Shipowners Chance 'Negative Equity' in Event of CTL

By George Backwell
Wednesday, May 14, 2014
Keith Jones: Photo AAA

Shipowners have been warned they could face being saddled with ‘negative equity’ in the insurance aftermath of disasters at sea, according to Keith Jones the outgoing chairman of the Association of Average Adjusters (AAA) at its London AGM, reports UK shipping trade association Maritime London.

Jones listed a potential series of pitfalls awaiting shipping companies when a ‘constructive total loss’ (CTL) is declared. He urged owners to be wary from the outset of the costs over which they had control, of the expensive business of maintaining a wreck pending investigation of the cause of the casualty, and cautioned that they may be unable to recover their costs if the sums exceeded the eventual proceeds of sale of the wreck.

“I am afraid there may be more unhappy monetary endings in the future when it comes to proceeds of sale, or rather the negative equity caused due to the lack of them,” remarked Mr Jones.

He said that despite the problems over ‘proceeds of sale’ having been underlined in 2010 by a previous chairman of the association, Sir Stephen Tomlinson, there was no sign of change in the approach by hull underwriters.

Mr Jones said that in a CTL case where the cause of the damage or the costs of repair are in dispute, the owner is in a difficult position as he needs to retain the wreck in order to be able to prove his case – “but then of course the costs of maintaining the wreck continue to mount. In some cases this could mean that once the cause or costs question has been resolved, the costs of maintaining the wreck throughout this period are far in excess of the proceeds realised.

What if ‘reasonable costs’ exceeded the proceeds? “In such circumstances this is unlikely to end well for an owner as he is no doubt under a legal obligation to maintain the wreck in any event,” said Mr Jones.

(A CTL occurs when a ship is so damaged by an insured peril that the cost of repairing the damage would exceed the value of the ship when repaired. Under the Marine Insurance Act 1906 – the linchpin of most law in its field – where there is a CTL the assured may either treat the loss as a partial loss, or abandon what is insured to the insurer by giving notice of abandonment.)

Source: Maritime London

 

Maritime Reporter August 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Legal

Port Firm Fined £650,000 for Health, Safety Breach

A port operator has today (Monday 29 September) pleaded guilty to health and safety breaches, following the deaths of three crew members of a tug which capsized on the River Clyde in 2007.

IMO Takes Step Towards Electronic Certificates

In the future, the IMO member States should accept the use of electronic certificates. This is the request of the Facilitation Committee (FAL) and, hence, the road is paved for less paperwork,

K-Line to Plead Guilty to Price Fixing

Kawasaki Kisen Kaisha Ltd. (K-Line), a Japanese corporation, has agreed to plead guilty and to pay a $67.7 million criminal fine for its involvement in a conspiracy to fix prices,

Finance

Norvestor to Become PG’s Largest Shareholder

Norvestor VI, L.P., a fund advised by Norvestor Equity AS, announced it has signed an agreement to invest in Ing Per Gjerdrum AS including its subsidiaries PG Hydraulics AS and PG Construction AS.

GasLog Closes First Option Vessels Dropdown

GasLog Ltd.  announced today the closing of the sale of two modern liquefied natural gas (“LNG”) carriers, the Methane Jane Elizabeth and Methane Rita Andrea,

Brent Holds Above $97, Eyes Worst Quarter Since 2012

Brent crude futures hovered above $97 a barrel on Tuesday, aided by firm U.S. and Chinese data, but the oil benchmark was on track for its deepest quarterly drop

Casualties

Report on MOL Comfort Incident is out

In response to the casualty of “MOL COMFORT” which occurred on 17 June 2013, ClassNK established the Investigative Panel on Large Container Ship Safety, comprised

NAT Tankship Rescues 150 in Mediterranean

Nordic American Tankers Limited ("NAT") says the one of its vessels, the 'Nordic Passat' performed a rescue operation, involving 150 people in the Mediterranean last Saturday afternoon,

Port Firm Fined £650,000 for Health, Safety Breach

A port operator has today (Monday 29 September) pleaded guilty to health and safety breaches, following the deaths of three crew members of a tug which capsized on the River Clyde in 2007.

People in the News

Shipping's GHG Emissions Down

The total Green House Gas (GHG) emissions from global maritime transport are estimated to have been over 20% lower in 2012 than in 2007, according to "London Matters

NAT Tankship Rescues 150 in Mediterranean

Nordic American Tankers Limited ("NAT") says the one of its vessels, the 'Nordic Passat' performed a rescue operation, involving 150 people in the Mediterranean last Saturday afternoon,

FSL Trust Appoint Esben Poulson Independent Director

FSL Trust Management Pte. Ltd. (“FSLTM”), as Trustee- Manager of First Ship Lease Trust (“FSL Trust” ) informs it has appointed Esben Sofren Poulsson as Non-Executive Independent Director of FSLTM,

Insurance

YoungShip Young Corporation Award 2014

For its efforts to promote young employee development, marine insurer GARD has been awarded the 2014 YoungShip Young Corporation Award. The shipping industry

Coast Guard: Investigations Underway in Cutter Collision

The Coast Guard is conducting a series of formal investigations after Tuesday’s collision involving a Coast Guard cutter and a fishing vessel off the coast of Puerto Rico.

 
 
Maritime Security Naval Architecture Navigation Offshore Oil Pipelines Pod Propulsion Port Authority Salvage Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1510 sec (7 req/sec)