When the shipping industry is deeply entangled in geopolitical tensions, extreme weather, and supply chain disruptions, one fact becomes increasingly clear: traditional hull insurance and P&I coverage are no longer sufficient to meet shipping needs.
During events like blocked shipping lanes, wars, pandemics, port strikes, and unexpected suspensions of voyages, shipowners and charterers face a significant risk—vessel delays. However, many still believe that any delays while a ship waits at anchor for berths or cargo operations are just part of the “commercial game” and cannot be mitigated through insurance. But is this really the case?
The “Illusion” of Lay-Up Returns
Clause 22 of the 1983 Institute Time Clauses-Hulls (ITC-Hulls /83) stipulates that if a vessel is officially laid up (i.e., not fully operational and effectively out of service) for more than 30 consecutive days in port, the insurer will refund a portion of the premium for the corresponding period.
However, prolonged delays—such as ships idling outside congested ports or awaiting charter instructions—do not necessarily qualify for lay-up returns under the policy.
The reasons may include:
· The vessel remains class-certified, crewed, and ready for operation at any time;
· The insurer still bears risks for all perils, including war, piracy, fire, and collision;
· Delay risks fall under commercial considerations rather than physical loss or coverage scope.
As a result, delays do not constitute a lay-up scenario under the policy, meaning full premiums remain payable while shipowners also bear the loss of time.
From Gaza to Odesa: Delays as the New Risk
The conflict between Iran and Israel, the ongoing Russia-Ukraine war, the Suez Canal blockage, threats from Houthi rebels in the Red Sea, and the Black Sea blockade all highlight an unavoidable new risk for the shipping industry—vessel delays, which can last days, weeks, or even months, with traditional policy clauses offering no recourse.
In reality, the shipping industry has entered a new era where delays are no longer just a commercial risk but occur frequently with severe consequences. Without insurance coverage, shipowners/vessel managers face these delays directly, shouldering immense uncertainty and financial losses.
A New Development: Insurable Delay Risks
In recent years, Lloyd’s market, major P&I clubs, and insurers have introduced delay insurance products to address scenarios such as:
· Port closures due to war, revolution, terrorism, or major accidents;
· Delays caused by quarantine restrictions or disease outbreaks;
· Strikes, riots, and labor disputes at destination ports;
· Infrastructure damage from catastrophic events like earthquakes and hurricanes.
These insured risks are not standard marine insurance items but fall under delay risk coverage, designed to compensate shipowners for disruptions caused by real-world perils. The industry also refers to it as “trade disruption insurance,” tailored for today’s unpredictable global trade landscape.
Specifically, shipowners, bareboat charterers, charterers, and vessel managers can now secure customized delay insurance, complementing traditional hull and P&I coverage to create a comprehensive risk mitigation system encompassing “property + liability + loss of hire.” Of course, when purchasing delay insurance, alignment with existing marine insurance policies is essential.
Source: Marasco Marine Ltd
