Interest

The assured may claim interest compensation pursuant to Cl. 5-4 of the Plan. Sub-clauses 3 and 4 were amended in the 2013 Plan.

Cl. 5-4 reads:

The assured may claim interest as from one month after the date on which notice of the casualty was sent to the insurer. If the insurer has to refund the assured's disbursements, interest accrues from the date of the disbursement. If the insurer is to indemnify the assured for loss of time, interest does not accrue until one month after expiry of the period for which the insurer is liable.

If the assured fails to provide information and documents as mentioned in Cl. 5-1, and the settlement as a result thereof is delayed, he may not claim interest for the resulting loss of time. The same applies if the assured unjustifiable rejects full or part settlement.

The rate of interest is six month CIBOR, NIBOR or STIBOR + 2% for insurance contracts in which the sum insured is stated in Danish Kroner, Norwegian Kroner or Swedish Kronor respectively, and otherwise six month LIBOR + 2%. Interest is determined as at January 1 of the year the insurance contract comes into effect at the average rate for the last two months of the preceding year.

After the due date, cf. Cl. 5-6, interest on overdue payments accrues according to the rate stated in sub-clause 3 + 2 %.


It follows from Cl. 5-4, sub-clause 1, that in respect of compensation under a loss of hire insurance, interest accrues one month after expiry of the period for which the insurer is liable. This provision reflects the Insurance Contract Act Section 8-4, third paragraph. Cl. 14, sub-clause 1 of the 1972/1993 conditions provided that interest was payable as of one month after the completion of the repairs.

The starting point is therefore no longer the completion of the repairs, but the expiry of the period for which the insurer is liable. In cases of slow steaming however, adjusters have long applied the principle that interest is instead payable one month after the last day of the slow steaming period.

Pursuant to Cl. 5-4, sub-clause 3, the rate of interest is six month CIBOR, NIBOR or STIBOR + 2 % for insurance contracts in which the sum insured is stated in Danish Kroner, Norwegian Kroner or Swedish Kronor respectively, and otherwise six month LIBOR + 2 %.

 Interest is calculated as of 1 January of the year the insurance contract comes into effect at the average rate for the last two months of the preceding year. The applicable rates for selected currencies are published by CEFOR each January on its website.[31]

After the due date, cf. Cl. 5-6, interest on overdue payments accrues according to the rate stated in sub-clause 3 + 2 %.

If the assured fails to provide information to the insurer and documentation necessary to settle the claim, interest shall not accrue during the period of delay caused by such failure.

Also the insurer himself may claim interest as per Cl. 5-7, sub-clause 3, last sentence, which reads:

In loss-of-hire insurance, the insurer may demand interest on advance payments from one month after expiry of the period for which he is liable.


This provision gives the insurer the right to claim interest from the same time as the assured may pursuant to Cl. 5-4. This rule does not give the insurer an incentive to pay any amount on account during a long repair period.



[31] www.cefor.no