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Section 4: Loss of hire insurance

  • Clause 18-43. Main rules regarding the liability of the insurer

    The insurance covers loss due to the MOU being wholly or partially deprived of income as a consequence of damage to the MOU which is recoverable under the conditions of the Plan, or which would have been recoverable if no deductible had been agreed, see Cl. 18-33. If the H&M insurance has been effected on conditions other than those of the Plan, and these conditions have been accepted in writing by the insurer, the rules in Chapter 18, Section 2, of the Plan shall be replaced by the corresponding conditions of the insurance concerned when assessing whether the damage is recoverable.

    The insurance also covers loss due to the MOU being wholly or partially deprived of income:

    • because it has stranded,
    • because it is prevented by physical obstruction (other than ice) from  leaving a port or a similar limited area, or
    • as a consequence of measures taken to salvage or remove damaged cargo, or
    • as a consequence of an event that is allowed in general average pursuant to the 1994 York-Antwerp Rules.
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    Clause 18-43. Main rules regarding the liability of the insurer

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-1. Reference is made to the Commentary to Cl. 16-1.

  • Clause 18-44. Total loss

    The insurer shall not be liable for loss of time resulting from a casualty which gives the assured the right to compensation for total loss under Chapter 18 of the Plan or under the corresponding conditions in the H&M insurance that applies to the MOU pursuant to Cl. 18-43, sub-clause 1, second sentence.

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    Clause 18-44. Total loss

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-2. Reference is made to the Commentary to Cl. 16-2.

  • Clause 18-45. Main rule for calculating compensation

    Compensation shall be determined on the basis of the time during which the MOU 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. 18-43 shall not be recoverable.

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    Clause 18-45. Main rule for calculating compensation

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-3. Reference is made to the Commentary to Cl. 16-3.

  • Clause 18-46. Calculation of the loss of time

    Loss of time shall be stipulated in days, hours and minutes. A period of time during which the MOU has only partially been deprived of income shall be converted into a corresponding period of total loss of income.

    The insurer’s liability for loss of time resulting from any one casualty, and for the total loss of time resulting from all casualties occurring during the insurance period, shall be limited to the sum insured per day multiplied by the number of days of indemnity per casualty and altogether stated in the insurance contract.

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    Clause 18-46. Calculation of the loss of time

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-4. Reference is made to the Commentary to Cl. 16-4.

  • Clause 18-47. The daily amount

    The assured’s loss of income per day (the daily amount) shall be fixed at the equivalent of the amount of hire per day under the current contract of employment, less such expenses as the assured saves or ought to have saved due to the MOU being out of regular employment.

    If the MOU is unchartered, the daily amount shall be calculated on the basis of average rates of hire for MOUs of the type, size and area of operation concerned during the period in which the MOU is deprived of income.

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    Clause 18-47. The daily amount

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-5 apart from the words “area of operation” which are added to sub-clause 2. Reference is made to the Commentary to Cl. 16-5. This Clause lays down rules for calculating the daily amount under open insurance contracts , i.e....

  • Clause 18-48. Agreed daily amount

    If it is stated in the insurance contract that loss of time shall be compensated for by a fixed amount per day, this amount shall be regarded as an agreed daily amount unless the circumstances clearly indicate otherwise.

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    Clause 18-48. Agreed daily amount

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-6. Reference is made to the Commentary to Cl. 16-6. This Clause regulates the agreed daily amount. As mentioned under Cl. 18-47, the daily amount is usually agreed ; the reason for doing so is to avoid difficulties in...

  • Clause 18-49. Deductible period

    Each casualty shall be subject to a deductible period which shall run from the commencement of the loss of time and last until the loss of time, calculated in accordance with the rule in Cl. 18-46, sub-clause 1, second sentence, is equivalent to the deductible period stated in the insurance contract. Loss of time in the deductible period is not recoverable.

