Temporary repairs and extraordinary measures

The phrase "temporary repairs and in connection with extraordinary measures" not only covers the measures which according to Cl. 12-7 and Cl. 12-8 activate the hull insurer's liability, but also a wider range of measures. Under Cl. 16-11, it is not required that the temporary repairs be "necessary", which is a requirement under Cl. 12-7, sub-clause 1. While Cl. 12-7, sub-clause 2 applies only to temporary repair of "the damaged part", no such limitation has been mentioned in Cl. 16-11. Cl. 16-11 applies therefore to any temporary repairs. This includes all measures of a non-permanent nature taken to enable the vessel to be removed to a repair yard or to continue trading and includes, inter alia, replacement of parts of the ship or hire of equipment, such as generators. New equipment or parts which are installed and which later are to be removed are also regarded as an extraordinary measure.

Cl. 16-11 requires that the purpose of the temporary repairs and/or extraordinary measures taken must be to save time. If the purpose is to reduce the total cost of complete repairs, the costs are to be paid in full by the hull insurer according to Cl. 12-7. If a ship that has suffered a casualty at A carries out sufficient temporary repairs to enable it to sail to B, where complete repairs can be carried out at lower costs than at A, the cost of the temporary repairs are to be paid in full by the hull insurer.

The increase in the loss of time which arises from the removal to B must be dealt with by reference to the rule in Cl. 16-9, see under 7.2.4 above. The temporary repairs at A plus permanent repairs at B must be regarded as an alternative to permanent repairs at A. The loss of hire insurer's liability is limited to the alternative that gives the least loss of time of the two (A and A + B), provided the assured can recover the repair costs in full from his hull insurer.

In the same way as Cl. 12-8, Cl.16-11 is based on a distinction between "ordinary" and "extraordinary" measures. The dividing line is, however, not necessarily the same in relation to the two provisions. As stated in Brækhus and Rein: Kaskoboken, page 493, it is not clear-cut to draw the dividing line between "ordinary" and "extraordinary" measures. The interpretation opens for discretionary evaluations, where the individual solutions may vary in accordance with technical developments. Nowadays, it is common practice to carry out certain types of work by means of mobile repair teams, which are thus considered "ordinary", while sending spare parts by charter plane is still considered "extraordinary".[30]

The most common extraordinary measure is probably the payment of overtime to repair workers.

In practice, the distinction between ordinary and extraordinary measures has particularly caused problems in connection with what has traditionally been described as "increased ordinary voyage expenses" or "enhanced voyage expenses". These are expenses that must be anticipated from time to time during the voyages of a ship, e.g. due to problems relating to weather and currents, or minor technical problems regarding the ship. A typical example is extra consumption of oil where there is an oil leakage. These increased voyage expenses have to be paid by the assured according to his duty to minimise the loss, cf. Cl. 3-30.  If the assured chooses to keep the vessel idle waiting for repair, the insurer shall not be liable for greater loss than that for which he would have been liable if the duty of the assured according to Cl. 3-30 had been fulfilled. 

Based on a theory which appears to have its roots in general average law and practice, adjustment practice of loss of hire adjustments has been fairly restrictive. This is demonstrated by the following example: 

The vessel is equipped with three generators, one turbine driven, and two which are driven by diesel engines. The turbo generator is damaged and repairs must be deferred until spare parts can be delivered. In order to keep the vessel trading while waiting for spares, the assured decides to hire and install a package diesel generator set onboard the vessel. Operation of the vessel during the period waiting for spares requires extra consumption for the vessel's diesel generators and consumption of gas oil and lubrication oil for the hired generator. The damage is considered recoverable under the vessel's hull insurance. 

There is no doubt, pursuant to adjustment practice, that the necessary hire of a mobile generator and the installation/removal costs concern the loss of hire insurance not the hull insurance. Such costs are considered "extraordinary" and are thus recoverable under the loss of hire insurance. Such costs would be recoverable both under Cl. 4-7 and Cl. 16-11.

On the other hand, average adjusters have considered the extra consumption of oil as "enhanced voyage expenses", which the assured must bear himself. This can hardly be a correct interpretation of the Plan. If the hire of a mobile generator is accepted as an extraordinary measure, the same must apply to the extra consumption. There is no valid reason why these expenses should be treated differently. Both the rental costs and the extra consumption are incurred to keep the vessel trading and are therefore "measures taken for the purpose of preventing loss of time".

To sum up, the loss of hire insurance supplements the hull insurance in the following two ways: 

  1. It covers costs which in principle fall within Cl. 12-7 and Cl. 12-8, but which exceed the 20% limit mentioned in these provisions.

  2. It covers costs incurred to save time by way of measures taken which are of a character different from those covered under Cl. 12-7 and Cl. 12-8.

[30] The Commentary to Cl. 16-11 is now vague on this point referring to a case by case evaluation considering what may be covered under the hull insurance in accordance with the “unrepairability” concept introduced in the Commentary to Cl. 12-1, see footnote 9.