Any type of insurance is meant to manage risk in the event of unfortunate incidents such as theft, accidents or damage. However, when it comes to ships the stakes are higher. This is because the cargo risks being damaged or stolen, the vessel itself risks being involved in an accident or capsizing and the people in the ship risk losing their lives. In order to cover for the possible events there are various types of marine insurance. These include. Hull& Machinery, protection and Indemnity, liability insurance and freight insurance to name a few.
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What is Marine Insurance
Marine insurance is protection against future loss given to ships, boats or any cargo carried by them. It is important because ship owners and transporters can claim for damages given the risks involved. There is a high risk of natural disasters that may cause losses as well as manmade risks such as piracy and shoot outs to consider. Shipowners and transporters should be protected against such events. Marine insurance is also one of the trickiest types of insurance thus, shipowners and transporters should make sure that they obtain the right insurance and policies that cover their needs.
Hull insurance is one of the popular types of marine insurance. It is an insurance policy designed for covering ship damage expenses. Hull simply refers to the main body of the ship. It can be likened to car insurance only that it is meant for the ship. Any fixtures attached to the ship are included in hull insurance. This type of marine insurance covers all types of vessels operating in oceans, lakes and rivers such as ships, fishing boats, tankers, yachts and jetties. It is normally taken by the owner of the ship to avoid any loss or damage to the vessel. Hull insurance covers destruction of hull, damage to machinery, disbursement losses, ship breaking, fittings and freight losses. Third party liability such as damages caused by an owner’s vessel to other ships or boats as well as injury to ship workers is included. Natural disasters like cyclones and earthquakes, thefts, piracy of ships and collision are some of the risks covered by hull insurance.
Machinery insurance is a type of marine insurance that covers all important machinery as well as operational damages. Hull and machinery insurance are normally classified together. Both hull and machinery insurance can be extended to strikes since they can lead to delays and high costs.
Protection and Indemnity
This type of marine insurance is found in some countries where they have protection and indemnity clubs. These clubs comprise of ship owners who provide insurance covering liabilities to the third parties for risks which are not covered elsewhere in hull and machinery insurance or other policies. These clubs are non-profit making organisations. The owners contribute to third party liability risks related to their maritime business. Asset managers administer the premiums contributed by the members of the club together with the claims. Protection and indemnity insurance covers risks connected with ownership of the vessel and crew related claims in addition to risks associated with the hiring of the ship as well as cargo.
Marine risks are vast, and their exposure goes beyond the water. Liability insurance is a type of marine insurance that covers general liability. Different insurance companies cover the various needs of different individuals. A customised marine liability package can be created for each client. Most marine general liability covers property damage including property belonging to others. Some of the marine policies cover employee benefits and they have limited coverage for sudden and accidental pollution incidents. Liability insurance also covers for losses that result from a ship crashing or colliding. Commercial watercraft manufacturers, marine operators, Yacht brokers and commercial vessel repairs can benefit greatly from this type of marine insurance.
Freight Demurrage and Defence Insurance (FD&D)
Popularly known as defence insurance this type of marine insurance covers legal costs for a wide range of disputes which are not covered by hull and machinery or protection and indemnity insurance. Managers, shipowners and charters benefit from this type of insurance. The cover for legal claims, operations, acquisition or disposal of a vessel is at the sole discretion of the insurer. Defence insurance is also provided by Protection and Indemnity clubs. Defence insurance covers disputes such as those related to hire and delivery, newbuilding, shipyard sale, bunker and purchases. Also, contamination claims and disputes over the safety of ports are covered by defence insurance. For many, defence insurance can serve as a proactive loss prevention. Shipowners and charterers can make use of defence advise with regards to international trade policies. Defence insurance covers for legal advice and guidance when it comes to interpreting and going about with shipping contracts and unforeseen legal challenges.
This is a type of marine insurance for indemnifying against loss of freight money if the shipowner cannot complete his/her contract of carriage due to various reasons. Cargo may be lost, damaged or stolen in transit. This kind of insurance can be provided by postal services, courier companies and shipping insurance companies. Freight insurance is a type of marine insurance that covers accidents that may occur. The loss of cargo or loss of money as a result of accidents can be claimed. Freight insurance can be complicated; there is no standard policy that is going to cover for shipment damages. There are too many factors and dynamics involved with shipping so every shipper may require a policy that will best suit their needs.
Marine Cargo Insurance
Marine cargo insurance covers and protects the cargo when the ship is sailing, that is whilst the ship is in transit. This type of marine insurance is useful when transporting oil tankers and heavy cargo. However, this type of insurance does not cover second-hand goods, or losses of goods as a result of negligence. Sometimes weather conditions can determine if the marine cargo insurance policy is covered or not. Marine cargo insurance also protects the cargo owner from the loss or damage of cargo due to unforeseen delays or accidents. It also has third party liability cover and covers for damages at the port or other transport forms including rail and truck.