What are layup returns in insurance ?

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The Institute Time Clauses - Hulls 1/10/83 allows for lay-up returns to be reimbursed by underwriters. A lay-up return is a return of premium for the period a vessel is laid-up either in a port or a specified lay-up area.

The amount of return will depend on whether the vessel is under repair or not and the number of crew on board. Theoretically, the percentage is fixed at the outset of the policy, however the underlying annual rate is usually higher where such lay-up returns are allowed. This is in contrast to a "Cancelling Returns Only" (CRO) designated policy where the annual rate will be lower but the Assured continues to pay full premium during the lay-up. This decision, which must be taken at the outset of the policy, has in recent times not been an issue for the majority of owners because freight rates were high and vessels were rarely being laid-up, hence CRO was almost invariably being taken to reduce annual premium costs.