In the event of shipyards not delivering a vessel on the delivery date as per building contract triggered e.g. by Force Majeure events or physical damage to the yard, an agreed amount is paid out for each day of delay up to and agreed limit. The policy is structured like a Loss of Hire policy (except scope which goes beyond physical damage to the vessel) with a deductible period expressed in days and a limit also expressed in days (correlated to the cancellation provisions in the Shipbuilding Contract).
Scope:
Delay in delivery of a newbuilding, or conversion, following events falling within the Permissible Delay Clause (largely Force Majeure events) in the building contract. A Non-Delivery Insurance should be structured to pay at the time of exhaustion of the Delay in Delivery Insurance. Insolvency and Political Risks may also be included in the Non-Delivery Insurance but do not lend themselves to inclusion under Delay in Delivery due to the Waiting Time requirements under these policies.
Applies to:
Operator with new building under construction or conversion in an increasing market; or where advantageous charter has been secured.
How it works:
In the event of shipyards not delivering a vessel on the delivery date as per building contract triggered e.g. by Force Majeure events or physical damage to the yard, an agreed amount is paid out for each day of delay up to and agreed limit. The policy is structured like a Loss of Hire policy (except scope which goes beyond physical damage to the vessel) with a deductible period expressed in days and a limit also expressed in days (correlated to the cancellation provisions in the Shipbuilding Contract).
Markets:
Lloyd’s, Norway.
Price Range:
0.75% - 1.5% for physical damage only.
Self Retention:
30 - 120 days depending on contract.
Time to market:
Up to 45 days depending on scope, less than 2 weeks if physical damage only.
