What is Marine Hull Insurance and How Does it Work?

With globalization, the entire world is one huge market and waterways are essential in facilitating international trade. The sea has been a primary mode of transportation for ages and even today it continues to be so. But despite all these years, the risks involved in water transport exist even today. These risks are not just due to natural calamities, but also the accidents that may occur at ports. So, it is best to avail marine insurance cover.

What is Marine Insurance?

It is a commercial insurance plan that is offered to ship owners, shipping companies, and even businesses that transport their goods through them. Unexpected changes in weather conditions, pirates, navigation issues, and cargo handling issues can damage the consignment and the ship. That’s when a marine insurance policy helps safeguard against these losses.

What is Marine Hull Insurance?

There are different forms of marine insurance plans, and one that specifically aims to protect the vessel carrying the cargo is marine hull insurance. It is a safety net designed specifically for ship owners and shipping companies that own a fleet of these vessels. The hull is the primary supporting part of the ship. Damage to the hull compromises the safety of the ship, and hence, an insurance cover is critical. Not just the hull, but also the machinery installed on the ship for loading and unloading the cargo can get damaged. With a marine hull insurance cover, ship owners can avoid financial losses for the damage to such machinery.

Types of Marine Hull Insurance

Marine hull insurance provides coverage for physical damage to vessels, including ships, boats, and other watercraft. It is essential for vessel owners to safeguard against financial losses. The types of marine hull insurance include:

1. Time Policy: Covers a vessel for a specified period, typically one year, against risks like collisions, fire, or sinking.
2. Voyage Policy: Provides coverage for a specific journey, protecting the vessel from risks during the voyage.
3. Fleet Policy: Insures multiple vessels under a single policy, offering cost efficiency for fleet owners.
4. Floating Policy: Flexible policy where details like the voyage and vessel can be declared later, suitable for frequent shipments.
5. Port Risk Policy: Covers vessels while they are docked at a port, protecting against damages due to fire, theft, or accidents.
6. Mixed Policy: Combines the features of both time and voyage policies to offer broader coverage.

How Does Marine Hull Insurance Work?

Marine hull insurance is a specialized form of coverage designed to protect vessels, including ships, boats, and yachts, from financial losses due to physical damage. It works by providing financial compensation to the vessel owner in case of damage or loss during operations at sea, air, or inland waterways. Here's how it typically works:

1. Premium Payments

The vessel owner pays an agreed-upon premium to the insurer, which is based on factors like the vessel’s value, age, type, and the intended routes. The premium can be paid annually, for a specific voyage, or for a set period.

2. Coverage Scope

Marine hull insurance covers damages caused by a wide range of risks such as accidents, collisions, fires, storms, and sinking. Depending on the policy type, it may also cover third-party liabilities, salvage costs, and even war or piracy risks.

3. Policy Terms and Conditions

Marine hull policies come with various terms and conditions, such as coverage limits, exclusions, deductibles, and specific risks covered. These terms help define the scope of protection for the vessel owner.

Inclusions of Hull Insurance Coverage

The following risks are included as a part of marine hull insurance plans:

• The damage to the ship or vessel, along with any installed machinery or equipment on it.
• Loss or damage to the ship due to theft and fires.
• Damages to the ship due to natural calamities like lightning, typhoons, etc.
• Third-party liability incurred due to the damage to other ships and vessels.
• Any unexpected damages to the vessel during a maintenance activity
• Coverage across the world for vessels that travel across oceans.

*Standard T&C Apply

Exclusions of Marine Hull Insurance

Like other insurance policies, marine insurance plans are limited in their scope. The policy document lays out what is covered by the policy, and similarly, what is specifically excluded. Here are some examples of its exclusions:

• Routine wear and tear of the hull and its machinery.
• Damages due to nuclear activities.
• Contamination due to radioactive elements.
• Any intentional damages to the vessel.
• Damages due to overloading of goods.

Features of a Marine Hull Policy

Marine hull policies provide comprehensive coverage for vessels, ensuring protection against various risks. Here are the key features:

1. Comprehensive Coverage: Protects against physical damage to the vessel caused by accidents, natural disasters, fire, or collisions.
2. Third-Party Liability: Covers legal liabilities arising from damage caused to third-party property or injury to third parties.
3. Customizable Policies: Offers flexibility to include specific coverage such as war risks, piracy, or machinery breakdown.
4. Coverage for Salvage Charges: Includes costs incurred for recovering or saving the vessel after an incident.
5. Applicable for Various Vessels: Suitable for ships, boats, tankers, yachts, and other watercraft used for commercial or private purposes.
6. Financial Security: Ensures compensation for significant financial losses, promoting business stability.
7. Duration Flexibility: Policies can be time-based, voyage-based, or a combination, catering to diverse operational needs.
8. Risk Assessment: Premiums are determined based on vessel type, usage, age, and the route's risk level.

Who must consider buying marine hull insurance plans?

Marine hull insurance plans are general insurance policies designed keeping in mind the port authorities, the ship owners, and even private and public port operators. It helps avoid unexpected financial losses.

Benefits of Hull Insurance

1. Comprehensive Protection: Marine hull insurance provides extensive coverage for physical damage to vessels, protecting against accidents, natural disasters, collisions, and more.
2. Risk Mitigation: It reduces the financial risk by covering costly repairs, replacements, and damages caused by unforeseen events, preventing significant out-of-pocket expenses.
3. Third-Party Liability Coverage: Many policies include third-party liability coverage, protecting the insured from legal claims due to damage caused to other vessels or property.
4. Peace of Mind: With the right marine hull cover, vessel owners gain peace of mind, knowing their investment is safeguarded against potential damage during voyages.
5. Flexibility in Coverage: Marine hull policies offer flexibility, allowing owners to customize coverage based on the vessel’s usage, voyage routes, and additional risks such as piracy or war.
6. Faster Recovery: In case of damage or loss, having a marine hull cover ensures quicker compensation for repairs or replacements, allowing business continuity.
7. Increased Marketability: Vessels with hull insurance are often more marketable and attractive to buyers or lenders, offering assurance of protection against risks.
8. Salvage Coverage: Many policies also cover the costs of salvaging the vessel if it gets damaged during transit or encounters a mishap.

Read more on what is marine insurance

How to Claim Hull Insurance Coverage

1. Notify the Insurer Immediately: As soon as the damage occurs, inform the insurance company. Most policies require prompt reporting of incidents.
2. Document the Damage: Gather evidence of the damage, including photographs, videos, and written reports. This documentation is crucial for the claims process.
3. File a Formal Claim: Submit a formal claim with the insurer, providing all required details such as the incident's date, location, nature of damage, and any third-party involvement.
4. Submit Necessary Documents: Provide supporting documents, including the vessel’s registration, policy details, damage reports, and any third-party claims if applicable. You may also need a surveyor's report to assess the damage.
5. Survey and Assessment: The insurer may send a surveyor to inspect the vessel and assess the extent of the damage. Ensure that the surveyor has access to the vessel.
6. Claim Approval and Settlement: After assessing the claim, the insurer will either approve or reject it based on the policy terms. If approved, compensation will be issued for repairs or replacement, depending on the coverage.
7. Pay Deductible (if applicable): Some policies may have a deductible, which the policyholder must pay before receiving the insurance payout. Ensure you're aware of any such conditions.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read the sales brochure/policy wording carefully before concluding a sale.