Lloyds Offers First Charter Protection For Shipowners

by Robin Pilgrim, LawAndTax-News.com, London

10 November 2006

It emerged on Wednesday that Lloyd’s underwriters are to provide the capacity for what is believed to be a world first for shipowners.

The policy, Seacure60 is a cancellation insurance that protects a shipowner from losing a charter because of the non-performance of a ship.

The policy is aimed at the larger vessel market and has a policy limit of up to $25 million.

Seacurus director, Thomas Brown explained that the policy was devised in response to fears that overcrowded shipyards are resulting in delays to repairs which put the owner at risk of the charter getting impatient and walking away if a vessel is delayed at a yard.

The current boom in the market and the rise in charter prices mean that shipowners could find it difficult to meet the current 60-day standard cancellation clause which is applicable to those vessels over 2,500teu. (TEU is a unit of measurement equal to the space occupied by a standard twenty foot container.)

Brown revealed that:

“This is a specialist cover which will indemnify the owner for the difference between the original time charter rates and the new market rate."

“We have a lead syndicate on the product but with limits up to $25m for the higher end of the policy limits there will be additional syndicates participating on the slip.”

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