A peril has struck that caused damage to the hull or machinery of a vessel. Technically there are a number of alternatives:
- Full and permanent repairs
- Temporary repairs
- Part permanent and part temporary repairs
Each alternative has financial and commercial consequences that need to be weighed before any decisions are made. The type of repairs depend on several factors, such as, if the vessel is in ballast, if she is loaded, what the relevant cost of each option is, what are the insurance conditions in the H&M policy, is there any Loss of Hire policy and under what terms, etc.
The vessel may be engaged under a contract of affreightment that incorporates the York Antwerp Rules 2004, which treat temporary repairs as “… the cost of temporary repairs of accidental damage at a port of refuge is limited to the amount by which the estimated cost of the permanent repairs at the port of refuge exceeds the sum of the temporary repairs plus the permanent repairs actually carried.”
Another issue may be that the cost of the temporary repairs will be compared and limited to the savings to the Underwriter under the policy. Any balance may be considered for the Loss of Hire underwriter (if the vessel is insured for Loss of Hire) or for owners’ account.
When there is no allowance in general average the consideration of the cost of the temporary repairs is made for the assessment of the particular average. In such cases the conditions contained in the H&M policy play a major role.
How the cost of the temporary repairs, the hire of temporary portable machinery and other combinations will be considered differs depending on whether the H&M Policy is under the Nordic Plan or the Institute Time Clauses – Hulls.
Consult us to discuss the matter before you undertake the repairs and incur the expense to ensure that you will optimise your cover under the insurance policies and avoid surprises.