Types of Marine Insurance: Hull, P&I, Charter and Crew Coverage

Hull and Machinery Insurance (H&M)

Hull and machinery insurance is the fundamental marine insurance policy covering physical loss or damage to the vessel itself. The cover typically includes:

• Total loss (constructive total loss and actual total loss)
• Partial loss - storm damage, grounding, collision, fire, theft
• Fixed and floating object damage
• Machinery breakdown (where included in the policy)
• Running down clause (RDC) - liability for damage caused to another vessel

Almost all marine lenders require hull and machinery insurance for at least the outstanding loan balance as a condition of a marine HP or marine mortgage agreement. The lender is typically noted on the policy as an interested party.

Who underwrites hull and machinery insurance?

The UK market for yacht hull insurance includes Lloyd's of London syndicates, Pantaenius, GJW Direct, Haven Knox-Johnston, Markel Marine, Navigators and specialist hull underwriters. Commercial vessel hull insurance is primarily placed at Lloyd's or through specialist marine P&I clubs.

Protection and Indemnity Insurance (P&I)

Protection and Indemnity (P&I) insurance covers the legal liabilities of a vessel owner or operator that fall outside the scope of hull insurance. For private yacht owners, P&I is typically incorporated within the hull policy as third-party liability cover. For commercial operators, standalone P&I club membership is the norm.

P&I cover typically includes:

• Injury or death of crew, passengers or third parties
• Pollution liability (oil spill, fuel contamination)
• Wreck removal costs
• Cargo liability (for commercial vessels)
• Collision liability excess above hull policy limits

P&I Clubs

The major P&I clubs are mutual insurance associations owned by their members. The International Group of P&I Clubs (IG) covers approximately 90% of the world's ocean-going tonnage. For UK commercial vessel operators, the UK P&I Club, the Standard Club and North P&I are among the most significant.

Charter Liability Insurance

Charter liability insurance is essential for any vessel used commercially - whether for bare boat charter, crewed charter or day-trip operations. Standard yacht insurance policies exclude or significantly restrict cover when the vessel is chartered to paying passengers.

Charter liability cover typically includes:

• Third-party liability for paying passengers
• Public liability (on shore and afloat)
• Legal expenses for charter-related disputes
• Loss of charter income (available as an add-on)

Charter and marine finance

If you intend to charter a financed vessel, the lender must consent to the commercial use and the insurance policy must reflect charter status from outset. Charter liability premiums can be financed through the premium finance providers on our panel - First Marine Insurance has particular experience with charter policy premium finance.

Crew Insurance

Crew insurance covers the legal liabilities of a vessel owner or employer towards crew members. This is particularly relevant for superyachts, commercial vessels and charter operators who employ professional crew.

Crew insurance typically includes:

• Employers' liability for crew injury or illness
• Personal accident and medical expenses (repatriation costs can be significant)
• Loss of effects (crew personal belongings)
• Death and disablement benefits

Loss of Hire Insurance

Loss of hire insurance compensates a vessel owner for loss of charter income when the vessel is out of service following an insured event. It is particularly relevant for commercial charter operators and superyacht owners whose vessels generate significant charter revenue.

Loss of hire cover is typically written as a standalone extension to the hull policy or as part of a commercial marine insurance package. Premiums for loss of hire cover are eligible for premium finance through the specialist providers on our panel.

Which Marine Insurance Types Can Be Premium Financed?