Commentary: Rule 29 Laid-up returns
Premiums paid are a reflection of risks insured. As mentioned in the comments under 22.3.1, the premium at entry is affected by the trade operated and cargoes. As records build up, the impact of the operational performance on the premium is increased. If and to the extent that those operational risks are reduced when the ship is laid up, the premiums ought to be reduced accordingly. The principles for laid-up returns are contained in this Rule.
Laid-up returns are generally neither granted for vessels under 500 GT nor for tugs, barges and passenger ships/ferries in coastal trade.
29.2 Duration of laid-up period
According to the first part of this Rule, a Member is entitled to a laid-up return if the entered ship is laid-up for a consecutive period of not less than thirty full days. “Full days” means that the days of arrival to and departure from the laid-up site, and any days of shifting lay-up site within the port or local area, are not counted.
If the ship is moved to a different port or area, a new time period starts.
29.3 “Safe port”
The words “safe port” do not necessarily have the same meaning in this Rule as in the interpretation of safe berth and safe port clauses in charterparties.
The port must be safe in accordance with the standards applied by the Hull underwriter of the entered ship. This must be decided on a case by case basis, based on all relevant facts, such as the nature and size of the ship, the anchoring and mooring facilities, etc.
Members are recommended to contact the Club before the ship is laid up, so as to obtain the Club’s approval as well as benefit from the Club’s experience as Hull and P&I underwriters.
29.4 Compliance with regulations
Throughout the duration of the lay-up – including the procedures of arrival and departure – the ship must comply with applicable requirements and regulations issued by competent authorities and by the classification society. This also follows from Rule 10 Section 1 and is a condition for cover. The regulations can be in respect to the method of mooring, shore communications, equipment, manning, etc.
The number of crew members on board while the ship is laid up must meet applicable requirements or regulations issued by the authorities, the classification society and the Club. The extent and composition of the crew must be generally adequate in order to carry out what is necessary for the maintenance and safety of the ship at her laid-up site.
On the other hand, it is part of the laid-up return concept that the risks covered should be reduced. Crew constitutes such a risk. The number of crew should, therefore, be balanced in such a way that risks are reduced during the laid-up period without creating new or increased risks.
A ship which is laid up with cargo on board does not meet the required risk reduction to qualify for a laid-up return. No such return is allowed in cases where there is cargo on board unless the full concept of the lay-up has been approved by the Club in advance and found to contain sufficient reductions of risks to justify a return.
In fact, the presence of cargo while the ship is laid up may increase the risk in view of machinery shutdown, nearness to shore, etc.
29.7 Application for laid-up returns
In order to be considered, a written application for a laid-up return must be received by the Club from the Member within six months after the expiry of the policy year in question.
Should one lay-up period concern two policy years, the application for a laid-up return must be received within six months after the expiry of each of the two policy years in question.
29.8 Extent of laid-up returns
Laid-up returns are calculated as a percentage of the gross premium less a minimum retention for the Club to cover fixed overheads such as reinsurance costs.
The extent of the laid-up return for the coming policy year appears from the head circular issued annually prior to the new policy year.