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Scope:
Loss arising from increased costs incurred after a Scrubber Breakdown due to the price differential between compliant and non-compliant fuels.
Applies to:
Anyone liable for extraordinary fuel expenses, where insufficient or no LOH is in place, or where there’s an interest in the commercial appeal of a vessel’s cost-efficient operation.
How it works:
IMO has set a global limit for Sulphur in fuel oil used on board ships of 0.50% m/m (mass by mass) from 1 January 2020. Shipowners worldwide have responded to this by having Exhaust Gas Cleaning Systems, known as Scrubbers, installed on their vessels. This provides the benefit of saving costs on bunkers as they can continue sailing on heavy fuel oils rather than switching to more expensive compliant fuels. The Scrubber in itself, once installed on a vessel, will be considered a part of the vessel and is thereby covered under conventional insurances such as H&M and LOH. However, extraordinary fuel costs if the Scrubber malfunctions but the vessel is not put off-hire will not have any coverage. The Scrubber Breakdown Insurance covers the cost differential between compliant and non- compliant fuel limited to the daily amount and limited to the total number of days agreed by the insurer. It is triggered by a breakdown / loss of the Scrubber equipment recoverable under the terms of the Nordic Plan, and depending on the size and consumption of the vessel, the total exposure could exceed USD 70.000 per day.
Markets:
Norway
Price Range:
About 25% of LOH
Time to Market:
Less than 7 days
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