UAE: Shipping company fights for compensation after engine failure

Question: We are a shipping company. During one of our ship's voyages, its port (left-hand side) engine failed. The ship completed the voyage using the remaining engine. Due to the inability to repair the engine at its docking location, it returned to its starting point. It was later discovered that the engine had sustained significant damage. We notified the insurance company of the incident to request compensation, but they refused, claiming we were 25 days late in reporting the incident, which allegedly caused further damage and liabilities. Noting that we pay our insurance premiums on time, do we have the right to compensation? Please advise.

Answer: The insured must, upon becoming aware of the occurrence of any accident covered by the insurer, promptly notify the latter so that it may take appropriate measures, such as examining the incident, verifying its cause, and assessing the extent of the damage. However, a delay in notifying the insurer does not automatically result in the loss of the right to compensation, particularly if the insured has been paying premiums and associated expenses at the agreed place and time. Nevertheless, the insurer retains the right to seek compensation from the insured if it can demonstrate that the delay in notification caused it harm.

According to Articles 286, 310, 312, and 317 of the Federal Decree by Law No. (43) of 2023 Concerning Maritime Law, a ship insurance contract may be executed for a single voyage, multiple voyages, or a fixed period. The ship is covered continuously, irrespective of its location, within the limits of the voyage, period, and type of navigation specified in the contract. The insurance covers the ship’s hull, moving machinery, and accessories owned by the insured. The insurer guarantees, within the limits of the insured amount, damages arising from any accident occurring during the validity of the policy. It also covers damages to the ship or its machinery resulting from unintentional faults committed by the captain or crew.