Hull insurance is an insurance policy especially designed for covering ship damage expenses. Where the ‘Hull’ refers to the main body of the ship. Hull insurance can be understood like a car insurance, with a difference of being for a water faring vehicle instead of land.
Hull insurance also includes any fixtures attached to the hull of the ship as a functional part, into the definition of hull. Since the policy mostly applies to water going vessels, it is more popularly called Marine Hull Insurance, and is a part of marine insurance.
It covers all types of vessels operating into the oceans, lakes, or rivers like bulk carriers, fishing boats, ships, tankers, cruises, yachts, jetties, and wharfs.
The policy plays an important role by helping boat owners to secure their vehicles against machinery damage and destruction of hull, fittings, liabilities, etc.
Mainly the policy insures against the following perils:
- Destruction of hull
- Damage to machinery
- Disbursement losses
- Ship-breaking losses
- Fittings and freight
Hull insurance policies can also include third party liability such as cover for losses or damages caused by your vessels to other ships or boats, or injury to the ship workers.
To know about what is covered and not covered under marine hull insurance, see What is covered under marine insurance?
Case on Hull Insurance
Couch Adventurer Ltd. operates three ocean liners equipped with five star facilities. The ships are large and have multiple safety features, apart from satellite connectivity and ocean early warning systems.
Each ship is manned by a crew of approximately 200 on a normal workday, and carries a maximum of 1000 passengers. Since, any accident may lead to huge loss of public life, the license of Couch Adventurer requires the ships to be insured with a comprehensive marine hull policy.
The policy not only covers damages to the ship due to a mishap, it also covers the compensation payable to the employees and tourists on the ship.
The company also maintains contingency funds to meet with certain expenses not covered by the insurer, such as injury to passenger or crew member while boarding or debarking the ship on a pier etc.
Hull Insurance & Financial Safety of Shipper
Godavari Shipping Ltd. is second largest shipping company running river transport in the country. The firm manages 20 river vessels including 5 with passenger carrying capacity.
In some areas, the company reports that the river traffic is so high that, the ship gets damaged due to collision with other boats and fishing vessels.
Also Check: What is not covered under marine insurance?
To recover such losses, marine hull insurance is a must for the firm. At times, the company has also faced issues such as, a discarded fishing net getting stuck in the underwater turboprop blades and the ship having to be grounded for repairs.
Such incidents not only increase the cost of repairs and operations but also cause the firm to lose part of their revenue due to cessation of operations of the ship.
Losses due to claims payable to third parties after collision with their vessel are rare but also covered by the hull insurance bought by the company.
Other than that, Godavari provides sufficient training to their staff for better performance and emergency handling processes as well, which helps in reducing avoidable losses.
The firm has faced a situation where, the ship’s crew had to abandon some of the goods midway to save the vessel and remaining cargo. They had to disburse the repair cost for emergency repair at the next port which was not the destination port, and had to pay general average liability for the lost goods.