Handling Ffo Damage Claims

One of the most frequently encountered cases are claims for damage caused to fixed and floating objects (FFO). Shipowners are aware that the extent of the damage for fixed and floating objects claims can be very different and evaluate to several hundred thousand Dollars. Usually fixed and floating objects claims include 2 categories: actual damage and consequential or auxiliary losses. Sometimes the second category of losses might be much more than actual losses. We mostly faced with claims which consist of the following points:

• Costs of actual damage caused, such as repair costs, costs of materials, spare parts, tools, and costs of the labor force.

• Non-received profit from damaged objects, for instance, when the pier is out of operational readiness for commercial purposes for the period of repair. • Taxes on the value of repair costs (for instance, VAT, etc.).

• Costs for auxiliary operations (tugs, transport, office and communication expenses, payments for re-birthing, shifting operations from the damaged pier, etc.). In FFO claims damage is caused to port objects (piers, berths, floating cranes, barges, port constructions and installations, pilot tug-boats, navigational buoys, and other equipment, etc.). The damage is determined and evaluated by the Port Authority or other bodies. It is quite a common situation when the amount of damage caused is extremely exaggerated by the claimants at the initial stage of claim assessment. Meanwhile, the participation of P&I Correspondents on the initial stage of the claim is the condition of its successful settlement, reducing and releasing the ship in case of detention.

During loading operations at the port terminal, the vessel crane damaged the loader. The loading was stopped, damaged objects were inspected, and terminal prepared a statement of claim which included not only the actual loss but also auxiliary losses, including non-received profit due to the damaged loader. The vessel was detained till completion the investigation and claims settlement.

Due to our involvement, the vessel sailed without delay in exchange of P&I Correspondent Letter of Guarantee. After the joint assessment of damage and mitigation the claim the sum of claim was reduced, a relevant settlement agreement has been signed between the terminal administration and P&I Correspondent, and Release Letter was obtained.

• The Shipowners should approach P&I Correspondent in order to obtain the first information regarding the incident and extent of damage caused by agents, crews, PSC, port administration.

• Discuss proper security to the Port Authority.

• Appoint a surveyor for inspection the cause and damage assessment, repair costs with the participation of technician or experts, if necessary.

• Lodge Master’s Letter of Protest addressed to claimants.

• Arrange investigation of the incident and collect appropriate evidence for further claim assessment (weather reports, records of the all-weather forecast, navigational charts, radio log, reports/records of communication with port state control, pilot station, agents, other vessels, inspect log book and make photocopies of relevant extracts, etc.).

• Request ship sailing in exchange for proper security – Club’s LOU or P&I Correspondent’s Guarantee Letter.

• Carry out inspection of damaged objects and the surrounding area in order to determine the absence of pre-existing damage with relevant photos (buoys, berths, fenders, etc.). Based on these findings, request reducing the amount of claim if pre-existing damage is identified.

• Obtain the Release Letter from claimants upon claim settlement.