Friday, 25 February 2011

GUIDE: Hull & Machinery Insurance

Hull and Machinery insurance is a form of marine insurance which pays the owner for damage done to the ship itself or the equipment which forms part of it (for instance, cranes, hydraulic winches etc.). it is often simply known as hull insurance or hull cover.

It is possible to buy a much cheaper insurance ('TLO') for the hull risk, which covers Total Loss Only. In other words, if the vessel is damaged you must repair it at your own cost; the policy will only respond if the vessel is a total loss (by paying you what it was worth so that you can purchase a new one).

Most hull brokers will be able to obtain the best overall cover by blending an H&M policy which excludes total loss with a standalone Total Loss Only policy. The latter policy would find most vessels never making a claim and could therefore be bought relatively cheaply and as the H&M policy excludes the largest risk possible (for loss of the vessel) it too would be comparitively cheap.

The rationale from an underwriting side is that both insurers can more accurately identify the risk in what they are underwriting and can therefore be more specific in how much premium they charge.


Anonymous 15 May 2011 at 15:11  

I thought TLO policies were less common nowadays in the London market?

Editor 19 February 2012 at 14:12  

They are a lot less common nowadays with the developments in size and cost of vessels. The market itself has also become a lot more sophisticated.

Muhammad Amir 2 January 2013 at 22:00  

The latter policy would find most vessels never making a claim and could therefore. Best PPI Claims Service

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