Hull & Machinery Insurance Lecturer: MR Zarir Yusoff: Click To Edit Master Subtitle Style

HULL & MACHINERY INSURANCE
LECTURER: MR ZARIR YUSOFF
Click to edit Master subtitle style
17/10/12
Marine Hull
Insurance
1. Marine Hull Insurance covers loss or damage to hull and machinery.
2. The hull is the structure of the vessel.
3. Machinery is the equipment that generates the power to move the vessel and
control the lighting and temperature system such as boiler, engine, cooler and
electricity generator.
CHARACTERISTICS OF HULL AND
MACHINERY INSURANCE
• Is a type of ocean marine insurance, which
protects the insured vessel or fleet against
physical damage caused by a peril of the sea
or other covered perils while the vessel is in
transit over water.
• The insurance can cover vessels that work in
any kind of waterway, such as tugboats,
barges, floating machinery, and even oil rigs
which operate in coastal areas.
• Hull and machinery insurance policies can be

written to cover a single vessel or the whole
fleet of a ship owner.
17/10/12
Scope of Cover
Institute Time Clauses
These are the main clauses and most important in Marine Hull policies.
Time Clauses covers for a specific period usually 12 months. As the nature
and degree of risks which the Insurer run vary according to the kind of vessel,
there exist a number of categories in the Time Clauses.
They are : -
1.Institute Time Clauses (Hull)
2.Institute Time Clauses (FPA)
3.Institute Time Clauses (Total Loss Only)

(Hull)
Provides the maximum coverage offered by hull insurance.
Perils Covered
• Perils at the sea eg; Fire & explosion, Violent theft, Piracy,
Breakdown of accident to nuclear installations etc., Contact with
aircraf
• Natural disaster eg Earthquake, volcanic eruptions or lightning,
• Accidents in loading etc.,
• Damage/ defect or malfunction of machinery eg; Bursting of boilers,

Breakage of shaft, Latent of defect (unidentify defect)
• Negligence eg; negligence of masters etc., Negligence of repairers

etc., Negligence of charterers etc., Barratry (misconduct of the
master of a ship in taking commodities on board that subject the
ship to seizure for Smuggling)
Institute Time
Clauses (Hull)
Excluded Perils
• Willful misconduct of the Assured, Loss caused by delays
• Wear and tear, Rats and/or vermin
• Injury to machine not proximately caused by maritime peril
Paramount Exclusions in the Policy

• War, Strikes
• Malicious acts, Nuclear exclusion
Institute Time
Clauses (Hull)
Other Losses & Expenses Covered
• Pollution Hazard, 3/4th Collision Liability
• General Average and Salvage, Sue and Labour
• Constructive Total Loss,
Wear and tear

Institute Time
Clauses (FPA)
1. The coverage of these clauses are similar to that of Hulls Clauses but
exclude coverage on machinery damages in all respects.
2. It is advised that all vessels which exceed 15 years of age or older, if the
risk accepted, to give this coverage only.
3. Past experience shows that older vessels suffer serious casualties due to
machinery damage. If machinery damage is excluded due to limitation of
this clause, there is a better chance of making hull underwriting profit.
Hulls (Total Loss Only)
1. As the name suggested, this clause only covers in the event of it
becoming a total loss by arrangement, actual, compromised or
constructive total loss.
2. The rate for this cover is low and usually this cover is only extended to old
vessel (but not more than 20 years) or on accommodation only.
Institute Yacht Clauses
1. This clause are basically Institute Hull clauses amended for yachts and
include all damages to hull, masts, spars, sails and other equipment on
board the yacht but does not include damage whilst the yacht is racing.
2. Caution should be taken with regard to charter yachts and if the risk is
accepted, the following warranty must be included into the policy conditions,
namely:
'Warranted that professional skipper & crew is in attendance at all times'
Full details of the Skipper and Crew's experience must be obtained.

Institute Voyage
Clauses
1. This insurance covers risks during a voyage from one port or place to
another or a round voyage.
2. In so far as ordinary vessels are concerned, as most of them are usually

insured under a time policy, voyage insurance is effected only in such
cases as delivery voyage of a new vessel to buyer from the shipyard or
a voyage of a vessel to be repaired at shipyard.
3. The period of coverage is usually less than a year and the scope of
coverage is almost identical that of time policy. In which case, there are also
the FPA and Total Loss cover.
Builders' Risk
Insurance
1. This type of insurance covers whilst vessel is under construction. During
that period, it is exposed to risks such as fire, tidal wave, capsize or failure in
launch.
2. It is also exposed to collision and sinking on a trial trip. The builder's risk
insurance effected by shipyards provides cover against all such risks.
3. The insured value is the contract price or the estimated completed value
of the vessel if there is no contract price.
4. The period of insurance should be from the time of inception of the

construction to the time of delivery. Hence, the period can well exceed
12 months.
Hull War And Strike
Risks Insurance
1. War and strike risks are usually excluded from the cover of ordinary
marine insurance policies in any market throughout the world.
2. This insurance covers exclusions under Article 11 of the Institute Time

Clauses. It can only be effected on vessels which are insured against
ordinary marine risks. The rate of premium fluctuates frequently reflecting
the climate of world politics at the time of inception of the risk.
Terrorism Insurance
Terrorism cover is an excluded risk worldwide.

There will be no consideration for acceptance if
this coverage is required.
Loss of Time Insurance
1. This insurance indemnifies a ship owner for loss of anticipated profits or
operating costs where the insured vessel is forced to be out of
commission in consequence of damage caused by maritime accident.
2. The period of insurance is one year and the insurable value is calculated
based on the following: -
• estimated operating costs

• estimated chartering to be earned
• estimated gross income of freight
3. The loss of time is covered on the basis of the number of days required
for the completion of the repairs, counting from the day following the
day of the accident. The Insurer's liability per any one accident is limited to
certain number of days up to 180 days throughout the year.
17/10/12
17/10/12
THANK YOU
17/10/12

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HULL & MACHINERY INSURANCE

LECTURER: MR ZARIR YUSOFF

Click to edit Master subtitle style

2. The hull is the structure of the vessel.

• Hull and machinery insurance policies can be

2.Institute Time Clauses (FPA)

3.Institute Time Clauses (Total Loss Only)

• Natural disaster eg Earthquake, volcanic eruptions or lightning,

• Accidents in loading etc.,

• Damage/ defect or malfunction of machinery eg; Bursting of boilers,

• Negligence eg; negligence of masters etc., Negligence of repairers

Paramount Exclusions in the Policy

Wear and tear

'Warranted that professional skipper & crew is in attendance at all times'

Full details of the Skipper and Crew's experience must be obtained.

2. In so far as ordinary vessels are concerned, as most of them are usually

4. The period of insurance should be from the time of inception of the

2. This insurance covers exclusions under Article 11 of the Institute Time

Terrorism cover is an excluded risk worldwide.

• estimated operating costs

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