Fees for marine loss assessment on commercial vessels

Mapping the professionals and who pays them

The underwriters' surveyor is appointed and paid by the insurers, although on some hull claims surveyors' fees are treated as part of the cost of the claim. The classification society charges the owner for class surveys as part of its normal relationship. The average adjuster, who prepares the adjustment of the claim or general average, is typically paid on a time basis and the cost is often included in the claim, subject to the policy.

The owner's own marine consultant or loss assessor is a separate engagement, chosen and paid by the owner. That is the fee this guide focuses on, while keeping in view the costs that the claim may already absorb.

What an owner's consultant delivers

The work typically includes reviewing the hull and machinery clauses, attending joint surveys, testing the cause analysis, reviewing yard tenders and repair specifications, separating casualty work from owner's maintenance in the drydock, checking the allocation of common costs, preparing documentation for the average adjuster, and negotiating on disputed items. On machinery claims it can include commissioning independent engine or metallurgical opinions.

Indicative amounts, to be checked with each expert.

Reference bands for percentage mandates

There is no statutory or industry tariff for owners' marine consultants in the UK, the United States, Canada, Australia or Ireland. The table offers an order of magnitude observed in the market, in US dollars, which remains the usual currency for hull values. These are non-official indications and many marine experts work on day rates instead.

As with other claims, rates fall as losses grow. Because hull claims can reach tens of millions, the top bands are almost always negotiated individually and often replaced by a time-based arrangement with a budget.

Owners should treat these figures as a starting point for discussion rather than a price list. A grounding with clear cause and a cooperative yard may need far less consultant time than a smaller machinery claim in which the cause is disputed and several engine specialists must be heard. Asking a consultant to explain where a quote sits against such bands, and why, is a simple way to test whether the proposal is reasoned or arbitrary.

Calculation methods and their effect

Shipowners should compare not only rates but bases. The following structures are found in practice.

• Percentage of the adjusted claim recoverable from hull underwriters
• Percentage of the amount recovered above the underwriters' surveyor's initial assessment
• Daily or hourly rates for attendance, report writing and meetings, plus travel
• Retainer arrangements for fleets, with reduced rates per casualty
• Mixed models combining a lower day rate with a success element on contested items

Travel, waiting time and taxes

Marine casualties happen in distant ports and repairs take place in yards across the world. Flights at short notice, accommodation near the yard, waiting time while the ship is docked and local agency costs can be significant. Agree in advance whether travel time is billed at full or reduced rate, and whether expenses are charged at cost. Professional fees may attract VAT or other taxes depending on where the consultant is established and where the owner is based.

Can the hull policy absorb the cost?

Hull clauses commonly treat reasonable costs incurred to avert or minimise a loss as recoverable, and the costs of the average adjuster and of underwriters' surveys are often part of the claim. The owner's own consultant is less clearly covered. Some clauses exclude the owner's claims preparation costs, while others are silent; tailored fleet policies or the owner's freight, demurrage and defence cover may offer limited help with disputes.

Because the position varies, ask the broker to confirm which costs will be accepted in the adjustment, and obtain underwriters' agreement in writing if you expect to include your consultant's attendance at joint surveys as part of the claim.

Scaling with the size of the casualty

A small machinery claim of around USD 80,000 just above the deductible may not justify an external consultant if the technical superintendent can manage the yard and the surveyor. A few days of consultancy for a focused review can still be useful if the cause is contested.

A medium casualty, for example USD 1.5 million of bottom damage after a grounding, is a typical case for an owner's expert. At an indicative 4 per cent of the adjusted claim, the fee would be about USD 60,000 plus expenses. On a time basis, perhaps 25 to 40 consultant days at a day rate agreed in advance, the cost could be lower or higher depending on the duration of the repair and the number of disputed items.

A major loss of USD 15 million, such as an engine room fire, sits in the bands where percentages fall to low single digits or below. Budgets, regular reporting and milestones become essential controls.

In every case, the relevant comparison is between the expected fee and the realistic improvement the consultant can achieve, for instance on yard cost allocation, machinery depreciation or the acceptance of temporary repairs and deviation expenses. Where the underwriters' assessment is already thorough and fair, a limited review may be all that is needed.

Illustration of a tiered computation

Applying each band only to its own slice, with indicative mid-points, a USD 1.5 million claim could be charged 8.5 per cent of the first USD 100,000, 6 per cent of the next USD 400,000 and 4 per cent of the remaining USD 1 million, totalling around USD 72,500. A single rate of 4 per cent on the whole amount would give USD 60,000. The difference shows why the method must be written into the agreement.

Selecting a consultant and agreeing terms

Experience with the ship type, the machinery maker and the yards concerned matters more than a small difference in rate. Ask for qualifications, such as a master mariner, chief engineer or naval architect background, and examples of similar casualties handled for owners.

The engagement letter should state the scope, fee base, rates, expense rules, invoicing intervals, the treatment of general average and collision work, and what is due if underwriters decline cover. A consultant who promises a guaranteed recovery before surveys and teardowns are complete should be treated with caution.

Fleet operators may also negotiate a framework agreement covering several vessels, with pre-agreed day rates, response times and reporting formats. This simplifies instructions when a casualty occurs at an inconvenient moment and avoids negotiating fees under pressure while the ship is waiting for a drydock slot.

• Obtain proposals on both a percentage and a day-rate basis
• Ask for a budget estimate and agreed reporting points
• Clarify which costs the average adjuster will include in the claim
• Keep your broker and P&I club informed

Marine claims fees depend on the size of the casualty, the method of charging and what the hull policy absorbs. Compare structures carefully and agree budgets before the ship goes into dock.