The insurer's maximum liability is calculated as the product of the daily amount and the number of days of indemnity per casualty.
The insurer's liability is normally limited to a fixed period per casualty and throughout the insurance period. In the policy, this would be described, for example, as "14-90-180 days"; 14 days being the deductible period, see 6 below; 90 days being the maximum number of days covered in one casualty and the last 180 days being the total number of days covered through the term of the policy, regardless of the number of casualties. In many policies, the number of days covered for one casualty is the same as the number of days covered throughout the term of the policy (e.g. 14-60-60).
Since the number of days per casualty may be consumed early on in the insurance period if there is a major incident, the assured may find himself without further cover during the remaining term of the insurance. In such event, the loss of hire insurer may offer, at additional premium, an extension of the cover, usually referred to as "reinstatement". If an automatic reinstatement clause is incorporated into the insurance contract, the effect is normally that the insurance is automatically reinstated, including the original limits of liability, immediately. If a new casualty occurs, the assured will have full cover within the agreed number of days. The re-instatement premium will be calculated and invoiced after the claim has been calculated (adjusted).
The maximum number of days covered per casualty or in total for the insurance period are, in accordance with Cl. 16-4, sub-clause 1, second sentence, to be understood as days covered in full. It is therefore not the number of days itself which constitutes the maximum liability of the insurer but rather the product of the amount insured per day and the agreed number of days in full. This product must be seen as the sum insured, i.e. a maximum monetary limit on the insurer’s liability (per casualty and altogether during the period of insurance). This interpretation was adopted by the arbitrator, Professor Dr. Juris Sjur Brækhus, in the arbitration award he rendered in the "Ranhav", ND 1967 page 269 deciding the issue on the basis of the conditions applicable at the time. See, on this award, also under 6.3 below.