Category: Insurance case law · Reviewed by Mark Fox, Broker · Renewals · Last reviewed June 2026
Commercial Court decision on a loss-of-hire marine insurance policy: clarification of the scope of cover, the meaning of “occurrence”, and how successive mechanical failures of the same component are to be treated for aggregation of off-hire days.
Sealion Shipping Ltd (“Sealion”) owned the Toisa Pisces, an offshore support vessel chartered for use in the deepwater oil and gas sector. The vessel was insured under a loss-of-hire policy with Valiant Insurance Company and other underwriters, covering daily loss-of-hire income arising from accidental damage to the vessel or its machinery, subject to a deductible period and a maximum indemnity period per occurrence and in the aggregate.
During the policy period the vessel suffered a series of failures of its port-side electric propulsion motor. The motor failed, was repaired or replaced, returned to service, and then failed again — and this pattern repeated. Owners brought a claim under the loss-of-hire policy for the loss of charter income across the multiple periods the vessel was off-hire as a result of these failures.
Underwriters disputed the claim on a number of bases, including: (i) whether the policy responded at all to the type of failure suffered (whether the cause was within the perils covered or fell within an exclusion such as for ordinary wear and tear, latent defect, or design defect); (ii) the proper construction of the words “occurrence” and “accident” in the policy; (iii) whether successive failures of the same motor should be treated as a single “occurrence” and so aggregated under the per-occurrence limit, or as separate occurrences each attracting a fresh deductible; and (iv) various quantum and causation arguments.
Sealion contended that each motor failure was a separate accidental occurrence, that the failures were not the result of inherent defect or wear and tear, and that the policy responded to each loss-of-hire period subject only to the agreed deductible.
The case was tried by Blair J in the Commercial Court following expert evidence on the cause of the motor failures.
The central issues were:
(1) Whether the loss-of-hire policy responded to the motor failures, having regard to the policy’s insured perils and exclusions, including any exclusion for wear and tear, latent defect, or design.
(2) The proper meaning of “occurrence” in a loss-of-hire policy of this type and the test for aggregating successive incidents arising from the same root cause for the purposes of the per-occurrence limit and deductible.
(3) Whether the repeated failures of the same motor component constituted one occurrence or several, and what was the proper unifying factor (cause, event, place, time, or combination).
(4) Quantum: the calculation of the daily indemnity and aggregation of recoverable days.
Blair J found largely in favour of the assured. The judge held that the proximate cause of each motor failure was accidental damage of a kind covered by the policy and not within any applicable exclusion. The evidence did not establish that the failures were attributable to inherent wear and tear or pre-existing design defect of a kind that would defeat cover.
On the aggregation question, the judge addressed the proper meaning of “occurrence” in the loss-of-hire context. Adopting the established approach from cases such as Axa Reinsurance v Field and Caudle v Sharp, he held that “occurrence” is a unifying concept narrower than “cause” — it requires an event with relevant unity of time, place and cause. On the facts, the successive motor failures were separated by intervening repair, return to service and renewed operation. They could not be treated as one continuous occurrence; each failure was a discrete event.
The Court therefore concluded that the assured was entitled to recover for each separate off-hire period (subject to the deductible per occurrence) up to the aggregate indemnity limit. The judge undertook a detailed assessment of the days of cover engaged and the quantum payable.
Underwriters’ arguments based on wear and tear, latent defect, and the exhaustion of the per-occurrence limit were rejected on the facts and the construction adopted.
The ratio is twofold. First, in a marine loss-of-hire policy, “occurrence” carries the orthodox meaning developed in the reinsurance aggregation jurisprudence: a unifying event with relevant unity of cause, time, location and intent. Successive mechanical failures of the same component, separated by periods of repair and return to service, are not one continuing occurrence merely because they share a common root cause; each is a discrete occurrence.
Second, the loss-of-hire perils insured under the policy responded to accidental damage to machinery in the absence of clear proof that the loss was caused by an excluded peril such as wear and tear, latent defect or design. The burden of bringing the loss within an exclusion lay on underwriters and was not discharged on the evidence.
The Toisa Pisces is an important modern authority on loss-of-hire insurance, a specialist marine class often written for owners of offshore support vessels, drilling units and similar specialised tonnage. It is one of the few recent reported English decisions on the construction of bespoke loss-of-hire wordings.
The case provides practical guidance on several recurring issues. It confirms that aggregation language in loss-of-hire policies is to be read against the backdrop of the well-developed reinsurance and liability case law on “occurrence” — including Axa Reinsurance Co v Field [1996] 1 WLR 1026 and Caudle v Sharp [1995] LRLR 433. Brokers and underwriters should therefore draft loss-of-hire wordings with explicit attention to whether they intend successive failures of the same component to aggregate or not.
The decision also reinforces that the onus of bringing a loss within an exclusion clause (wear and tear, latent defect, design) rests on the insurer, and that this is a demanding evidential burden requiring clear expert engineering support.
For the offshore marine sector, the case is regularly cited by both owners and underwriters in claim disputes about complex, intermittent or progressive machinery failures. It is also relevant to the wider marine insurance market in relation to time-charter loss of earnings, “delay” cover, and the boundary between accidental damage and inherent vice.
By Matt Bartlett, Director, on 2026-06-06. Next review: 2026-12-06.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-06. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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