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 Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter February 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Legal

Vessel Discharge Amendment Push Continues

AWO voices strong opposition to McCain anti-Jones Act amendment   The American Waterways Operators (AWO) is continuing an intensive lobbying campaign to bring

NATO Launches Sea Mission Against People-Smugglers

NATO, EU mission to help target traffickers in Aegean Sea. NATO ships are on their way to the Aegean Sea to help Turkey and Greece crack down on criminal networks smuggling refugees into Europe,

Greeks at Frontline of Migrant Crisis Angry at EU Critics

ABOARD THE AGIOS EFSTRATIOS, Aegean Sea, Feb 11: Greek Captain Argyris Frangoulis lifts his binoculars and with eyes fixed on the Aegean Sea horizon, steers his

Finance

Baltic Index Pauses at Record Low

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, ended flat on Thursday after declining for 12 straight sessions

Long Beach Sees Robust Container Growth

The Port of Long Beach kicked off 2016 by logging its seventh straight month of cargo increases, showing a 24.8 percent jump in container shipments over the same month last year.

Maersk Drilling Posts Record Profit

Maersk Drilling delivered the best result ever with a profit of USD 751m (USD 478m) in 2015 generating a ROIC of 9.3% (7.1%). The result was positively impacted

Casualties

42 People Rescued after Abandoning Ship off Hawaii

Forty-two people are safe after abandoning ship approximately 1,800 miles south of the Hawaiian Islands, Thursday, the U.S. Coast Guard reported.   Crewmembers

NTSB to Search for El Faro’s Voyage Data Recorder

Second search mission to sunken El Faro seeks to locate missing voyage data recorder   The National Transportation Safety Board (NTSB) said it will initiate a

Innovative Equipment Will Help Unload Listing Ship

Following Smit Salvage’s salvage of the stricken ship Modern Express in the Gulf of Biscay, another Rotterdam company has now become involved in the rescue operations.

People in the News

Guy Harvey to be Honored by Seafarer's House

Guy Harvey – artist, conservationist and entrepreneur – has been selected as this year’s recipient of the Seafarers’ House International Golden Compass Award. The

Delia Succeeds Schmidt as Ohmsett Program Manager

MAR Incorporated has named John Delia the Program manager for Ohmsett – The National Oil Spill Response Research & Renewable Energy Test Facility, succeeding Bill Schmidt who retired in December 2015.

OTC Names 2016 Award Winners

The 2016 Offshore Technology Conference (OTC) will honor this year’s Distinguished Achievement Award recipients on Tuesday, 3 May, in Houston.   As part of the

 
 
Maritime Careers / Shipboard Positions Naval Architecture Navigation Offshore Oil Pod Propulsion Port Authority Salvage Ship Repair Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | 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: 0.1008 sec (10 req/sec)