Insurance of vessel and its equipment are included under hull insurance, there are a number of classification of vessels such as ocean steamers, sailing vessels, builders, risks fleet policies and so on.
It is concerned with the insurance of hull and machinery of ocean-going and other vessels like barges, tankers, Fishing and sailing vessels.
Insurance of construction risks or builder’s risks deals with hull insurance for vessels when they are under construction.
A recent development in hull insurance has been the growth of insurance of offshore oil/gas exploration and production units as well as connected construction risks.
It is covered with the specialized class of business particularly for Fishing Vessels, Trawler’s, Dredgers, Inland and Sailing Vessels are available.
The subject matter of hull insurance is the vessel or ship.
There are many types of designs for ships. Most of them are constructed of steel and welded and are capable of sailing on the sea in ballast in with cargo.
The ship is to be measured with GRT (Gross Register Tonnage) and NRT (Net Register Tonnage). GRT is calculated by dividing the volume in cubic feet of the ship’s hull below the tonnage dock, plus all spaces above the deck with permanent means of closing.
NRT is the gross tonnage less certain spines for machinery, crew accommodation ballast spaces and is intended to encompass only those spinning used for the of cargo.
DWT (Dead Weight Tonnage) means the capacity in tons of the cargo required to load a ship to her load line level.
4 types of marine hull insurance are;
- General Cargo vessels.
- Dry Bulk Carriers.
- Liquid Bulk Carriers.
- Passenger Vessels.
These can be further divided into ocean-going and coastal tonnage.
Ocean-going general cargo vessels are usually in the 5000 to 15000 GRT range, coasters are smaller in size and one engaged in the carriage of bulk cargoes.
Coastal tonnage does not withstand the same strains as ocean-going vessels.
Read more: 19 Types of Marine Insurance Policies
1. General Cargo Vessel
The general cargo vessels may be container ships, large carriers (LASH – Lighter Abroad Ship) Ro-Ro (Roll on Roll off) vessels, Refers (Refrigerated Vessels General Cargo) Many general cargo vessels are built for specific purpose Vessels may be subdivided into Liners and Tramps.
Liner’s loads at an advertised berth and runs to an advertised schedule calling can route at a varying number of ports according to the particular service. It tries to maintain Time schedule although there is a heavy risk of seas.
It requires huge capital investment. Liners are always fit and well maintained at all times. Liners have a high standard of officers and crew.
Tramp carries cargo whenever and wherever it is available. Mostly bulk cargos very often are seasonal in character for which she is usually chartered. Vessels are built to comply with the particular needs of the owner’s trade.
2. Dry Bulk Carriers
Dry Bulk Carriers are specially constructed vessels in the size range of thousands GRT for coasters and 70,000 GRT for ocean-going tonnage. The main bulk cargoes carried are iron ore, coal, grain bauxite and phosphate
The main features of these vessels are the single weather deck and large holds with wide hatches to facilitate loading and discharge by mechanical means.
Most bulk carriers have sloping upper wing tanks to assist in trimming the cargo and thus produce a safer slow.
Nature of cargo, routs conversation into bulk cargoes and stability are the main considerations for underwriting.
3. Liquid Bulk Carriers
Tankers are strongly constructed to carry bulk liquid. The tankers have used tanks which do not extend across the breadth of the tanker.
Due to the live nature of the liquids cargo, tankers sustain heavier damage than other cargo ships.
The tanker has a shorter life due to corrosive effect. There is considerable danger of fire and explosion.
Before a tanker is allowed to enter a dry dock for repairs, a gas-free certificate is required. The risk of pollution following a casualty makes salvage operation more difficult and expensive.
The tankers may be VLCC (Very Large Crude Carrier) and ULCC (Ultra Large Crude Carrier) LASH and Sea Bee vessels are mother ships which carry floating containers in the form of barges up to 1000 tons displacement.
An RO-RO (Roll on Roll off) vessel is one having a facility for shipping Lorries, trailers, etc. without the need for cranes.
4. Passenger Vessels
There are cruise vessels or passenger liners which sail on voyages to distant areas of scenically beautiful but rocky or shallow coasts or near the icy waters of the Arctic and Antarctic. They possess modem navigational systems.
There are other types of vessels such as fishing vessels, offshore oil vessels, and others.
Fishing vessels bulk of steel and fiberglass (GRP) are much more prevalent.
Geographical/physical features of the area of operations vary from comparatively sheltered waters of inshore fishing to the full rigors of the open seas with exposure to gales, heavy seas fog ice and snow.
The vessels may be classed or un-classed. Classed vessels are recognized by Classification Society, and may possess class granted by it. Un-classed vessels are surveyed out of the later and all machinery is thoroughly examined.
There is a special tariff for the fishing vessel in India. Nature, type, age, geographical limits, etc. are examined for insurance cover and rating.
Offshore Oil Vessels
The offshore oil vessels are used for explanation or for commercial production of oil from the ocean beds.
The comprehensive cover gave covers not only the operations at the site but also the transporter of plant and equipment to the drilling sales which may be hundreds of kilometers away in mid sea. These vessels are veritable artificial islands where the risks are present in one form or another.
The jack-up unit is a self-elevating platform which can float freely with legs retracted by a jacking system for movements in tow. Casualties may occur during tows or whilst jacking up or down.
The semi-submersible or column established drilling platform can be bottom supported and or free floating.
They can operate in deeper water and usually, have multi-anchoring system employing up to 10 separate lines. Another ship shape unit is basically a modified conventional ship, with a slot for drilling through, located in the center.
It is capable of much deeper water drilling. Again another fixed structure is usually a platform construction on four or more piled legs. The platforms are stationary.
Hull and Machinery Insurance
The policy covers the hull, machinery and equipment and stores etc. on board but do not cover cargo.
The insurance cover, the requirements of the individual ship owner and protects him against partial loss, total loss, ship’s proportion of general average and salvage charges, sue and labor expenses and ship-owners liability towards other vessels arising from collisions.
Hull underwriting requires the following information to assure the risk: Type, construction, builders, age, tonnage, dimension, equipment, propulsion machines, engine, fire extinguisher; classification society, merchant shipping act, warranties, navigation physical and moral hazard.