    Damage caused by heavy weather or navigating in ice which has occurred during the period between departure from one port or location and arrival at the next port or location shall be regarded as one casualty. 

    Damage caused by heavy weather occurring as a result of the same atmospheric disturbance whilst the MOU is stationary at one location shall be regarded as a single casualty.

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    Clause 18-49. Deductible period

    This Clause was new in the 2013 Plan and corresponds to Cl. 16-7. Reference is made to the Commentary to Cl. 16-7.  Sub-clause 1 is verbatim the same as Cl. 16-7, sub-clause 1. In sub-clause 2 the words “or location” is added as MOUs seldom enters ports but rather more often moves between...

  • Clause 18-50. Survey of damage

    The provision of Cl. 18-27 shall apply correspondingly to this insurance.

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    Clause 18-50. Survey of damage

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-8. Reference is made to the Commentary to Cl. 16-8.

  • Clause 18-51. Choice of repairer

    The insurer may require that tenders for repairs be obtained from repairers of his choice. If the assured does not obtain such tenders, the insurer may do so.

    If, due to special circumstances, the assured has reasonable grounds to object to the repairs being carried out by one of the repairers that has submitted a tender, he may require that the tender from that repairer be disregarded.

    The assured shall decide which repairer is to be used, However, the liability of the insurer shall be limited to the loss of time under the tender that would have resulted in the least loss of time amount the tenders for which the assured would have been able to claim compensation under the H&M insurance. If the assured chooses this repairer, the claim shall be settled on the basis of the actual time lost, even if this is greater than that specified in the tender. If the H&M insurance has been effected on conditions other than those of the Plan, liability of the insurer shall be limited to the loss of time under the tender that would have resulted in the least loss of time plus half of any additional loss of time that may occur.

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    Clause 18-51. Choice of repairer

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-9. Reference is made to the Commentary to Cl. 16-9.

  • Clause 18-52. Move to the repair location, etc.

    Loss of time during move to the repair location shall be attributed to the category of work that necessitated the move.

    If move to the repair location was necessary for more than one category of work, the time of the move shall be apportioned in accordance with the time that each category of work would have required if carried out separately. Time of move that falls within the deductible period shall not be apportioned.

    The rules of sub-clauses 1 and 2 shall also apply to loss of time during surveys, while obtaining tenders, during tank cleaning, while waiting to commence repairs or due to other similar measures that were necessary in order to carry out the repairs.

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    Clause 18-52. Move to the repair location, etc.

    This Clause was new in the 2013 Plan and is nearly verbatim the same as Cl. 16-10, but the words “class of works” has been replaced by “category of work”. Reference is made to the Commentary to Cl. 16-10.

  • Clause 18-53. Extra costs incurred in order to save time

    The insurer shall be liable for extra costs incurred in connection with temporary repairs and in connection with extraordinary measures taken in order to avert or minimise loss of time covered by the insurance, insofar as such extra costs are not recoverable from the hull insurer. If the H&M insurance has been effected on conditions other than those of the Plan, and these conditions have been accepted in writing by the insurer, the rules of Cl. 18-43, sub-clause 1, second sentence, shall apply.

    The insurer shall not, however, be liable for such costs in excess of the amount he would have had to pay if such measures had not been taken.

    If time is saved for the assured, he shall bear a share of the extra costs that is proportionate to the time saved for his account.

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    Clause 18-53. Extra costs incurred in order to save time

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-11. Reference is made to the Commentary to Cl. 16-11.

  • Clause 18-54. Simultaneous works

    If repairs covered under this insurance are carried out simultaneous with work which is not covered under any loss of hire insurance, but which:

    • is carried out to fulfil classification requirements, or
    • is necessary to enable the MOU to meet technical and operational  safety requirements or perform its contractual obligations, or
    • is related to the reconstruction of the MOU,

    the insurer shall pay compensation for half of the time common to both categories of works in excess of the deductible period. Works under a - c, which would not have deprived the MOU from income if carried out separately and which have not delayed the casualty repairs, shall not be taken into account. If casualty damage is discovered or occurs during the period the MOU would have been deprived of income if the work under a - c had been carried out separately, time for repairs carried out simultaneously with scheduled works under a - c shall not be compensated.

