Will the Vessel in Layup Attract a Lower Premium Rating?

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alex-millar-1The Club acknowledges that vessels entering into laid up status present 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, this will be subject to a number of factors:

  1. The first factor is the terms of entry for the vessel in question. 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.
  2. Secondly, 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.

If the entered vessel is not CRO warranted and will be laid up in excess of 30 consecutive days, without cargo and only a watching or security crew onboard then Members will be eligible to apply for a return of premium.  Returns will be calculated at 40% pro rata, except Legal Assistance and Defence Cover, which will only be due returns of 15% pro rata. Members may also apply to cancel any additional covers in place.

Does it matter if the vessel goes into hot or cold layup?

The Club does not differentiate and cover afforded by the Club or any returns of premium due to laid up vessels will not be affected by whether the vessel is in a hot or cold layup.  It is worth noting however that, although the vessel is in a laid up condition, Class and Flag state requirements will still apply.

What forms do I have to fill in?

There is a form on the Club’s website that should be filled in and returned to the Club for our action.  Simply search ‘laid up returns’.  Please include all of the information requested on the form.  Failing this, an underwriter will be happy to provide the form via email.

When do I have to declare it?

There is a cut off point by which returns must be declared to the Club; this is three months after the end of the year in question.  In other words, three months after the expiry of the policy on which the returns are being requested.

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Alexander Millar 

Underwriting Assistant,

The Shipowners’ Club

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