top of page

SCOPIC costs alongwith salvage charges to be included when deciding a vessel is CTL?

Updated: Apr 10, 2022

If the ship is not financially worth repairing after suffering damage in an accident then it is deemed to be a constructive total loss (CTL). Besides other things such as steel renewal, painting works etc., salvage charges also do form part of the calculation. The principle being that a vessel must be salved in order to be repaired. But should the SCOPIC costs be included alongwith salvage charges or not?

SCOPIC costs could sometime be significant, as in the case of The Renos [2019] (a ship that was damaged extensively following an e/rm fire) where SCOPIC liability of owners was $1.34m whereas their salvage liability was only $1.24m. The question made its way up to the UK Supreme court. It would benefit H&M insurers if SCOPIC costs are not included as they would not have to pay out for total loss. Lower courts had decided against H&M insurers.

Court emphatically said 'NO'. They found that the purpose of SCOPIC costs is different and unrelated to the hull – it is purely to protect owner’s liability for pollution. A win for hull insurers or as Tradewinds put it – a lifeline for them.

But will that result in the vessel not being a CTL remains to be seen, as the exact repair costs have still to be figured out - somewhere between $11.8m and $13.9.

3 views0 comments


Recent posts

bottom of page