Loss of hire Flashcards
Loss of Charter Hire Insurance
Including War
(ABS 1/10/83 Wording)
This insurance is subject to English law and practice
1. If in consequence of any of the following events:
(a) loss, damage or occurrence covered by Institute Time Clauses-Hulls (1/10/83) or Norwegian Hull Form or American Institute Hull Clauses (2nd June 1977) and also loss damage or occurrence covered by Institute War and Strikes Clauses-Hulls (1/10/83) or American Institute Hull War and Strikes Clauses (1/12/77) plus Addenda 1 and 2, (Option of clause to be exercised at inception)
(b) breakdown of machinery, including electrical machinery or boilers, provided that such breakdown has not resulted from wear and tear or want of due diligence by the Assured, occurring during the period of this insurance the Vessel is prevented from earning hire for a period in excess of …………………days in respect of any accident, then this insurance shall pay …………. of the sum hereby insured for each 24 hours after the expiration of the said days during which the Vessel is so prevented from earning hire for not exceeding a further ………….. days in respect of any one accident or occurrence (and not exceeding ……………. days in all during the currency of this Insurance (irrespective of the expiry date of this insurance)) provided that the repairs in respect of which a claim is made hereunder are completed within 12 months of the expiry of the period covered by this policy.
2. No claim to attach to this insurance if the occurrence in respect of which such claim arises is the cause of the vessel becoming a Total Loss (Actual or Constructive).
3. In all cases where a recovery is obtained from third parties in respect of loss of earnings or demurrage such recovery shall be apportioned between the Assured and the Underwriters as their respective interests may appear.
4. Subject to current Institute Trading Warranties and, in respect of War risks, subject to current London Market War Risk Trading Warranties.
5. Held covered in case of any breach of warranty as to cargo, trade, locality, towage, salvage services or date of sailing, provided notice be given to the Underwriters immediately after receipt of advices and any amended terms of cover and any additional premium required by them be agreed.
6. The expression ‘one accident’ shall be deemed to include all heavy weather damage occurring during a single seappassage between two successive ports as defined in Clause 12.2 of Institute Time Clauses-Hulls (1/10/83).
7. If this insurance attaches or expires during a passage as defined above heavy weather damage occurring on the same passage but outside the period covered by this insurance may be added for the purpose of calculating the loss provided the damage sustained during the period covered hereunder has not been repaired during the passage, but only the proportion of the loss arising from damage occurring during the currency of this insurance shall be payable hereunder.
8. It is understood and agreed that if the Vessel is prevented from earning hire on separate occasions, which shall not in any event exceed three, in respect of any one accident or occurrence falling within this insurance, for the purpose of ascertaining the amount claimable hereunder the total PDF created with time that the Vessel is off hire shall be taken into account, provided that the repairs are completed within 12 months of the expiry of this insurance.
9. Should the Vessel at the expiration of this insurance be at sea or in distress, or at port of refuge or of call, she shall, provided previous notice be given to the Underwriters, be held covered at a pro rata daily premium to her port of destination, but in no event shall such extension affect or postpone the operation of the Institute Notice of Cancellation and Automatic Termination of Cover Clause for War.
10. In the event of the Vessel named herein being sold or unchartered, other than by reason of Total or Constructive Total Loss of Vessel, this insurance is automatically cancelled. In such event Underwriters agree to return pro rata nett monthly premium, provided there are no claims on the Vessel during the currency of the insurance prior to cancellation. In no other event shall there be any return of premium (except as provided under Clause 14.3 below).
This clause shall prevail notwithstanding any provisions whether written, typed or printed in the insurance inconsistent therewith unless especially agreed by Underwriters.
