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How Does Hull Insurance Safeguard Ship Owners from Vessel Damage?

Posted on 18 Jul, 2024
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Owning a ship is a significant responsibility, offering opportunities for excitement, discovery, and the thrill of sailing in the open waters. However, even the most experienced sailors face challenges. Picture yourself sailing one day when your ship unexpectedly hits a reef, causing significant damage. The financial aftermath of such an incident could be overwhelming.

This is where hull and machinery (H&M) insurance comes into play, serving as a safety measure for ship owners. It shields your vessel and your finances from unforeseen circumstances as well as risks.

Marine Insurance

Marine Hull Insurance: Types

Although there are various forms of hull insurance (viz., cargo insurance, marine inland transit insurance, yacht insurance, transit insurance, etc.), the two primary categories are —

Brown-water hull insurance: This covers ships travelling via inland waters that are closer to the shore, like rivers and lakes.

Blue-water hull insurance: This covers vessels travelling via large waterbodies, like seas and oceans.

Understanding the Scope of Coverage

H&M insurance offers protection for the physical structure (hull) of your ship, its permanently attached machinery and onboard gear. Marine cargo insurance coverage includes several aspects, such as —

Accidents and Collisions: Unintended collisions with other vessels, stationary objects (such as piers or reefs) or hidden underwater hazards are included. Collisions with floating or submerged objects like debris, icebergs, or marine life can result in significant damage. Hull and machinery insurance offers protection for these incidents as well.

Groundings: Getting stuck on sandbars or other submerged obstacles can be costly mishaps. H&M insurance can help ease the strain of getting your ship afloat and repaired.

Harsh Weather Conditions: Unpredictable sea conditions can cause havoc to a vessel. Damage caused by wind, hurricanes, earthquakes, hail, lightning, or floods is usually included in H&M insurance coverage.

Apart from these risks, additional options are available with H&M insurance policies based on your choice. These could involve coverage for the following —

  • Physical injuries sustained by the ship’s crew
  • Damages due to theft/fire/burglary
  • Damages sustained due to maintenance activities
  • Piracy
  • Navigational hazards during transition via lake, sea, or river
  • Jettison

The coverage provided by your hull insurance policy will vary depending on the policy’s specific terms you select. Certain insurance policies provide protection from common risks, while others can be tailored to your needs.

What doesn't fall under the H&M umbrella?

It’s crucial to know what H&M insurance specifically safeguards and what it doesn't. Let’s look at the exclusions of this policy.

  • Regular wear and tear of a vessel is not included in H&M coverage.

  • Damages from radioactive contamination due to nuclear activity/explosion and acts of war or terrorism are usually excluded from H&M insurance.
  • If a vessel is intentionally damaged by its owner or crew, the insurer won't cover repair costs.
  • Damage caused by the crew under the influence of alcohol/drugs is exempt from coverage
  • Damage resulting from exceeding the ship's cargo weight limit is not part of H&M insurance coverage.
  • Loss/damage caused by unlawful activities are not covered
  • Sailing during a sea storm despite a warning being issued will not be covered.

Goods transported on a ship need separate cargo insurance for protection against damage or loss.

Why should you consider investing in H&M Insurance?

The advantages of having H&M insurance include the following —

Financial Security: H&M insurance helps cover repair expenses or even replacement costs depending on the extent of damage.

Peace of Mind: Having your ship insured lets you sail with peace of mind, focusing on the journey without worries about financial setbacks.

Loan Requirements: If your vessel is under a loan, most lenders will insist on having H&M insurance as a mandatory condition.

Customised Plans: You can customise your policy based on your specific requirements, as insurers offer various add-ons and built-in options for marine insurance policies.

Third-party Liability Coverage: In situations where your ship accidentally collides with another vessel, the insurer will help cover the financial liabilities, irrespective of who was at fault.

Wrapping Up

Marine insurance offers a vital layer of protection for your ship, giving you the confidence to sail the seas and knowing that you are safeguarded in all the unexpected situations that might occur during your voyages. However, it's essential to keep in mind that despite having insurance coverage, safe navigation practices and regular maintenance remain essential at all times. Also, remember to carefully review the policy terms to grasp what is covered and what is not.

Help us know you better!

This contains only an indication of the cover offered. For complete details on risk factors, terms, conditions, coverages and exclusions, please read the sales brochure carefully before concluding a sale.ICICI trade logo displayed above belongs to ICICI Bank and is used by ICICI Lombard GIC Ltd. under license and Lombard logo belongs to ICICI Lombard GIC Ltd. ICICI Lombard General Insurance Company Limited, ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. . IRDA Reg.No.115. Toll Free 1800 2666. Fax No – 022 61961323. CIN (L67200MH2000PLC129408). customersupport@iciclombard.com. www.icicilombard.com. (Marine Insurance, 4010 , IRDAN115P0010V01200607)

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