Marine Hull Insurance

Marine Hull Insurance Overview:

Insurances related to transportation are not merely restricted to road transport. Apart from car insurance, two-wheeler insurance and travel insurance, there are also insurance products available for water transport. If you own a water vessel of any sort, you can opt for a marine hull insurance. Hull refers to the body of a vessel. This boat insurance plan is like a comprehensive automobile insurance. It covers all kinds of vessels going into the ocean, including ships, tankers, bulk carriers, dredgers, trawlers, fishing boats, pontoons, yachts, cruises and other pleasure boats, jetties and wharfs. Marine hull insurance allows boat owners to insure their vehicles against damage and destruction of hull, machinery, fittings and freight, as well as protection against construction and ship-breaking risks, liabilities, disbursement losses, oil and energy-related risks, etc. Many specialised forms of marine hull insurance are also available, such as yacht insurance, marine cargo insurance, marine import transit insurance, marine export transit insurance, and marine inland transit insurance policy.

Features Of Marine Hull Insurance:

Here are a few reasons why you must have a marine hull insurance if you are a ship-owner:

  • The risks of ocean travel are as great as those in road or air travel. Your ship could be damaged, lost or sunk in fire, robbery or collision, and the loss could be stupendous as marine vehicles do not come cheap. Owners of yacht and other pleasure boats, especially, are at a greater risk as their boats are expensive and not profit-yielding. A marine hull insurance or yacht insurance ensures that your vessel is protected from sea-related hazards.
  • Yacht insurance policies and marine hull insurance policies also cover the loss caused by your vessel to other boats and ships.
  • Marine Hull Insurance is given out either by time or voyage. This means that you can insure your ship or yacht for each voyage, or buy a comprehensive plan that covers your vessel for a specific period of time, such as 1 year.
  • The sum assured is not a fixed amount but as per agreed value between the insurance company and the insured. Usually it is equivalent to or nearly the cost of the vessel in question.
  • The premium amount payable to the insurance company depends on many factors:
    • Type of vessel
    • Age of the vessel
    • Valuation or cost of vessel
    • Tonnage and trading limits of the vessel
    • Management and ownership terms of the vessel
    • Type of insurance cover required

Marine Hull Insurance Covers:

Marine insurance policy in general covers several aspects of a ship, including interests of a ship-owner, charterer, ship builder, ship breaker, and ship repairer. Marine hull insurance focuses on the ship-owner’s interest, but is limited to the Hull & Machinery part, which insures everything owned by the ship’s owner, including the body of the ship, machinery, tackle, boats, fittings, equipment, bunkers, engine stores, stores and provisions for the officers and crew. The scope of the insurance policy may vary from insurer to insurer.

There are 3 main types of Time Clauses under the marine hull insurance policy:

  1. Institute Time Clauses (Hull): This covers hazards of seas, rivers, lakes and other navigable waters; loss or damage to property from fire or explosion, stranding or sinking, capsizing or derailment, violent robbery by external elements, jettison, piracy, earthquake, volcanic eruption or lightning; damage due to collision with other ships, aircrafts or other vehicles on land or sea; general average, sacrifice and salvage charges; accident to or breakdown of legally installed nuclear reactors on the ship; loss due to articles falling off aircrafts or other vessels; damage while installation or equipping at dock or harbour; loss due to negligence of the crew; pollution hazard; wages, maintenance and agency commission; 3/4th of collision liability; legal and labour expenses; and constructive total loss coverage.
  2. Institute Time Clauses (FPA): The free of particular average (FPA) insurance coverage clause is similar to the Hull coverage, but excludes machinery damages of any kind. The FPA coverage is generally given when the ship being insured is more than 15 years old, because older vehicles are bound to suffer more damage, especially on the machinery front.
  3. Institute Time Clauses (Total Loss Only): This clause covers only the total ascertained loss based on actual, compromised or constructive losses. Such a policy is offered mainly to very old and large vessels, and it is available at a relatively lower cost.

