Marine Hull Insurance is for the loss or damage of ships, vessels, yachts, boats and ferries. Marine Cargo Insurance is for the loss or damage of cargo carried by any mode of transportation while being held, transferred, loading and unloading between the points of origin or departure and the final destination or point of arrival or discharge.
The word marine though may suggest the mode of transportation by sea, however, in marine cargo insurance, the cargo other than being transported via sea, can be transported by land by lorries, trucks or train. Â Cargo can also be transported by air especially when the goods in the containers are perishable items that need to be shipped to the destination immediately by the exporter to the importer for delivery to the buyer or consumers. Air cargo is also covered under Marine Cargo Insurance.
Marine Hull Insurance is not limited to insuring the ship body and its motorised engine. Â It can also covers other floating structures like oil-rig platforms and barges.
Scope of Marine Hull Insurance coverage is wide and comprehensive as it can cover the loss or damage to the ship due to collision with another ship, or collision with a fixed object like a shipwrecked or harbour at terminals or sandbars or reefs. Â If there are bodily injuries to the third party on board the other ship Â or damage to the fixed objects like harbour or terminal, the marine insurance will have to pay for the claims by third party besides the cost of repair to the ship and its engine.
Marine Hull insurance usually covers up to three quarter of the insured’s liability to third parties. Â This development has encouraged the shipowners to band together in mutual underwriting clubs known as Protection and Indemnity Clubs (P&I), to insure the remaining one-quarter liability amongst themselves.
Most of the P & I Clubs work on the basis of agreeing to accept a shipowner as a member and levying an initial “call” (premium). With the fund accumulated, reinsurance will be purchased; however, if the loss experience is unfavourable one or more “supplementary calls” may be made and all the club members have to contribute to the fund. Â These P & I clubs will also try to build up their reserves in good time when there are fewer claims so that they will have more funds on standby.
An actual total loss occurs where the damages or cost of repair clearly equal or exceed the value of the ship or Â property . A constructive total loss is a situation where the cost of repairs of the ship plus the cost of salvage equal or exceed the value of the ship insured
Insurance of pleasure craft Â in nature like yacht is generally known as “yacht insurance” and includes liability coverage. Smaller vessels such as yachts and fishing vessels are typically underwritten on a “binding authority” or “lineslip” basis.
With the growing number of individuals who have grown financially rich and wealthy in Malaysia and the rests of the world, it has become a trending Â lifestyle for many to own private yachts and moor it at marinas like the ones at Georgetown, Penang Marina and Pulau Langkawi Marina clubs and Puteri Harbour and Â Danga Bay, Johor in Malaysia.
Like most classes of insurance, war risks is not covered by Marine Insurance. General hull insurance does not cover the risks of a vessel sailing into a war zone. A typical example is the risk to a tanker sailing in the Persian Gulf during the Gulf War involving Iraq and Kuwait, its allies in Arab Gulf countries and itsÂ majorÂ Western Allies like UK, France and NATO countries and USA.
The war risks areas are established by the London-based Joint War Committee, which has recently moved to include the Malacca Straits as a war risks area due to piracy. There have been several oil tanker ships and container ships being hijacked by pirates and terrorists near Sudan and Somalia which have given rise to many insurance losses and the governments of most of the affected shipping lines have made arrangement to send their naval forces to escort and patrol the seas in that area to curb piracy. If an attack is classified as a “riot” then it would be covered by war-risk insurers.
Marine Hull insurance policy can also include Increased Value(IV) cover to protect the shipowner against any difference between the insured value of the vessel and the market value of the vessel.
Some of the special covers are not readily available to the shipowners are the insurance company’s underwriter will look into other factors in accepting the risks proposed.
Marine Cargo insuranceÂ is underwritten on the Institute Cargo Clauses, with coverage on an A, B, or C basis, A having the widest cover and C the most restricted. Valuable cargo is known as specie. Institute Clauses also exist for the insurance of specific types of cargo, such as frozen food, frozen meat, and particular commodities such as bulk oil, coal, and jute. Â Sometime a cargo may be a herd of animal livestock like cows and sheep.
Marine Cargo Insurance has also engaged many parties like shipping agents, Shipping Lines, Integrated Land Transporters and Aviation Cargo Industry and specialized professionals like quality and quantity packing inspection agencies and marine loss adjusters who will determine the value or sum insured, salvage and sacrifice and adequacy of sum insured and average calculation.
Marine Cargo policies can be issued on annual open cover basis or on per consignment or shipment basis.
If you need a Marine Hull Insurance or Marine Cargo Insurance from general Marine insurance agent in Malaysia, please contact us. If you are from outside of Malaysia, please contact via email.