11. Unless the Underwriters agree to the contrary in writing, this insurance shall terminate automatically at the time of change of the Classification Society of the Vessel, or change, suspension, discontinuance, withdrawal or expiry of her Class therein, provided that if the Vessel is at sea such automatic termination shall be deferred until arrival at her next port. However where such change, suspension, discontinuance or withdrawal of her Class has resulted from loss or damage covered by Clause I of this insurance such automatic termination shall only operate should the Vessel sail from her next port without the prior approval of the Classification Society.
12. The Assured shall effect, or cause to be effected, all repairs (temporary or permanent) with due diligence and dispatch. Underwriters to have the right to require the Assured to incur any expense which would reduce Underwriters’ liability under this insurance provided such expense is for Underwriters’ account.
13. This insurance excludes:
13.1 loss damage liability or expense arising from
13.1.1 any detonation of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter, hereinafter called a nuclear weapon of war
13.1.2 the outbreak of war (whether there be a declaration of war or not) between any of the
following countries: United Kingdom, United States of America, France, the Union of Soviet Socialist Republics, the People’s Republic of China
13.1.3 requisition or pre-emption
13.1.4 capture seizure arrest restraint detainment confiscation or expropriation by or under the order of the Government or any public or local authority of the country in which the Vessel is owned or registered
13.1.5 arrest restraint detainment confiscation or expropriation under quarantine regulations or by reason of infringement of any customs or trading regulations
13.1.6 the operation of ordinary judicial process, failure to provide security or to pay any fine or penalty or any financial cause
13.2 any claim for any sum recoverable under any other insurance on the Vessel or which would be recoverable under such insurance but for the existence of this insurance
13.3 any claim for expenses arising from delay except such expenses as would be recoverable in principle in English law and practice under the York-Antwerp Rules 1974.
14. 14.1 Cover hereunder in respect of the risks of war, etc., may be cancelled by either the Underwriters or the Assured giving 7 days notice (such cancellation becoming effective on the expiry of 7 days from midnight of the day on which notice of cancellation is issued by or to the Underwriters). The Underwriters agree however to reinstate cover subject to agreement between the Underwriters and the Assured prior to the expiry of such notice of cancellation as to new rate of premium and/or conditions and/or warranties.
14.2 Whether or not such notice of cancellation has been given cover hereunder in respect of the risks of War, etc., shall TERMINATE AUTOMATICALLY
14.2.1 upon the occurrence of any hostile detonation of any nuclear weapon of war as defined in Clause 13.1.1 wheresoever or whensoever such detonation may occur and whether or not the Vessel may be involved
14.2.2 upon the outbreak of war (whether there be a declaration of war or not) between any of the following countries: United Kingdom, United States of America, France, the Union of Soviet Socialist Republics, the People’s Republic of China
14.2.3 in the event of the Vessel being requisitioned, either for title or use.14.3 In the event either of cancellation by notice or of automatic termination of this insurance by reason of the operation of this Clause 14, pro rata net return of premium shall be payable to the Assured.
15. Cover in respect of the risks of war, etc., shall not become effective if, subsequent to acceptance by the Underwriters and prior to the intended time of attachment of risk, there has occurred any event which would have automatically terminated cover under the provisions of this clause
Exclusions
Claims after a TL,
If recovery is received for demurrage, this shall be apportioned between assured and insurers as their respective interests appear.
[where it is the ABS excluding war – this excludes all the same things as in the ITC-hulls ]
13. In no case shall this insurance cover loss damage liability or expense caused by
13.1 war civil war revolution rebellion insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent power.
13.2 capture seizure arrest restraint or detainment (barratry and piracy excepted), and the consequences thereof or any attempt thereat
13.3 derelict mines torpedoes bombs or other derelict weapons of war.
- In no case shall this insurance cover loss damage liability or expense caused by
14.1 strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotions
14.2 any terrorist or any person acting from a political motive. - In no case shall this insurance cover loss damage liability or expense arising from
15.1 the detonation of an explosive
15.2 any weapon of war and caused by any person acting maliciously or from a political motive. - In no case shall this insurance cover loss damage liability or expense arising from any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.
