The potential conflict of interest between the loss of hire insurer and the hull insurer

The loss of hire insurer normally wants repairs to be performed as fast as possible. If tenders from alternative repair yards have been obtained, he will therefore be interested in choosing the tender which offers the shortest time for repairs, even if it is not the cheapest.

The hull insurer is not liable for the loss of time and therefore wants the costs of repairs to be as low as possible, provided the quality is up to standard.

Since a yard that can offer a short repair period is often more expensive than a yard offering a longer repair period, there may be a conflict of interest between the loss of hire insurer and the hull insurer. This conflict ought to be resolved in a manner which, to a reasonable extent, takes into consideration the assured's interest in averting an uncovered loss.

Similar conflicts of interest may occur in relation to costs incurred in expediting the repairs etc. The assured and the loss of hire insurer may want to use methods which speed up repairs, such as overtime, air transport of spare parts etc., whereas the hull insurer wants the cost of repairs to be as low as possible. The assured may further be interested in temporary repairs of the damage, if this makes it possible to postpone the final repairs to a more convenient time, whereas the hull insurer may prefer that the ship's damage is permanently repaired immediately. These conflicts are discussed in 7.2.2 and 12 below.