Hull and machinery insurance provide physical damage protection for the ships or vessels and the machinery which is part of them.
Since the soundness and normal operation of the hull and machinery of a ship is key to the safe transportation and delivery of any cargo or freight, it is highly advisable that ship owners purchase hull and machinery insurance.
Characteristics of Hull and Machinery Insurance:
- 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.
- Although the most commonly insured vessels are those operating in the ocean or the sea, hull and machinery 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.
- A deductible specified in the policy declarations is payable in the event of a hull and machinery insurance claim.
- A very important provision of hull and machinery insurance is the running down clause, also referred to as "the collision liability" provision. Just as its name suggests, it protects the owner of the craft against legal liability which may arise out of the owner's vessel colliding with another ship and damaging its property or cargo.
The collision liability clause does not apply to legal liability arising out of bodily injury or death, or property damage to fixed installations such as piers. If insurance against this kind of liability is required, the solution is the purchase of a protection and indemnity coverage.