What is Hull Insurance? What Does it Cover and Not Cover?

Hull insurance is a variant offered under marine insurance that offers insurance coverage for ships, vessels and their equipment and machinery.

It covers the 'hull' or body of the ship from risks like grounding, collisions, piracy, sea storms, etc., and will provide financial reimbursement if the ship or its machinery/equipment is damaged in any way due to these events.

Shipowners, port authorities and private and public port operators are all eligible to buy hull insurance. You should note that this type of marine insurance in India is mandated by lenders for loaned vessels.

Moreover, this insurance policy can be written to cover a single vessel or a fleet of vessels. Other than ships, boats, barges, etc., it can also cover other types of machinery that work in waterways, like floating machinery and even oil rigs.

Hull insurance comes in more specialised forms like yacht insurance, cargo insurance, transit insurance, marine inland transit insurance, etc. Generally, it is divided into two policy types:

Brown-Water Hull Insurance: Covers vessels travelling on inland waters close to shore, like lakes and rivers.

Blue-Water Hull Insurance: Covers vessels travelling on large water bodies, like oceans and seas.

• Destruction or damage to the ship's hull, machinery or equipment (self).

• Third-party destruction or damage to other vessels caused by the insured ship.

• Bodily injuries sustained by workers on the insured ship.

• Navigational water hazards when transiting via sea, lake or river.

• Damages resulting from fire, burglary, or theft.

• Damage caused by natural disasters like volcanic eruptions, earthquakes, lightning, etc.

• Damage sustained during maintenance activities.

• Sea-faring vessels are covered worldwide.

• Jettison (throw/drop something from an aircraft or ship).

• Piracy.

• Routine wear and tear of the vessel that comes with regular usage and old age.

• Intentional damage to the vessel or its machinery/equipment.

• Damages sustained from acts of war or terrorism.

• Radioactive contamination and damage from nuclear activity.

• Overloading of goods/cargo.

• Damage or loss resulting from breaches of law or illegal activity.

• Damages from intentional involvement in dangerous activity.

• Sailing the vessel in a sea storm after the issuance of a warning.

• Damage done by crew members to the vessel under the influence of alcohol or drugs

Legal Compliance: Hull insurance is legally mandated by lenders of financed vessels. So, any loaned vessels must have insurance coverage from a certified marine insurance company in India.

Coverage for Physical Damage: Hull insurance will cover the financial costs incurred by physical damage caused to the ship's body or its equipment. This can be damage from storms, collisions with other ships, piracy, theft or any other insured event.

Comprehensive Protection: Your hull and machinery insurance will cover most, if not all, types of damage incurred onto your ship(s) – barring policy exclusions. Generally, the damage must be accidental or out of your control to be eligible for compensation.

Pre-Determined Coverage: The coverage amount is decided based on the agreed-upon value of the vessel to be insured. This value is decided on policy purchase and, in most cases, is identical to or around the cost of the vessel to be insured.

Additional Coverage: Some marine hull policies will offer additional coverage like excess collision liability, war and riot risks and specific natural disasters or damages not typically included under basic plans.

Deductibles: Like other insurance policies, hull insurance can include deductibles where a part of the loss must be covered/paid for by you.

Premiums: Your marine hull policy premiums will depend on the coverage amount, vessel type and age, equipment/machinery value, operating area and risk levels.

Salvage and Recovery Coverage: During accidents or total loss, hull insurance provides reimbursement for the cost of salvaging and recovering your vessel.

Protection Against Financial Losses: Hull insurance shields you from the economic liabilities that arise from damaged vessels and machinery by having the insurer reimburse you for any repair and replacement costs.

Third-Party Liability Coverage: Not only does marine hull insurance cover damages to your vessels and crew members, but it also offers coverage for third-party liabilities in case your ships cause damage to another ship, regardless of who was at fault.

Flexible Coverage Options: Hull insurance can be customised to meet your specific insurance needs, as most insurers offer several variants and built-in optional coverage under their marine policies.

Step 1: Inform Your Insurer

After the accident or insured event, you must contact your insurer and inform them of what has happened. This must be done as soon as possible as most insurers have a time limit within which claims are admissible after an insured event.

To initiate your marine hull policy claim process with Tata AIG, you can contact us through our helpline.

Step 2: Provide the Necessary Documents

Other than the claims application form, you will need to provide supporting documents when submitting your claim. These can be documents like:

Policy certificate.

Deck and engine room log book.

Survey reports and photographic evidence.

Receipt of drydocking (repair receipt for when your ship is taken to the service yard).

Other relevant repair receipts (if any).

Step 3: Property Inspection

Upon receiving your claim application, we will dispatch a surveyor to assess the damage sustained by your vessel to determine the reimbursement amount.

Answer all their questions honestly and offer any additional information on your part to ensure an adequate reimbursement amount and a quick claim settlement.

Step 4: Get Reimbursed!

After verifying your documents and approving your claims application, we will contact you about the reimbursement process to ensure you are adequately reimbursed.

• Hull insurance secures the ship's body, machinery and equipment against all forms of physical damage – barring policy exclusions.

• The age of the vessel plays a significant role in determining your insurance hull insurance premiums. Hence, we recommend getting hull insurance as soon as you buy the vessel.

• Higher deductibles can reduce overall premiums. However, only do this if you are sure you can pay the deductible amount without fail.

• If you anticipate certain damages not included under the base policy, make sure you discuss these potential risks with your insurer to see if you can get coverage for them. These can be done through optional covers or an underwriting process.

• File claims as soon as possible to avoid any delays or issues during your claim settlement process, as repairs or replacements can get incredibly expensive if you pay out of pocket.

Hull insurance is essential for shipowners who own large fleets or financed vessels, as there is always an increased risk of damage or loss when it comes to waterway or oceanic navigation.

These losses can also leave a large dent in your company funds in cases where your ship is declared a total loss. To avoid this scenario, Tata AIG offers several types of marine insurance policies to ensure your vessels are secured against any uncertainties at sea.