INSURANCES FOR SHIPOWNERS
HULL & MACHINERY, MATERIALS, EQUIPMENT ETC. AND EVERYTHING CONNECTED THEREWITH (H&M)
This insurance covers physical loss or damage to the hull and machinery, etc.; thus, the cover encompasses the assured’s economic interest in everything that constitutes the ship and its accessories. We can arrange cover subject to standard market conditions including the Nordic Marine Insurance Plan of 2013 latest version, the English Institute Time Clauses Hulls 1/10/83 and the German General Rules of Marine Insurance (ADS) and DTV Hull Clauses 1978 (as amended in April 1984).
It can thus be thought of as the primary insurance against physical damage to the vessel. The vessel is insured to its full value, whereby the insurance, depending on the extent of protection chosen, compensates total loss of the vessel, salvage, partial damage to one’s own vessel (particular average), collision liability, ice damages, engine-damage, and the vessel’s contribution to general average.
Hull Interest insurance (HI)
Compromised, Constructive and Total loss of vessel, as an addition to H&M
Hull Interest insurance is for total loss (TLO) only and will be paid out following a TLO settlement on the H&M policy. The sum insured of the Hull Interest insurance is allowed up to 25% of the sum insured in respect of the insurance object’s H&M value. War & Strike risk are excluded but can be covered on a separate War insurance (see below).
Sums insured: up to 25% of H&M values
Deductible: Nil
Freight Interest insurance (FI)
The insurance covers the assured’s loss of freight because the assured is deprived of the use of the chartered ship as a result of the charter party being legally cancelled due to the vessel being considered a total loss for purposes of H&M insurance.
Sums insured: 25% of H&M values above
Deductible: Nil
Loss of Hire insurance (LOH)
Loss of Hire cover protects the shipowner from a daily loss of income arising from physical damage to the vessel. This loss can be caused by events such as damage to the vessel recoverable from, among others, the underlying hull & machinery cover, stranding of the vessel and events giving rise to an allowance in General Average. Such an insurance will indemnify the assured up to an agreed daily amount. Underwriters will require a deductible, and to limit their exposure, they will also put a cap on the cover in way of maximum number of days per incident and over the policy year.
A normal cover will be 14/90/90, which means that the assured will be paid the daily amount but not more than 90 days per incident and 90 days over the policy period. For each incident a qualification period of 14 days will apply. War risk can also be included in the cover. LOH will not pay out following a TLO of the ship.
Usual deductible: 14 days is the most popular option, however, you can contact us for customized coverage options with different deductibles.
War
A tailor-made and adapted to the vessel's other insurances. Usually includes War P&I when war actions are excluded from P&I.
Cover against War, Strikes, Riots, Civil Commotions etc. Generally, but not always, arranged separately to a vessel’s Hull and Machinery Insurance and extended to include War Protection and Indemnity Risks. Trading to ‘Excluded’ areas (as defined within the London Market’s list of excluded areas) is customarily subject to specific agreement.
Note: When trading in war areas or in areas deemed to be enhanced risk, underwriters will offer cover provided an additional premium is paid. During such visits to “war areas” it is normally considered to also take out Kidnap and Ransom, and detention (due to piracy) insurance for any loss of charter hire not paid by charterers.
Sums insured: H&M + Hull Interests+ Freight Interests
Deductible: Nil
War – Trading to War Area as defined by JWLA 025
Additional insurances required if vessels are to trade to areas described in JWLA 025 (https://www.lmalloyds.com/lma/jointwar), please contact us for further information.
War Risks extention to the trade
Kidnap & Ransom
Piracy Detention Cover - Depending on charterparty terms, the Charterer is usually liable to continue to pay charter hire should the vessel be hijacked or detained by pirates irrespective if this is inside or outside of War Risks Areas.
Protection and Indemnity insurance (P&I)
A Liability insurance for practically all maritime liability risks associated with the operation of a vessel.
Broadly speaking, it covers the liabilities which may be incurred by the vessel or her owners on account of loss of life or personal injury, or on account of damage to property other than that covered under the collision clause of the Hull Policy. Coverage also includes defence costs, liability for oil pollution and wreck removal as well as owners liability for his crew.
The P&I insurance offers the owner insurance cover for claims or damages occurring to a third person. As such, P&I insurance will protect the owner and his legal liabilities towards a third party. “Third parties” are any person, apart from the shipowner himself, who may have a legal or contractual claim against the ship.
Death and Personal injury - P&I cover an owner’s liability for all deaths, personal injuries and illnesses which occur on board, including death or injury to crew, passengers, stevedores, pilots and visitors to the ship.
Repatriation of sick or injured crew
Loss of or damage to cargo
Other risks - Other risks covered include liability for stowaways, liability for oil pollution and other types of pollution and legal liability for wreck removal if the ship sinks and is blocking free navigation for other vessels.
Please note it is an indemnity policy and “pay to be paid” might be upheld strictly.
Liability Extensions required for “deviations”
Deviations are NOT covered by normal P&I Insurance
Deck Cargo - A normal Bill of Lading stipulates that cargo shall be stowed under deck. If the carrier despite this carries some cargo on deck (which is normal in the timber trade) he is liable without limitation to any damage resulting from this breach of the contract of carriage. The carrier can cover such liabilities by a separate insurance.
Deviation - This insurance covers liability for loss of or damage to cargo arising out of a geographical deviation or another breach of the contract of carriage amounting to a deviation in the widest sense (see e.g. Deck Cargo).
Freight, Demurrage and Defence (FD&D)
Optional defense cover for contractual disputes.
Also referred to simply as “Defense” insurance. In most instances an optional adjunct to P&I coverage. This insures the ship owner from legal costs associated with either the defense or pursuit of a claim relating to the insured vessel, for example, the legal fees resulting from a charter party dispute.
Note: This is a discretionary insurance for legal costs in relation to any contracts that the Owner has entered into. Please be reminded that the insurer will decide which cases has a merit, and will not support cases where the merits are not good.
Deductible: Usually a %-age of any legal costs
Strike & Delay (Owners Risk)
Cover for costs owing to ship related events
This insurance covers shipowners for losses resulting from delay of the vessel as a consequence of a wide array of perils and can be customized in terms of length of cover, deductibles and perils covered. The usual length of cover is between 7 and 120 days for each peril and the deductible can be as low as 1 day.
Delay resulting from the following shipboard perils can be covered:
Crew and officers strikes
Collision, stranding, grounding, or striking of fixed or floating objects
Other damages to the ship
Machinery damages
Illness, injury, death on board or directly caused by the entered vessel
Actual or alleged presence of drugs on board
Desertion of members of the crew
Quarantine Actual or alleged pollution by the entered vessel
Certain detentions of an entered vessel in the same beneficial ownership or management
Stowaways, saving life at sea, rescuing of refugees
Fire, explosion or breakdown in machinery
Piracy, kidnap and ransom
War, civil war or any hostile act by or against a belligerent power
Typical cover (excl. onboard strike) is as follows:
Type of Cover Class III (onboard incidents (“Owners risks”))
There are many ways to combine this Class III cover with the LOH. One economic way is to take this insurance, but at the same time increase deductible days under the traditional LOH. Please contact us to discuss tailoring this insurance to your existing Loss of Hire policy and other needs.