The bulk carrier Evita was sailing westwards on the Norwegian Western coast on a voyage from Trondheim to Hamburg. 1. May 11.00 AM 2021, when passing Stavanger, she hit a reef and water started to ingress into a cargo tank. Furthermore, bunkers (fuel) started leaking from one of the fuel tanks.

Evita had P & I Insurance and Hull insurance with Gard and Loss of Hire Insurance (LoH) with Norwegian Hull Club (NHC). The Hull insurance and the LoH insurances were based on the plan on the following terms:
- Hull: Insurable value: USD 30 million, Sum of insurance: USD 30 million, Deductible: USD USD 30.000
- LoH: Number of deductible days: 10. Number of days covered per causality: 80. Total number of days covered for the insurance period: 90.
The master notified the Owners, Gard and NHC and assistance from a local towage and salvage firm was retained to assist. Furthermore, the pollution authorities were notified as the wind was strong and the bunkers oil leakage was spreading over a wide area.
Two tugs arrived 1. May 02.00 PM and started towing Evita towards a ship yard close to Stavanger.
1. May 11.00 PM Evita arrived outside the yard. The damages to Evita were surveyed and it was concluded which classes of repairs that were necessary. The surveyors’ report was submitted to the yard, which gave the following offer:
- Repairs of the hull: USD 150.000
- Repairs of the cargo tank: USD 80.000
- Repairs of the bunkers tank: USD 30.000
- Repairs of vital parts of the engine system: Complete repairs of the damaged parts: USD
150.000. However, it was possible to carry out provisional repairs only. Such provisional repairs would be sufficient for a period of about 2 months at sea. The offer for the provisional repair costs amounted to USD 50.000.
A while ago the owners of Evita had agreed with a yard in Rotterdam to upgrade major parts of engine system and this upgrading work should start 1. July. On this background the Owners decided that only the provisional repairs of the damaged parts of the engine should be carried out at the yard in Stavanger.
The repair works related to the hull damages, the cargo tanks damages and the bunkers tank damages started 15. May 11.00 AM. These classes of work were completed 30. May 11.00 AM.
20. May 11.00 AM – 22 May 11.00 AM some class work, which were not related to the causality, was carried out simultaneously with the repair works. Furthermore, some paint work was carried out 23. May 11.00 AM – 27. May 11.00 AM simultaneously with the repair work.
The provisional repairs of the engine system could not start until the completion of the other repairs works. As a consequence, the work on the machinery system started 30. May 11.00 AM. These classes of works were completed 10. June 11.00 AM and Evita left the yard in that moment.
The yard was located in a narrow fjord. In the early morning of 10. June a ship had stranded further out and it was not possible for Evita to pass that ship as long as the rescue operations were going on. Consequently, Evita had to wait outside the yard until the completion of the rescue operations. The operations were completed 13. June 11.00 AM and Evita could start sailing for Hamburg immediately.
No problems arose during the voyage to Hamburg or to the voyage from Hamburg to Rotterdam. Before the arrival at the yard in Rotterdam the following work schedule was agreed upon:

- Complete repairs of the parts of the machinery system that were provisionally repaired in Stavanger. The plan to upgrade the machinery system did not include these parts. It was established that the provisional repair work now had no value and these parts of the engine system had to be repaired in full as if no provisional repairs had been carried out. The offer for theses repairs amounted to USD 120.000.
- The above work should start 1. July 11.00 AM and was planned to be completed 12. July 11.00 AM.
- The other classes of work (The upgrading) should commence 12. July 11.00 AM and should be completed 30. July 11.00 AM.
The work started 1. July 11.00 AM, as planned, and the yard was able to carry out all the work fully in line with the agreed work schedule.

e.) Explain the principles for how these costs are distributed between the Owners of Evita, Gard P & I and The International Group of P & I Clubs.

Answer rating: 100% (QA)

The use of marine insurance as a means of providing protection against loss by maritime perils can be traced back to at least 215 BCE but the origins of marine insurance as it is practiced today can b... View the full answer