A vessel is meant to trade to generate income. But what if the vessel is deprived of income as a consequence of damage? At this point an Owner still has his running costs, but no income. For these circumstances there is a Loss of Hire Insurance.
A Loss of Hire insurance covers loss of income following a physical damage to the vessel, recoverable from the underlying hull & machinery cover. This enables ship owners to protect their income and cash flow in the event of a casualty.
Compensation shall be determined on the basis of the time during which the vessel has been deprived of income (the loss of time) and the loss of income per day (the daily amount). In general this insurance has a deductible of 14 days and will pay out 60, 90 or even 180 days.