Hull Insurance

Hull insurance is the marine equivalent of property insurance for land-based assets, protecting the vessel owner against physical damage to the ship's structure, engines, and onboard equipment. Indian hull policies are based on the Institute Time Clauses (Hulls) or Institute Voyage Clauses, adapted for the Indian market under IRDAI oversight.

The policy covers perils of the sea (storm, stranding, collision, sinking), fire and explosion, piracy, and other maritime risks. A hull policy also typically includes a Running Down Clause (RDC), also known as the collision liability clause, which covers the shipowner's liability to the other vessel in a collision, usually up to three-fourths of the insured value.

In India, hull insurance is critical for the country's growing coastal shipping sector, inland waterway transport under the Sagarmala and Jal Marg Vikas projects, and the offshore support vessel fleet serving ONGC and other oil exploration companies. The Directorate General of Shipping (DGS) and the Merchant Shipping Act, 1958 require certain classes of vessels to maintain insurance, and hull cover forms the primary layer.

The sum insured in hull insurance represents the agreed value of the vessel, established at policy inception. Indian hull policies are typically valued policies, meaning the insured value is agreed upfront and is not subject to dispute at the time of a claim (subject to the principle of utmost good faith at inception). Premiums are determined by the vessel's age, type, trading area, classification society rating, and claims history. Indian insurers often reinsure hull risks in the international market given the high sums insured involved.

Hull insurance also interacts with Protection and Indemnity (P&I) insurance, which covers third-party liabilities not addressed by the hull policy, such as pollution, cargo damage, and crew injury.