    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 the two categories 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 MOU’s arrival at the repair location. 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.

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    Clause 18-54. Simultaneous works

    This Clause was new in the 2013 Plan and corresponds to Cl. 16-12. In addition to some editorial amendments substantive amendments were done in 2013 Plan compared to Cl. 16-12 by adding two new sentences to sub-clause 1. The Commentary to Cl. 16-12 is relevant also to Cl. 18-54 and is therefore...

  • Clause 18-55. Loss of time after completion of repairs

    After repairs have been completed, the insurer shall only be liable for loss of time: 

    • until the MOU can resume the activity that it was engaged in under  the contract of employment that was in force at the time of the  casualty, or 
    • while the MOU moves back to an equidistant position to where it  without the casualty would have commenced the move to its next  location under a contract of employment that was entered into with  binding effect prior to the commencement of the move to the repair location.


    Cl. 18-52 shall apply correspondingly to loss of time after completion of repairs.

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    Clause 18-55. Loss of time after completion of repairs

    This Clause was new in the 2013 Plan and is corresponding to Cl. 16-13, but letters (b) and (d) are not deemed relevant to MOUs and are therefore not included in Cl. 18-55. Reference is made to the Commentary to Cl. 16-13, letter (a) of Cl. 18-55 is for the purpose of cover unamended even though...

  • Clause 18-56. Repairs carried out after expiry of the insurance period

    The insurer shall not be liable for loss of time resulting from a stay at a repair location that commences more than two years after expiry of the insurance period.

    Loss of time resulting from a stay at a repair location which commences after expiry of the insurance period shall be recoverable in accordance with the rules of Cl. 18-47, even if the daily amount is an agreed amount pursuant to Cl. 18-48, if this results in a lower compensation.

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    Clause 18-56. Repairs carried out after expiry of the insurance period

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-14. Reference is made to the Commentary to Cl. 16-14.

  • Clause 18-57. Liability of the insurer when the MOU is transferred to a new owner

    When damage to the MOU is repaired in connection with a transfer of ownership, the insurer shall not be liable for time that would in any event have been lost in connection with the said transfer. If the transfer has to be postponed due to repairs covered by this insurance, the insurer shall be liable for the assured’s loss of interest in accordance with the rules of Cl. 5-4, even though the MOU would not have earned income during the postponement.

    The insurer’s liability pursuant to sub-clause 1 shall not exceed the compensation calculated on the basis of the sum insured per day and

    • the period of time by which the transfer was postponed, or
    • the time it must be estimated that the buyer will take to repair the  MOU,

    less the agreed deductible period. The deductible period is calculated in consecutive days even if the loss of interest differs from the sum insured per day. No compensation may be claimed under Cl. 18-55 in these cases.

    The assured’s claim against the insurer may not be transferred to a new owner.

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    Clause 18-57. Liability of the insurer when the MOU is transferred to a new owner

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-15. Reference is made to the Commentary to Cl. 16-15.

  • Clause 18-58. Relationship to other insurances and general average

    The rules as to subrogation in Cl. 5-13 of the Plan shall apply correspondingly to:

    • the assured’s right to claim compensation for loss of time and  operating costs during removal to a repair location under Cl. 18-28  or Cl. 18-30 of the Plan, or equivalent provisions in other conditions  applicable to the MOU’s  H&M insurance, and
    • any right the assured might otherwise have to claim compensation for  the loss from another insurer or in general average.
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    Clause 18-58. Relationship to other insurances and general average

    This Clause was new in the 2013 Plan and is verbatim the same as Cl. 16-16. Reference is made to the Commentary to Cl. 16-16.