Section 7.- ABANDONMENT OF SUBJECTS OF INSURANCE

Article 250.- The right to abandon the subjects of insurance
1. The assured shall have the right to abandon the subject of insurance and surrender to the insurer of his/her rights and obligations related to the subject of insurance in return for the payment of the indemnity for total loss where the total loss of the subject of insurance is inevitable, or the aversion of such loss would entail expenditure so high in comparison with the value of the subject of insurance.
2. The right to abandon the subject of insurance may be applicable where the seagoing vessel has been sunk, appropriated or damaged in an accident in consequence of which it has become irreparable, or its cost of repair, recovery or redemption is economically inefficient.
3. The right to abandon the subject of insurance provided for in Clause 2 of this Article shall be also applied to cargo, even where the costs of its repair and delivery to the port of delivery would be so high in comparison with its market value at the port of delivery.

Article 251.- The mode and time limit for exercising the right to abandon the subjects of insurance
1. The exercise of the right to abandon the subject of insurance must be declared in writing, stating the grounds for the application of this right.
2. The declaration of the abandonment of the subject of insurance must be sent to the insurer within a reasonable time limit but not exceeding one hundred and eighty days, counting from the date on which the assured has learned of the circumstances used as grounds for the application of this right or within sixty days, counting from the date on which the insurance has expired in cases where the seagoing vessel or cargo has been appropriated or where the right to possession of the vessel or cargo has been lost for other reasons; after the time limit specified in this Clause, the assured shall lose the right to abandon the subject of insurance but shall still have the right to claim the indemnity for the loss.
3. The abandonment of the subject of insurance must be unconditional; if the abandonment has been accepted, neither the insurer nor the assured can change his/her decision.

Article 252.-The assured’s obligations when declaring the abandonment of the subject of insurance
When declaring the abandonment of the subject of insurance, the assured shall be obliged to provide the insurer with information on any proprietary rights related to the subject of insurance and on other insurance amounts and limitations known to the assured.

Article 253.- The time limit for the insurer to accept or refuse to accept the abandonment of the subject of insurance
1. Within thirty days, counting from the date of receipt of the declaration of abandonment of the subject of insurance, the insurer shall be obliged to notify in writing the assured of his/her acceptance or refusal of the abandonment. The insurer shall lose the right to refuse to accept the abandonment after the expiration of this time limit.
2. The rights and obligations related to the subject of insurance shall be transferred to the insurer immediately after he/she notifies that he/she accepts the abandonment; the insurer may not demand these rights.
3. Where the declaration of abandonment of the subject of insurance has been effected as provided for but the insurer refuses to accept the abandonment, the assured shall still retain the right to an indemnity.

Article 254.- Indemnity for total loss
1. A constructive total loss means loss resulting from the damage to the seagoing vessel or cargo whose actual total loss is deemed to be unavoidable or the cost of repairing or recovering the seagoing vessel would exceed the value of the vessel when repaired or exceed the market value of the cargo at the port of delivery; in this case, the assured must send the declaration of abandonment of the subject of insurance to the insurer before demanding the payment of the insured sum.
2. Actual total loss means loss resulting from the total destruction or damage of the seagoing vessel or cargo which renders the vessel or cargo unrecoverable or from the missing of the vessel together with the cargo on board thereof; in this case, the assured may demand from the insurer sum without having to declare abandonment of the subject of insurance.
3. Where the vessel found missing has been insured for a definite period of time, the insurer shall only be liable for the indemnity if he/she has last received the information of the vessel before the expiration of the insurance period. The insurer shall not be liable for the indemnity if he/she proves that the vessel has been found missing after the expiration of the insurance period.

Article 255.- Refund of indemnified amounts
Where the insurer has paid the indemnity, the seagoing vessel then escapes from the maritime peril, he/she shall be entitled to request the assured to continue his/her ownership of the seagoing vessel and refund the indemnity paid after deducting the indemnified amount for partial loss of the seagoing vessel provided that such partial loss is the direct consequence of the maritime peril insured.

Section 6. TRANSFER OF THE RIGHT TO RECOURSE

Article 247.- Transfer of the right to recourse
After having indemnified the assured, the insurer shall have the right to recourse against the person who is responsible for such loss (hereinafter referred to as the third party) within the amount paid. The insurer shall exercise this right in accordance with the provisions applicable to the assured.

Article 248.- The assured’s obligations in the recourse against the third party
1. The assured shall be obliged to provide the insurer with all information, documents as well as proofs and to take necessary measures to enable the insurer to exercise the right to recourse against the third party.
2. Where the assured fails to perform the obligations specified in Clause 1 of this Article or he/she is at fault that makes the insurer’s right to recourse unexercisable, the insurer shall be exempt from the payment of the whole indemnify or enjoy a reasonable reduction of the payable indemnity.
3. If the assured has received the indemnity for losses from the third party, the insurer shall be obliged to pay only the difference between the indemnity amount according to the contract of insurance and the amount of money the assured received from the third party.

Article 249.- Guarantee for general average contributions
1. The insurer must guarantee for general average contributions within the limit of the insured sum on the basis of the assured’s commitment to general average contributions.2. When adjusting general average, the assured shall be obliged to pay due attention to the insurer’s interests.

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.

Section 4. FLOATING INSURANCE

Article 237.- Floating insurance
1. Floating insurance is a package insurance covering the subject of insurance of a kind or some kinds of cargo which the assured will dispatch or receive within a specified period of time.
2. In a contract of floating insurance, the insurer shall be obliged to issue, at the request of the assured , a policy or a certificate of insurance for each shipment or each unit of cargo.

Article 238.- Performance of contracts of floating insurance
1. The assured, who has concluded a contract of floating insurance, shall be obliged to notify to the insurer immediately upon receipt of information concerning the dispatch or receipt of the cargo and to specify each case the name of the seagoing vessel, the route, the cargo and the insured sum, even when the notice reaches the insurer, the cargo may have been dispatched or have arrived at the port of delivery.
2. Where the assured has intentionally or through his negligence failed to fulfil the obligation specified in Clause 1 of this Article, the insurer may terminate the contract while retaining the right to the insurance premium to which he would have been entitled had the contract been properly performed.

Article 239.- Termination of contracts of floating insurance
A contract of floating insurance may be terminated by either party subject to a ninety days’ notice.