Shipowners’ Club advises on lay-ups

Shipowners’ Club has published an article addressing the challenge of whether an owner should decide to put a vessel into lay-up.

Shipowners’ said that it acknowledged that vessels entering into laid up status presented a much lower risk. As a consequence, policies written by the Club can allow for a return of premium when a vessel is placed in layup.

However, the club noted that this would be subject to a number of conditions:

i) Terms of entry: Some policies will contain a condition stating ‘Cancelling Returns Only’ (CRO). As this suggests, the only returns due to the Member will be as the result of cancelling the policy, either because the vessel has been sold or scrapped.

ii) Period of lay-up” The vessel must be laid up in excess of 30 consecutive days without a full complement of crew or cargo onboard. This is calculated from the start of the lay up to the day of departure, but only inclusive of one of these days.

For qualifying vessels, returns will be calculated at 40% pro rata, although Legal Assistance and Defence Cover will only be due returns of 15% pro rata.

Shipowners does not differentiate between hot and cold lay-up

The cut off point for declaration is three months after the expiry of the policy on which the returns are being requested.