Part days
ABS
The Clause states “for each 24 hours”. The London practice is not to allow part of days to be included in the final statement of claim, although the various odd hours and minutes may be added together to make full 24 hour periods. A recovery is then made for each complete 24 hours.
Laz.
The Lazard Form states “24 consecutive hours” (line 7) and as with the ABS wording the final claim may not include part of days, However, there is a difference in practice, If the loss of hire from one accident comprises two or more separate periods, the odd hours and minutes of each period cannot be added together to make a full 24 hours, or. The Norwegian Form provides that the loss of time may be stipulated in days, hours, and minutes (Chapter 16-4.1)
Slow steaming
ABS - Though not strictly allowed in ABS (prevented from earning hire) doesn’t allow for ‘partially prevented form earning hire) it is generally allowed in practice.
Lazard – prevented from earning hire in whole or in part
Nordic – covers loss due to vessel being wholly or partially deprived of her earning capacity as a consequence of damage sustained
The repair clause (Common time simultaneous repairs) - NMIP Cl.16-2
If repairs covered under this insurance are carried out simultaneously with work which is not covered under any loss of hire insurance, but which:
a. is carried out to fulfil classification requirements, or
b. is necessary to enable the vessel to meet technical and operational safety requirements or perform its contractual obligations, or
c. is related to the reconstruction of the vessel,
the insurer shall pay compensation for half of the time common to both categories of repair in excess of the deductible period.
If repairs resulting from two casualties, both of which are covered under this insurance, are carried out simultaneously, the rule in sub-clause 1 shall apply correspondingly for the time that is within the deductible period of one casualty, but not within the deductible period of the other casualty.
If repairs covered under this insurance and work covered under other loss of hire insurance are carried out simultaneously, the insurer shall pay compensation for half of the repair time common to both categories of work in excess of the deductible period. This also applies where repairs under the other insurance contract are carried out within the deductible period under this insurance contract. Furthermore, if work which is not covered under any loss of hire insurance but which falls within the scope of sub-clause 1 is carried out simultaneously, the insurer shall only pay compensation for one fourth of the common repair time which exceeds the deductible period.
When applying the rules set out in sub-clauses 1-3, each category of work shall be deemed to have lasted for the number of days the work would have required if each category of work had been carried out separately, reckoned from the time the work started. Unless the circumstances clearly indicate another point in time, all categories of work shall be deemed to have started on the vessel’s arrival at the yard. Any delay which might occur due to several categories of work being carried out simultaneously shall be attributed to all categories in proportion to the number of days each category would have required if carried out separately, reckoned from the time the work started. However, the insurer’s liability shall not exceed the amount that would have been payable if the category of work for which he is liable had been carried out separately.
The repair clause (Common time simultaneous repairs) - London ABS & Lazard (American)
- London practice (ABS) – divide common time in excess of deductible period equally over the work carried out (50:50 owners’ / damage, disregarding specific time required per repair) – owner’s must be required for seaworthiness, or be a scheduled class work
- The Lazard Form clearly stipulates that the American practice on this point is the same as the English i.e. the common time in excess of the deductible period is divided equally between the various types of work carried out (lines 78/90).
Simultaneous repairs – actual period when repairs are effected concurrently.
- American & English: treat as the same as above – however if the time necessary to effect damage repairs is extended in any way by reason of concurrent repairs, then such additional time is to be entirely for the Owners’ account.
Calculation of claims on policies - NMIP
- Clause 16-3. Main rule for calculating compensation
Compensation shall be determined on the basis of the time during which the vessel has been deprived of income (loss of time) and the loss of income per day (the daily amount). Loss of time that occurred prior to the events described in Cl. 16-1 shall not be recoverable. - Clause 16-4. Calculation of the loss of time
Loss of time shall be stipulated in days, hours and minutes. A period of time during which the vessel has only partially been deprived of income shall be converted into a corresponding period of total loss of income.
