This Chapter discusses the clause in Supplytime which requires owners to have insurances for the vessel, together with Annex B which lists the insurances required.
Supplytime is based on a knock-for-knock arrangement whose purpose is related to insurance: the arrangement is intended to reduce the overall cost of insurance for the project by enabling each risk of damage or liability to be insured once only, by the party to whom the risk is allocated under the knock-for-knock. But these insurance provisions are not drafted to support the knock-for-knock. Rather, Annex B is based on a list of the insurances which (in the absence of any knock-for-knock) the operator of an oil or gas field would require of a contractor before letting the contractor onto the operator’s worksite, and also seems to be tailored only to require the owners to have the insurances which they would have purchased in the ordinary course of things.
The list of insurances has not been thoroughly updated since 1989, and does not include any obligation for the vessel to have certificates for the compulsory insurances required under international conventions. (The Chapter mentions a route by which Supplytime may yet oblige the vessel to have these “blue cards”.)
The Chapter deals with the details of Annex B, including the question whether the wording requires the owners to purchase “specialist operations” buyback cover in addition to a basic P&I club entry.
It also discusses the provisions in Supplytime with regard to waivers of subrogation and co-insurance. The effect of these will be familiar to those acquainted with the details of P&I club rules, but others may be surprised how little these provisions give to the charterers and their client.
Under Supplytime 89 and 2005 the charterers’ recourse if the owners did not have the insurances required was to buy the insurance and send the owners the bill. It would normally not be practical for the charterers to obtain liability insurance for the vessel, and under Supplytime 2017 the remedy has been changed. The charterers now have the right to terminate the charter, but under the Supplytime 2017 termination procedure the charterers have to give notice and then wait 14 days before terminating, which is a long time if the charterers cannot use the vessel because the liability insurance required is not in place. What charterers need is a range of remedies to deal with the situation, including a right to terminate with a notice period of only a few days.