Insurance

(1) The ship or ship under construction must be insured, for the entire duration of the lending, at least in the amount of 110 per cent of the respective outstanding loan claims plus any prior-ranking or equal-ranking ship mortgages of third parties, in accordance with the Pfandbrief bank's business terms. The insurer must have undertaken not to raise, as against the Pfandbrief bank, the objections under section 36(2) no. 2 of the Act on Rights in Registered Ships and Ships under Construction, or, in the case of lending against ships and ships under construction registered abroad, the corresponding objections.
(2) The Pfandbrief bank must notify the insurer of the loan without delay.
(3) Insofar as the insurer satisfies the Pfandbrief bank on the basis of the obligation assumed under subsection (1), the ship mortgage passes to the insurer. The passing may not be asserted to the detriment of the Pfandbrief bank or of an equal- or lower-ranking ship mortgage creditor as against whom the insurer's obligation to perform has continued to exist.
(4) Where the ship mortgage does not by operation of law extend to the insurance claim, the lending is permitted only where the Pfandbrief bank obtains corresponding security by contract.