Risk is an inevitable part of everyday life. Nobody can say beforehand when an undesirable event may occur or how grave the damage may be. Investing in insurance is said to be less risky. This is because an underlying principle is the ‘law of large numbers’. The law states that the ability to predict losses improves with larger groups. Insurance is widely available and affordable. It is a significant economic force in industrialized countries.
It is vital that you insure your vessel to protect your investment. Whilst you are free to choose insurers, do consider the options very carefully. It is advisable to insure your boat with a recognized marine insurance company. Contact DeltaQuest Group to get an advise and recommendations regarding your vessel’s insurance arrangements.
P & I
Protection and indemnity (called P & I) insurance protects the vessel owners against their liability for damage to cargo in their care and custody; death or injury to passengers, crew, cargo loaders, and others; damage caused to piers, docks, underwater cables, and bridges; and, more recently, damage caused by pollution. The terms and conditions of the policy can be extended, limited, excluded, modified or changed upon the request of the client.
Protection & Indemnity Insurance traditionally covered by mutual associations known as ‘P & I Clubs’ offering high limits of insurance protection for third party liability cover, including pollution risks, passenger risks, and other high profile liability risks commonly encountered by Shipowners. P & I clubs are mutual entities formed by the shipping companies and managed by managers of the club. As required by the mutual system, negative balances are covered by additional premium calls.
- Damages or compensation for illness, personal injury or death for any person, other than seamen.
- Illness, injury, loss of life and property of seamen.
- Stowaways, refugees or persons rescued at sea.
- Collision with other ships and non contact damage.
- Loss of or damage to property.
- Pollution Risks.
- Wreck Removal.
- Cargo Liabilities.
- General Average.
- Properties of the Assured Vessel.
- Sue and Labour and Legal Costs.
- Enquiry Expenses.
- Different risks such as war, liabilities due to deviation, liabilities of the assured client, cargo and strike can be added to terms and conditions upon the request of the client
Insurance premiums are based on gross charges for the period of insurance, the limit of liability, the type of cargo carried, vessels type and loss record.
Hull & Machinery
Hull & Machinery policy is the mainstay of Marine Insurance. Hull & Machinery provides insurance for damage to the hull and machinery and equipment installed on the vessel. The main purpose of Hull and Machinery cover is to comfort the shipowner with an expectation of status quo regarding a vessel’s operational ability during a maritime enterprise. Since marine perils are a risk that the shipowner assumes each venture, the shipowner takes out Hull and Machinery cover to protect against losses that may occur to the vessel and her equipment during the enterprise.
It is a physical damage policy designed to cover physical loss or damage arising from a marine peril, and will include recovery actions, and all other events associated with a physical loss at sea. The policy is adapted to the requirements and fleet profile of the Shipowner concerned, and will address levels of deductible, individual vessel valuation, any increased value, and will specify the extent of the cover afforded, whether ‘All Risks’ or ‘Limited Conditions’ or ‘Total Loss Only’ cover.
The three sets of Clauses most commonly used in Hull & Machinery policy are the Norwegian Marine Insurance Plan 1996, Version 2003, the English Institute Time Clauses Hulls 1/10/83 (ITCH) and the American Institute Hull Clauses (June 2,1977). The English Clauses have also been issued in newer versions that are not widely used, but the newest version known as the International Hull Clauses 1/11/03 (IHC) appears to have won some support and may be a substitute for ITCH in the future.
The policy insures vessels for losses or damages resulting from:
- Perils of the seas, rivers, lakes, and other navigable waters.
- Heavy weather.
- Collision with other vessel.
- Contact with floating or submerged objects
- Contact with fixed objects.
- Fire, explosion, lightning.
- Theft committed by persons other then ship ’s crew.
- Contact with land conveyance, dock or harbour equipment or installation.
- Earthquake, volcanic eruption.
- Accident in loading, discharging or shifting cargo or fuel.
- Contact with aircraft, helicopters or similar objects, or objects falling therefrom.
- Bursting of boilers any latent defect of the tail shaft, the crankshaft, the camshaft or any part or parts of a main engine or any auxiliary machinery or hull.
- Negligence of repairers.
- Mistake made by master, officers or crew or pilot being on duty which consists in inadequate fulfillment of their actions required with any rules or regulations or good seamanship or prevailing conditions.
- Any governmental authority acting under the powers vested in it to prevent or mitigate a pollution hazard or damage to the environment, or threat thereof, resulting directly from damage to the insured vessel.
- Total loss /actual or constructive /of the vessel.
- Ddamage to hull, machinery, equipment and everything connected therewith.
- General average.
- Salvage, salvage charges.
- Charges properly and reasonably incurred for the purposes of averting or minimizing a loss (Sue & Labour).
- Collision defense or attack costs.
- Dry docking expenses to survey underwater part of the hull after grounding or stranding even if no damages were found.
The Yacht Policy covers pleasure craft, such as yachts, motorboats and sailboats. It is written to cover both the property (boat, and contents) and its liability for collisions or injuries. Yacht insurance generally covers any watercraft that is around 26 feet. Generally “boats” are considered to be 26′ and smaller, and “yachts” are 27′ and larger. Yacht coverage is usually broader and more specialized because larger boats travel further and have more unique exposures. If you own a larger boat you must look into purchasing yacht insurance along with the optional “all risk” coverage which covers machinery, furniture, navigational equipment and all gear that is used for the boat’s operation and maintenance.
Yacht insurance is a lot like boat insurance and it has two main types of coverage. Instead of being called property damage and liability for boat insurance, yacht insurance calls them hull coverage and protection and indemnity coverage. Details of Hull & Machinery coverage and P & I coverage are described above.
There are two main sections of a yacht policy. Hull insurance is all risk direct damage coverage that creates a very broad insuring agreement. It will include agreed amount hull coverage, meaning all parties agree at the time the policy is written on the value of the vessel and that value will be paid in the event of a total loss. A true yacht policy also includes replacement cost (new for old) coverage on partial losses, with the exception of sails, canvas, batteries, outboards and sometimes out drives, which are depreciated. Protection & Indemnity insurance is the broadest of all liability coverage, and because maritime law is unique, you will need coverage that is designed for those exposures.
Exclusions on a yacht policy generally include wear and tear, gradual deterioration, marine life, marring, denting, scratching, animal damage, osmosis, blistering, electrolysis, manufacturer’s defects, defects in design, and ice and freezing.