Institute Voyage Clauses are applied to a marine hull insurance policy to provide protection against risks during a voyage from one port or place to another, or a round trip. Additional insurances such as builders risk insurance, war and strikes risks insurance, terrorism insurance, loss of time insurance, loss of charter hire insurance, freight or cargo insurance, oil energy insurance, protection and indemnity cover, institute yacht clauses, etc. can be added to a marine hull insurance for greater protection.

Marine Hull Insurance Exclusions:

The following damages are not covered under marine hull insurance:

  • 1/4th of collision damage
  • Wreck removal
  • War damage
  • Malicious or deliberate damage
  • Nuclear attack damage
  • Radioactive contamination
  • Attack or damage from biological, biochemical, chemical or electromagnetic weapons

List Of Companies Providing Marine Hull Insurance:

In India, marine hull insurance is provided by the companies given below:

  1. ICICI Lombard: The Marine Hull Insurance policy by ICICI Lombard covers Hull & Machinery Insurance, Freight Insurance, Builders Risk Policy, Loss of Hire Insurance and Loss of Profit Insurance.
  2. HDFC Ergo: HDFC Ergo’s Marine Hull and Machinery Insurance policy offers protection against damage or loss to the body of a vessel as well as machinery, equipment, stores and provisions in the ship.
  3. Bajaj Allianz: Bajaj Allianz offers a comprehensive Marine Insurance policy covering the cargo; damage from war, strikes and terrorism; and risk management services.
  4. United India Insurance Company: The Marine Hull Insurance policy of United India Insurance Company offers protection against loss or damage to fishing vessels, sailing vessels, ocean-going vessels and other sea transportation.
  5. The New India Assurance Co. Ltd.: Marine Hull Policy offered by New India Assurance Co. covers perils of the seas, rivers, lakes and other navigable waters, against loss or damage caused to the hull.

Marine Hull Insurance Claim Process:

To make a claim on a marine hull policy, the insurance holder needs to provide a lot of evidence. The claims process of HDFC Ergo Marine Hull & Machinery Insurance Policy is as given below. Most insurance providers follow a similar process.

  • When an event that has been covered in your insurance policy occurs, you need to intimate the Claims Manager or Underwriter. The insured person should provide details of policy and loss to the company.
  • The company will appoint a surveyor to verify the claim. Professional estimation of losses in case of fire, explosion or other destructive forces is an important part of a marine hull insurance claim.
  • In case an event is beyond the expertise of a surveyor, a specialist consultant may be appointed.
  • The surveyor collects verifiable documents and photographic evidence of the event that caused the loss/damage. This includes policy or underwriting documents, survey report, claim intimation letter, deck and engine room log books, endorsed receipts of repairs, dry docking, incidental expenses, spare part changes made to the ship, details of how much provisions of fuel and engine room stores were used up during the repair period, and the required certificates and endorsements, among others. All this is submitted to the insurance company.
  • If the vessel has been in a collision, the surveyor will need to collect details of the measures taken to establish liability for the collision and the settlement arrived at between the parties, detailed facsimile of the claim put forward for recovery against the colliding ship, information about all the items allowed from the claim by the owners of the colliding ship, accounts of legal costs, and a detailed copy of any claim received from the other vessel.
  • The surveyor, after a preliminary assessment of the loss-making event, would issue an Initial Loss Assessment (ILA). The loss amount mentioned in the ILA is subject to change in further valuations by the surveyor.
  • The surveyor has to establish coverage, salvage value and cause of loss clearly.
  • The surveyor is also tasked with finding loss-minimising solutions with the help of experts, and ensuring that as many equipment as possible are functional again.
  • Other documentation may be sought depending on the reason for which you are making an insurance claim.
  • Once the surveyor approves the documentation and the claim, the insurance company will proceed to make the payout.

Protecting your investment against damage is a wise and sensible move, especially if your investment is an expensive ocean-going vehicle such as a pleasure yacht, cruise or cargo ships. Like with all insurances, it is better to be safer than sorry every time you take a ship out into the sea. 

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