Marine Hull Insurance
Hull insurance covers the ship. Cargo insurance covers what it carries. The owner's liabilities go to a P&I club.
Hull insurance covers the ship itself: the hull, the machinery and the equipment on board. Cargo insurance covers the goods the ship carries. The two are separate policies bought by different people: the shipowner insures the hull, the cargo owner insures the cargo.
In practice the class is called hull and machinery (H&M). It covers ocean-going vessels, coastal and inland craft, fishing boats, dredgers and tugs, as well as ships under construction. The owner's liabilities to others are mostly insured separately with a P&I club.
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What a Hull and Machinery Policy Covers
A typical hull wording on the London clauses covers:
- check_circleLoss of or damage to the vessel by perils of the seas, fire, explosion, collision, stranding, piracy and similar named perils.
- check_circleMachinery damage from causes such as bursting of boilers or latent defects, usually subject to a due-diligence proviso on the owner.
- check_circleTotal loss, actual or constructive, of the vessel.
- check_circleThe vessel's share of general average and salvage, and sue and labour costs.
- check_circleCollision liability: the owner's liability for damage to another ship. The traditional London wording covers three-fourths of it and leaves the rest to P&I.
- check_circleA deductible applies to each partial loss claim, while a total loss is paid without it.
Time Policy vs Voyage Policy
Section 27 of the Marine Insurance Act 1963 defines both. Hull is usually insured on time, cargo on voyage.
Covers
Time policy
A definite period, typically 12 months
Voyage policy
One voyage, "at and from" or "from" one port to another
Maximum term
Time policy
A time policy for more than 12 months is invalid (s.27(2))
Voyage policy
No time limit; ends when the voyage ends
Seaworthiness
Time policy
No implied warranty, but no cover for loss caused by unseaworthiness the assured knowingly allowed (s.41(5))
Voyage policy
Implied warranty that the ship is seaworthy at the start of the voyage (s.41(1))
Typical use
Time policy
A shipping company's fleet
Voyage policy
A single delivery voyage, or a vessel bought abroad sailing to India
| Point | Time policy | Voyage policy |
|---|---|---|
| Covers | A definite period, typically 12 months | One voyage, "at and from" or "from" one port to another |
| Maximum term | A time policy for more than 12 months is invalid (s.27(2)) | No time limit; ends when the voyage ends |
| Seaworthiness | No implied warranty, but no cover for loss caused by unseaworthiness the assured knowingly allowed (s.41(5)) | Implied warranty that the ship is seaworthy at the start of the voyage (s.41(1)) |
| Typical use | A shipping company's fleet | A single delivery voyage, or a vessel bought abroad sailing to India |
Total Loss of a Ship
An actual total loss is a vessel destroyed or sunk beyond recovery. A constructive total loss under section 60 covers the cases where the ship still exists but saving her makes no economic sense. For a damaged ship, that is where the cost of repairing her would exceed her value when repaired. The owner gives notice of abandonment and is paid as for a total loss.
Hull policies are usually on an agreed value, so the insured value written in the policy, not a market valuation after the loss, is what the owner receives on a total loss.
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P&I Clubs in One Paragraph
Protection and indemnity (P&I) insurance covers the shipowner's liabilities, written by mutual associations of shipowners called P&I clubs. The 12 clubs of the International Group of P&I Clubs insure about 87% of the world's ocean-going tonnage. They cover injury and death of crew, passengers and others on board, cargo loss and damage, oil pollution, wreck removal, and the share of collision and property damage that the hull policy leaves out.
How IC-11 Tests This
Expect "which of these is covered by hull insurance" (the vessel, including fishing vessels, against collision, storm and stranding), time vs voyage definitions, and the seaworthiness warranty. The trap is applying the implied seaworthiness warranty to a time policy: section 41 puts it only in voyage policies. A second trap is thinking hull covers the owner's liability to the crew or for pollution; that is P&I.
FAQs
What is hull insurance in marine insurance?expand_more
Insurance of the ship itself (hull, machinery and equipment) against loss or damage by marine perils, plus the vessel's share of general average and a part of the owner's collision liability.
What is the difference between hull insurance and cargo insurance?expand_more
Hull insurance covers the vessel and is bought by the shipowner. Cargo insurance covers the goods on board and is bought by the seller or buyer, depending on the sale terms.
What is a P&I club?expand_more
A mutual association of shipowners that insures their third-party liabilities, such as crew injury, cargo claims, pollution and wreck removal, which the hull policy does not cover.
Can a marine time policy be issued for more than 12 months?expand_more
No. Section 27(2) of the Marine Insurance Act 1963 makes a time policy for more than twelve months invalid.
Next steps
- GA vs PAarrow_forward
- Marine Cargoarrow_forward
- Syllabusarrow_forward
- Warranties and conditions (IC-01)arrow_forward
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