Hull Insurance

M. Sequiera United India Insurance Co. Ltd.

SHIP:INCLUDES EVERY DESCRIPTION OF VESSEL USED IN NAVIGATION (SEC. 2 (L) MIA 63) A MERCHANT SHIP IS MERELY AN ELONGETAD FLOATING BOX MADE OF WELDED STEEL FRAMES, AND PLATES, IN SUC A WAY THAT THE RESULTING STRUCTURE CAN SAFELY TRANSIT OCEANS IN MOST WEATHER CONDITIONS, BOTH CARRYING HER LOAD OR WHEN SAILING EMPTY HULL - BODY OR STRUCTURE MACHINERY - PROVIDES PROPELLING POWER

MATERIALS USED IN CONSTRUCTION OF SHIPS (1) WOOD (2) IRON (3) STEEL - SAILING VESSELS - WROUGHT IRON - MILD STEEL

(4) FIBRE GLASS - PLEASURE BOATS ETC.

(5) CONCRETE - WARSHIPS OF REINFORCED CONCTERE

Hull Insurance

(1) Introduction (2) Interests covered under Hull Insurance (a) Ship owners interests - H & M Freight, I.V. Or Disbursements, Premium Reducing (b) Ship owners liabilities - Col. Liability, Cargo Liability, Removal of wreck (3) Mortgagees Interests (4) Charterers Interests (5) Crews Interests (6) Shipbuilders Interests

Note: Even though the above mentioned interests are valid insurable interests, insurers do not insure many of them viz., P & I risks. Ship owners therefore join P & I clubs. Such clubs normally cover the following risks :(i) 1/4th Col. Liability not borne by insurers (ii) Loss of life & personal injury (iii) Dmg. to fixed objects like harbours, wharfs (iv) Wreck removal (v) Quarantine expenses (vi) Liability to cargo The above interests are termed as P & I interests.

Kinds of Policies -

Time Policy Voyage Policy Valuation Agreed value Policy Measure of Indemnity - TL/CTL - Sum Insured Partial / Loss - reasonable cost of repairs not exceeding S.I. Warranty of seaworthiness - Voyage policyImp.War Time Policy - No such warranty - Privity of Assured excluded Trading warranties Stamp Duty

HULL UNDERWRITING PRACTICE SEVERAL FACTORS WEIGH IN THE MINDS OF UNDERWRITERS WHILST EVALUATING THE RISK ELEMENT IN A SHIP / VESSEL PROPOSED FOR INSURANCE. THE MAIN FACTORS THAT INFLUENCE THE U/Ws IN ACCEPTING AND RATING A HULL RISK ARE: (A) TYPE OF VESSEL (B) TRADE OF VESSEL (C) CLASSIFICATION (D) FLAG AND REGISTRATION (E) CONDITIONS OF INSURANCE (F) VALUATION OF THE VESSEL (G) OWNERSHIP

TYPE OF VESSEL (i) Type such as Tanker, Dry cargo vessel., Passenger vessel., etc. (ii) Age / year of build (iii) Construction - steel, wooden, iron (iv) Tonnage - GRT / DWT (v) Dimensions (vi) Method of propulsion

Contd...

TRADE OF VESSEL What type of operations are carried on - like fishing, dredging, etc. What type of cargo is being carried - bulk cargo, chemicals, crude oil, passengers, etc. Trading routes - coastal, world-wide, etc. Usage of vessel - tramp or as a liner. OWNERSHIP OF THE VESSEL Single owner or a fleet owner. Past claim record, if any. Management, if any.

CLASSIFICATION Built and maintained under which class. FLAG & REGISTRY OF VESSEL Indicates nationality of vessel. F.O.C.

CONDITIONS OF INSURANCE Total loss or wider cover.

VALUATION Basis of Rating of Hull Risks: Two distinct elements -T.L.O. - Percentage to be applied on the sum insured. O.T.L. - Rate per GRT / DWT
Initial Rating - From MHIR. Renewal Ratings - Based on past premium & claims record.

Hull Insurance Covers

Until 1983, age old S.G. form (ship &

goods form) of policy used to cover hull interests with suitable clauses being

attached to meet the requirements of the ship owners. This form was outdated with a number of old time terminology and phrases which in time to come was found to be unsuitable to the insuring public.

The Institute of London Underwriters (ILU) have since introduced a new simplified policy form and various Hull clauses for covering ships of different types and other

related interests. The revised policy form does not

contain any details regarding the terms & conditions of the Insurance Contract but merely sets out the details of the interest covered and serves as evidence of the contract. To know the scope of cover and terms & conditions applicable, one has to study the set of Institute Clauses attached to the Policy

Some of the important revised Institute Hull Clauses are listed below:(1) Institute Time Clauses -Hulls (1.10.83) (2) Institute Time Clauses -Hulls Total Loss only (1.10.83) (3) - - do - -Hulls Disbursement & Increased ValueTotal Loss Only including Excess Liabilities (1.10.83)

(4) Institute Voyage Clauses -Hulls (1.10.83) (5) - - do - Freight (1.10.83)

(6) Institute Time Clauses - Hulls - Port Risks (20.7.87) (7) Institute Fishing Vessels Clauses (20.7.87) (8) Institute Clauses for Builders Risk (1.6.88)

The above is not a comprehensive list but there are other clauses which are also used as per the requirements of the ship owners.

Thank you