Clause 22: Returns for Lay-up and Cancellation

22.1 To return as follows:

22.1.1 Pro rata monthly net for each uncommenced month if this insurance be cancelled by agreement. 

22.1.2 For each period of 30 consecutive days the vessel may be laid up in a port or in a lay-up area provided such port or lay-up area is approved by the Underwriters (with special liberties as hereinafter allowed) 

(a) {Response} per cent net not under repair

(b) {Response} per cent net under repair.

If the vessel is under repair during part only of a period for which a return is claimable, the return shall be calculated pro rata to the number of days under (a) and (b) respectively.



22.2.1 a total loss of the vessel, whether by insured perils or otherwise, has not occurred during the period covered by this insurance or any extension thereof

22.2.2 in no case shall a return be allowed when the vessel is lying in exposed or unprotected waters, or in a port or lay-up area not approved by the Underwriters but, provided the Underwriters agree that such non-approved lay-up area is deemed to be within the vicinity of the approved port or lay-up area, days during which the vessel is laid up in such non-approved lay-up area may be added to days in the approved port or lay-up area to calculate a period of 30 consecutive days and a return shall be allowed for the proportion of such period during which the vessel is actually laid up in the approved port or layup area

22.2.3 loading or discharging operations or the presence of cargo on board shall not debar returns but no return shall be allowed for any period during which the vessel is being used for the storage of cargo or for lightering purposes

22.2.4 in the event of any amendment of the annual rate, the above rates of return shall be adjusted accordingly

22.2.5 in the event of any return recoverable under this Clause 22 being based on 30 consecutive days which fall on successive insurances effected for the same Assured, this insurance shall only be liable for an amount calculated at pro rata of the period rates 22.1.2(a) and/or (b) above for the number of days which come within the period of this insurance and to which a return is actually applicable. Such overlapping period shall run, at the option of the Assured, either from the first day on which the vessel is laid up or the first day of a period of 30 consecutive days as provided under 22.1.2(a) or (b), or 22.2.2 above.

The following clauses shall be paramount and shall override anything contained in this insurance inconsistent therewith.

Comments to ITCH

Clause 22.1

Sub-Clause 22.1.1 Cancellation

The natural main rule stated in 22.1.1 is that a pro rata net return should be made if the policy is cancelled by agreement before expiry. The return is to be made for each un-commenced remaining month. No return is to be made if the policy expires as the result of a total loss irrespective of whether the total loss has been caused by an insured peril or not, see 22.2.1.

Comments to NMIP

NMIP Cl. 6-3 and 6-5

NMIP Cl. 6-5 states a similar but broader main rule that no premium is to be paid for any period when the insurance is not in force. This applies both to periods after a cancellation and to periods during which cover is suspended, e.g. NMIP Cl. 3-19. Clause 6-3 states that the reduction does not apply where cover is terminated because the vessel becomes a total loss as a consequence of a peril insured against. Unlike Cl. 22.1.1 a return of premium shall be made if the vessel becomes a total loss due to a peril that is not covered by the policy. In the case of a combination of insured and uninsured perils, see NMIP Cl. 2-13 the return of premium will be pro rata both to the time remaining and pro rata in relation to the effect of the insured and uninsured perils. 

Comments to ITCH

ITCH Cl. 22.1.2 Lay-up

Returns in premium for periods in lay-up are allowed for vessels laid up for more than 30 consecutive days. The clause is structured on the basis that different return rates will apply for vessels laid up not under repair and under repair.

The lay-up location shall be approved by the underwriters.

ITCH Cl. 22.2.2 – 22.2.5 contain detailed rules for calculating premium returns in a number of very specific cases.

Comments to NMIP

NMIP Cl. 6-6 Reduction of premium when the ship is laid up

Negotiations with the underwriter regarding reduction of premium may be demanded by the assured for vessels which have been laid up for an uninterrupted period of at least 30 days.

For vessels laid up the assured shall present a lay-up plan to the insurer for approval as per Cl. 3-26.

No reduction of premium is allowed for vessels:

-       With cargo on board

-       Insured against Total Loss and/or General Average Cover only as per Cl. 10-5 and 10-6.

A demand for lay-up returns must be made within 6 months of the expiry of the policy.

There are no provisions regulating the details dealt with in ITCH Cl. 22.2.2 – 22.2.5