The difference between the different off-hire clauses in the time charters described above and others will have a bearing upon the assured’s claim under a loss of hire insurance. Provided the circumstances which puts the vessel off-hire pursuant to the time charter fall within the scope of Cl. 16-1, the off-hire period will usually be the same period as the loss of time covered by the loss of hire policy.
The above will also apply if the off-hire period includes the time after the repairs and until the vessel is back in the same position where the casualty occurred or a position not less favourable to the charterer.
The fact that the vessel is serviceable upon leaving the repair yard is therefore not decisive. The off-hire calculation between the assured and the charterer will frequently be applied between the assured and the insurer. The off-hire statement will be important to the insurer in such circumstances, who is entitled under Cl. 5-1, sub-clause 1, to receive it from the assured.
The assured's rights under the loss of hire policy regarding the calculation of loss of time will also be governed by Cl. 16‑13. This section extends in some instances the insurer's liability for loss of time after completion of repairs.
As has been seen, the insurer must be prepared for large variations in different off-hire clauses, but one further qualification must be made - the insurer does not cover any increase in the loss of time due to contractual terms which are unusual or prohibited in the customary trade of the vessel, Cl. 4-15 of the Plan.
The various off-hire clauses referred to in 5.2.1 above may all be considered as being within the customary terms of worldwide time chartering. The risk for the assured and the exposure for the insurer nevertheless vary greatly.
Although the applicable off-hire clauses will determine much of the loss of time calculation and the insurer's exposure under the policy, they will usually have no influence on the insurer's assessment of the premium as per insurance practice today.
If the insurer considers an off-hire clause too permissive with respect to the calculation of the loss of time, Cl. 3-28 of the Plan permits him to require that certain terms be included or excluded in contracts concerning the operation of the vessel, including contracts for a specific trade. However, because this provision calls for advance approval of the vessel's contract of affreightment by the insurer, it is rarely used.
The off-hire calculation will often raise difficult issues. If the owner/assured settles the off-hire calculation by amicable settlement with the charterer or, if a settlement cannot be reached, by arbitration or court litigation, an issue arises on the extent to which such a settlement, arbitration award or judgement is binding on the insurer. The Commentary to Cl. 16-4 states that Cl. 4-17, No. 2, and Clauses 5-9 to 5-11 must be applied by analogy because the wording of these provisions relates to liability towards third party.