The different parties which can take cover under the Marine Hull Insurance Policies are as follows: Shipowners, Shipbuilders, charterers, bankers, financiers of Ships, or vessels who have Insurable interest.
Ship owner’s insurable interest:
The marine hull policies cover the ship’s body or her ‘Hull’, also the ship’s machinery, ordinary fittings and tackle as required for its proper running, and other equipment which forms an integral part of the ship. Under this policy, the ship may cover damage to the vessel caused by multiple factors (negligence of the crew, sea perils, the breakdown of machinery, salvage, General Average, etc.).
Insurable Interest of the Builder:
Under this policy, it covers the ship-builders for the protection against the risk for the value of the ship (the value increases progressively during the course of construction). It also covers any physical loss (Total or Constructive) or damage to the vessel while under construction. During trials and when undergoing the process of putting the vessel. Also covered are the collision liability and protection and the indemnity exposures. If caused loss or damage to the vessel by any governmental body while acting to minimize pollution hazards or the threat of such a hazard, it can cover through this policy.
Read More: What is Hull Insurance?
Cargo owner’s Insurable interest:
The cargo of the vessel is insured under this policy.
A creditor’s Insurable Interest:
A creditor who has loaned money on the security of the ship or cargo has, to the extent of his loan, insurable interest.
The master and crew’s insurable interest:
In respect of their wages.
Case: 1
Since, 2011, M.KS Electronics is using the ship of J.S Cargo to send its goods to the Eastern nations. However, during its last consignment, the ship caught up in a heavy storm, and it not only damaged the items but devastated the ship as well.
As J.S Cargo had an insurable interest in the ships, the company had marine hull insurance. And the company approached its insurer who settled the claim after analyzing the entire situation. Marine hull insurance offers coverage against natural disasters as well. So the insurer covered J.S Cargo, losses/damages.
Case: 2
JNS is a leading fashion house that exports kids’ and women’s apparel worth lakhs of dollars every year via sea route to its buyers in the USA. Usually, most of the consignments are sent on a CIF basis (cost, insurance & freight) and JNS bears all the expenses till the buyer receives the goods. However, some of its consignments are FOB, where the buyer makes the payment of insurance expenses (usually a trader who will further sell goods to final customers).
Read More: What is Insurable Interest in Marine Policies?
In this, till the time the merchandise reaches the buyer safely, the insurable interest will be with the JNS. However, once the goods reach the buyers, the insurable interest can transfer to the buyer.
In this case, the insurable interest can transfer to the buyer only when JNS receives a confirmation of the safe delivery of the goods.
Case: 3
N.K Shipping Co. Ltd. owns and operates various medium-capacity ships. Now in order to improvise and expand its operations. The company decided to purchase four high-capacity cargo vessels. Which can finance in the ratio of 4:6 between the company and banks.
This deal involves four banks (one for each ship): KNS Ltd., ABC Ltd., MJH Ltd., And XYZ Ltd.
Now the ships can be insured in any of the following ways=
- The shipper purchases the marine insurance and bears all the costs. Also repays the loan to the financier in case there is any loss or damage to the ship.
- Both the shipper and financier ensure respective shares individually
- The shipper buys the insurance and assigns it to the financer. If it avails, at the time of claim, the shipper gets the sum insured once the financier claim is satisfied.
Marine hull policies help financiers in recovering the loan easily in case any loss or damage happens to the ship.
About The Author
Simran
MBA Insurance and Risk
With extensive experience in the insurance industry, Simran is a seasoned writer specializing in articles on marine insurance for SecureNow. Drawing from 5 years of expertise in the field, she possesses a comprehensive understanding of the complexities and nuances of marine insurance policies. Her articles offer valuable insights into various aspects of marine insurance, including cargo protection, hull insurance, and liability coverage for marine-related risks. Renowned for their insightful analysis and informative content, Simran is committed to providing readers with actionable information that helps them navigate the intricacies of marine insurance with confidence.
