This cover is in direct response to concerns raised by a number of our valued clients and brokers as 1 January 2020 approaches, bringing with it the IMO’s global limit of 0.5% sulphur in marine fuels. To comply with this legislation, vessels will either have to switch from Heavy Fuel Oil (HFO) to Low Sulphur Fuel Oil (LSFO), or install exhaust gas cleaning systems, also known as scrubbers.
Working closely with these clients and brokers, Norwegian Hull Club has created a tailor-made solution that provides protection against a number of major uncertainties and potential exposures associated with scrubbers.
The plan is triggered by damage to a vessel’s scrubber system. If an owner must switch from cheaper HFO to compliant-yet-costlier LSFO, this product will cover the difference in fuel costs in the period up to first available repair. Please note: further details regarding the plan, including optional associated covers, are provided on the dedicated product page as well as at the conclusion of this article.
Exhaust gas cleaning systems for vessels are a relatively new technology. Despite this, some have been installed and used for a number of years already. A full risk-picture is yet to emerge, however, as a wide variety of types are available from a large number of suppliers. Norwegian Hull Club is aware that there is uncertainty regarding quality, design errors, potential defects and possible damage scenarios. As so many different types of scrubber exist, making general assumptions based on the limited number of cases seen to date would be, we believe, unwise.
In addition, not all charter parties are clear on the contractual mechanisms should scrubber failure or damage occur. Is the charterer, for example, entitled to put the vessel off-hire? And who will be responsible for the additional cost of switching fuel from cheaper HFO to more expensive LSFO?
As an added concern, we have learnt that many yards are fully booked for the next six months due, in large part, to the retrofitting of scrubbers. This potentially means a long waiting period should a vessel require repairs to its scrubber system.
PROTECTION FROM NORWEGIAN HULL CLUB
Norwegian Hull Club has now launched a new product that helps protect against these doubts and issues: Damage to Marine Scrubber Systems: Additional Costs & LOH. This cover is triggered by physical damage to the scrubber system, which is recoverable under the conditions of the Nordic Plan. The difference in fuel costs between LSFO and HFO in the period up to first available repair is covered. In addition, optional cover for additional lump-sum costs for the cleaning of tanks and machinery needed to switch fuel, removal of HFO and net deviation to port, plus a limited standard LOH cover for scrubber damages only, is also available.
16. Oct. 2019