The Crankshaft Explosion and the Pending Sale

Red flags

• Known bearing problem. The engine maker's bulletin and the class condition recommendation show the owner had notice of a developing bearing defect. Ignoring both until the next dry dock supports a wear-and-tear or unseaworthiness argument rather than an accidental casualty.
• Abnormal oil analysis. Iron at 90 ppm against a 50 ppm limit is a documented warning of bearing deterioration. The owner's failure to act after that result is central to causation.
• Sale pending. A conditional sale agreement signed seven weeks before the casualty, closing subject to survey, creates a motive to convert a mechanical defect into an insured casualty or to inflate repairs before inspection.
• Alarm sequence. A six-second warning before a crankcase explosion is unusually short. The oil mist detector and alarm data should be checked; a long-standing deterioration would normally produce earlier alarms or trends.
• Repair scope. A new crankshaft plus four connecting rods may exceed what the damage requires. The yard's finding that fracture initiated at No. 3 bearing points to localised failure; betterment and repair-versus-replace must be tested.
• Loss of hire. USD 310,000 should be tested against actual charterparty, off-hire and earnings records, and against the vessel's trading pattern in a weak market.

These indicators do not prove fraud, but they shift the investigation from 'what happened' to 'what did the owner know and when'.

Evidence and expertise

1. Engine-room records. Obtain the engine log, bell book, oil mist detector records, alarm and monitoring data, maintenance logs, running hours and the chief engineer's night order book. Preserve the electronic alarm history before it is overwritten.
2. Maintenance history. Obtain all invoices and work orders for bearing work, bolt torqueing, crankshaft alignment and lubricating oil. Obtain the engine maker's service records and confirm whether the bulletin was received and acknowledged.
3. Oil analysis. Collect the full lubricating-oil analysis history, not just the single 90 ppm result. Instruct a laboratory to review trends for iron, copper, lead, tin, viscosity and water.
4. Metallurgy. Instruct an independent metallurgist to examine the fractured crankshaft and bearing shells, preserving fracture surfaces. The yard should not scrap components before examination.
5. Witness evidence. Interview the chief engineer, second engineer, duty engineer and ratings separately. Focus on the alarm sequence, unusual noise or vibration, and any prior work on No. 3 bearing.
6. Class and flag state. Obtain class survey reports, condition recommendations, statutory certificates and any outstanding recommendations. Interview the class surveyor.
7. Sale and financial records. Obtain the sale memorandum, pre-sale survey reports, broker correspondence and the owner's repair budget.
8. Yard and towage. Obtain the yard's damage report, repair specification, photographs and towage invoices.

Use a marine engineer and a metallurgist jointly so that the failure mechanism and the maintenance history are analysed together rather than in isolation.

Coverage and quantum

• Insured peril versus wear and tear. H&M covers accidental damage, but standard clauses exclude wear and tear, gradual deterioration, and damage that is the inevitable result of the insured's own failure to maintain. If the explosion resulted from a bearing defect known for months, the insurer has a strong exclusion argument. The owner may argue that the explosion itself was a sudden accidental event; causation will turn on the metallurgy and maintenance evidence.
• Seaworthiness and due diligence. In a time policy there is generally no implied warranty of seaworthiness, but the insurer may rely on the owner's knowledge of the defect, non-disclosure, or breach of a condition. The class recommendation and oil analysis are central to whether the owner was on notice.
• Sue and labour. Towage and reasonable steps to avert further loss may be recoverable even where the underlying damage is excluded, depending on the clause and whether the steps were reasonable.
• Betterment. Replacing a 2009 crankshaft with a new one improves the vessel. A new-for-old deduction or depreciation should be applied unless the policy provides otherwise.
• Deductible. The USD 250,000 deductible applies to the covered loss, and its allocation across repair, towage and loss of hire must follow the policy wording.
• Loss of hire. This is usually a separate cover with its own deductible and waiting period. It must be proved by actual earnings loss, not a market-rate estimate.

Recommended position: admit towage and reasonable mitigation costs, but hold repair and loss-of-hire items pending metallurgy, maintenance records and sale documents.