The different parties which can take the cover under the Marine Hull Policies are as follows: Ship owners, 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 equipments which form an integral part of the ship. Under this policy, the ship is covered from 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, the ship-builders are covered 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 during 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 loss or damage is caused to the vessel by any governmental body while acting to minimise pollution hazard or the threat of such a hazard, this is covered through this policy.
Read More: What is Hull Insurance?
- Cargo owner’s Insurable interest: The cargo of the vessel being 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.
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 got caught in the heavy storm, which 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 a marine hull insurance, and the company approached its insurer who settled the claim after analysing the entire situation. As the marine hull insurance offers coverage against natural disasters as well, J.S Cargo got its losses/damaged covered by the insurer.
JNS is a leading fashion house that exports kids and women apparels worth lakhs of dollars every year via sea-route to its buyers in the USA. Usually, most of the consignments are send on CIF basis (cost, insurance & freight) and JNS bears all the expense 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.
In this, till the time the merchandise reaches the buyer safely, the insurable interest will be with the JNS. However, once the goods are delivered to buyers, the insurable interest is transferred to the buyer.
In this case, the insurable interest will be transferred to the buyer only when JNS receives a confirmation of the safe delivery of the goods.
N.K Shipping Co. Ltd. owns and operates various medium capacity ships. Now in order to improvise and expand its operations, the company has decided to purchase four high capacity cargo vessels, which will be financed 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 insurance and bears all the cost repays the loan to financier in case there is any loss or damage to the ship.
- Both the shipper and financier insure respective shares individually
- The shipper buys the insurance and assigns it to the financer. If this option is availed, at the time of claim, the shipper will get the sum insured once the financier claim is satisfied.
A marine hull insurance policy will help financiers in recovering the loan easily in case any loss or damage happens to ship.
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