Buyer (and seller) beware

Charles Fernandez, of Sompo Canopius, warns of some of the pitfalls of insuring vessels as they head to the scrapyard


Between its productive lifetime on the high seas and its ultimate breaking-up in a specialist shipyard, vessels sold for scrap typically come briefly into the possession of very specialised third parties known as a “cash buyers”. Few in number and rich in knowledge, these undertakers of the marine world sometimes face very large potential liabilities under recent international conventions. Should the worst happen as a vessel makes its final voyage, even those who have purchased insurance may be hit with astronomical costs far in excess of the value of their cover. These new liabilities affect all vessel owners, but a specialist insurance market exists for certain end-of-life voyages, and not everyone affected has full knowledge of the risks they present.