Unlocking Clause 54: Are You Missing Out on Return Insurance Premiums?

💸 Unlocking Clause 54: Are You Missing Out on Return Insurance Premiums?

❓ Can charterers legally claim a share of an owner's insurance refund?

❓ Does a vessel at anchor qualify for a return premium?

❓ Are you losing money by ignoring this hidden clause?

🔍 Understanding Clause 54 – Return Insurance Premium

Clause 54 is often overlooked but can deliver real cost savings for charterers—if you know how to leverage it. It outlines how charterers benefit from refunds (return premiums) on the vessel's insurance policy when specific criteria are met.

📜 The Clause:

"Charterers to have the benefit of any return insurance premium receivable by the Owners from their Underwriters (as and when received from underwriters), by reason of the Vessel being in port / anchorage qualifying for such return provided Vessel is on hire."

🧠 Clause Breakdown:

• Return Premium Defined: When vessels remain in low-risk zones (like ports or anchorages) for a specified time, underwriters may refund part of the paid insurance premium.
• Charterers' Benefit: If the ship is on hire during such periods, the charterer is entitled to that refund—but only once the owners receive it from insurers.
• Timing: The refund is conditional—not guaranteed—and is dependent on underwriters' policies and timelines.

⚠️ Common Pitfalls:

• Assuming Automatic Credit: The clause only grants benefit after the owner receives the refund—not immediately.
• Overlooking On-Hire Requirement: The vessel must be on hire during the qualifying period. Off-hire events can void the benefit.
• Lack of Transparency: Owners may not proactively inform charterers when they receive a refund unless prompted.

💼 Practical Example:

A vessel anchored for 10 days at Singapore, which qualified for return premium under the H&M policy. The charterer, aware of Clause 54, formally requested their proportional benefit. Without Clause 54, this refund would have been retained by the owner.

📘 BIMCO Commentary:

While not all BIMCO forms include an exact Clause 54 equivalent, BIMCO does encourage clear allocation of insurance benefits. For instance, BIMCO’s SHIPMAN and BARECON forms address insurance proceeds, though typically from an owner’s view. This clause gives charterers a rare right to shared financial benefit.

 

✅ Actionable Steps for Stakeholders

1. Check Your Insurance Clause – Ensure Clause 54 or a similar provision is present in your charter party.
2. Track Port Stay Durations – Monitor days spent at qualifying anchorages or ports while on hire.
3. Request Confirmation from Owners – Proactively ask owners if return premiums were received and claim your share.
4. Coordinate with Underwriters – When possible, confirm refund eligibility terms directly with insurers.
5. Include in Voyage Cost Analysis – Factor potential returns into your budgeting and reporting cycles.

 

📣 Conclusion & Call to Action

Clause 54 proves that sometimes, staying still pays off. Don’t miss your chance to recover part of your chartering costs. Track, ask, and claim what’s rightfully yours. ⚓💼

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⚠️ Disclaimer:

This blog post is for informational purposes only and does not constitute legal or insurance advice. Stakeholders should consult qualified maritime legal or insurance professionals before acting on Clause 54 or similar provisions.