information from the assured about the occurrence of the maritime perils and their consequences; the insurer shall not be entitled to claim the ownership of the subject of insurance if the total insured sum is less than the insurable value.
In addition to the indemnification of the total insured sum, the insurer must also refund expenses incurred for the purpose of averting the loss or lessening is extent, as well as repairing and recovering the subject of insurance, which the assured had paid before he/she received the notice from the insurer.

Article 245.- Indemnification for successive losses
1. The insurer shall be liable for successive losses, even though the aggregate amount of losses may exceed the insured sum, unless otherwise agreed upon in the contract.
2. Where, a partial loss of the subject of insurance that has not been repaired or otherwise made good is followed by a total loss, the assured shall only recover in respect of the total loss.
3. The provisions of Clauses 2 and 2 of this Article shall not relieve the insurer of the liability for refunding the expenses related to the performance of the obligations provided for in Article 244 of this Code.

Article 246.- Exemption of the insurer’s liability
1. Unless otherwise agreed in the contract of insurance, in the insurance of a seagoing vessel and freight, the insurer shall not be liable for losses arising from:
a. The seagoing vessel being not seaworthy at the beginning of the voyage, unless this is due to latent defects of the vessel or caused by circumstances which could not have been prevented in spite of due diligence exercised by the assured.
b. Loading on board the seagoing vessel of explosive or inflammable materials or other dangerous cargoes without compliance with regulations on the carriage of cargoes of that kind, of which the assured was aware but the insurer was not.
2. Unless otherwise agreed in the contract of insurance, in the insurance of the cargo, the insurer shall not be liable for losses arising from:
a. The nature of the cargo;
b. Ordinary leakage, ordinary wear and tear of the cargo;
c. Improper packing of the cargo;
d. Delay in its supply.3. Unless otherwise agreed in the contract of insurance, the insurer shall not be liable for losses of the subject of insurance arising from war or military activities of any nature and their consequences; from being appropriated; from civil commotion; strikes; or from acquisition, requisition, compulsory purchase, detention or destruction of the seagoing vessel or cargo under military orders or decisions of competent state agencies.