Category: Marine · Reviewed by Chrissie Anderson, Client Executive · Last reviewed 2026-06-05
Hull insurance, more fully hull and machinery insurance or H&M, is the branch of marine insurance covering physical loss of or damage to the ship and its machinery, together with a portion of the shipowner’s collision liability, written on standard wordings such as the Institute Time Clauses-Hulls 1/11/95 or the International Hull Clauses 1/11/03.
Category: Marine insurance Also known as: H&M, hull and machinery, ship hull insurance First codified: Lloyd’s SG Form (17th–19th century); Institute Time Clauses-Hulls 1/10/83 Related legislation: Marine Insurance Act 1906 [1]; Insurance Act 2015 [2]
Hull insurance indemnifies the shipowner, demise charterer or other party with insurable interest in the vessel against physical loss of or damage to the ship’s hull, machinery, equipment and stores. It is the principal asset cover for shipowners and one of the four traditional branches of marine insurance alongside cargo, freight and liability [3][4].
Modern H&M policies are written on time, the standard period being twelve months at a fixed insured value. The insured value is normally set close to the agreed market value of the vessel, with deductions for normal wear and tear absorbed by the shipowner. Cover extends to all parts of the vessel, including bunkers and spares on board, but excludes cargo (covered separately under cargo policies) and personal effects of crew [4][5].
A distinctive feature of H&M is the inclusion of a fixed proportion of the shipowner’s collision liability. Historically, the SG Form provided cover for three-quarters of the assured’s liability for damage to another ship and her cargo arising from a collision (the ‘three-fourths running down clause’ or 3/4ths RDC), with the remaining quarter falling to the shipowner’s Protection and Indemnity Club. The International Hull Clauses 1/11/03 allow election of 4/4ths cover, meaning the H&M insurer covers the entire collision liability and the P&I Club’s role for collision shrinks correspondingly [3][4].
H&M is distinct from war risks (which are excluded by the standard clauses and placed separately, often through mutual war risks associations), from marine builders risk (which covers the vessel during construction), and from increased value (IV) and disbursements covers which provide additional total loss protection [5].
H&M is governed in English law by the Marine Insurance Act 1906, supplemented by the express terms of the standard wordings. Key statutory provisions include s.5 (insurable interest), s.27 (valued policy), s.39 (warranty of seaworthiness in voyage policies — typically excluded in time hull policies by express clause), s.55 (perils insured and excluded), s.60 (constructive total loss), s.61 (notice of abandonment), s.78 (sue and labour) and s.79 (subrogation) [1].
The Insurance Act 2015 applies to commercial hull policies entered into on or after 12 August 2016. It replaces the historic duty of disclosure with the duty of fair presentation, introduces a proportionate remedies regime for breach, and provides that breach of warranty suspends rather than discharges the insurer’s liability. Section 13A imposes an implied term that the insurer must pay sums due within a reasonable time. The Act may be contracted out of in non-consumer contracts subject to transparency requirements in s.16 [2].
The standard market wordings are maintained by the Joint Hull Committee, with input from the Lloyd’s Market Association and the International Underwriting Association. The three principal current wordings are: Institute Time Clauses-Hulls 1/10/83 (older market wording still in occasional use); Institute Time Clauses-Hulls 1/11/95 (the most widely used wording in the international market); and the International Hull Clauses 1/11/03 (a more modern wording with restructured cover, but slower to be adopted) [4][5].
International conventions affecting hull underwriting include SOLAS (Safety of Life at Sea), the International Safety Management Code, the International Ship and Port Facility Security Code and the Maritime Labour Convention, all administered by the International Maritime Organization. Compliance with these conventions and with the rules of the vessel’s classification society is typically a condition of cover [6].
A shipowner places H&M cover with the assistance of a specialist marine broker. The broker prepares a slip setting out the insured values, deductibles, conditions, navigation limits and trading patterns of the fleet, together with the proposed wording and the shipowner’s claims record over a number of years. The slip is presented to one or more leading underwriters who set terms, and following underwriters then take agreed lines until the placement is complete [4][5].
A typical placement might involve a single leader taking the largest line (often 10% to 25%) with following markets supporting on the agreed wording. London market business is heavily subscription-based, with both Lloyd’s syndicates and company market insurers participating. The deductible is usually a substantial figure, often $100,000 or more for a substantial vessel, reflecting that smaller damage is dealt with by the shipowner without claim. Deductibles bite per casualty, although a separate (often lower) deductible may apply to heavy weather damage.
Navigation limits define the trading areas in which cover applies. Standard limits exclude trading in war zones, polar regions and some specific high-risk areas. Trading outside the navigation limits without notice and additional premium typically breaches a warranty. The Institute Warranties 1/7/76 set out long-standing navigation limits.
Claims procedure involves immediate notification to underwriters, appointment of a surveyor (often by the H&M lead), repair specifications, tender from shipyards and approval of repairs. The shipowner’s duty to sue and labour under s.78 of the Act requires reasonable steps to minimise loss. Average adjusters may be appointed for complex claims and prepare the adjustment of the loss between H&M, P&I, increased value and other interests [1][4].
The three principal wordings differ in detail but share a common structure. ITC-Hulls 1/10/83 is the original modern hull wording, brief and broadly drafted. ITC-Hulls 1/11/95 tightened several provisions following market losses in the late 1980s and remains the market standard. The International Hull Clauses 1/11/03 restructured cover into named parts (cover, additional covers and miscellaneous provisions) and offered options including 4/4ths collision liability. Despite the modernisation, ITC-Hulls 1/11/95 remains more widely used [4][5].
Specialist hull wordings exist for tugs and barges, fishing vessels, yachts and pleasure craft, ferries, offshore support vessels and high-value newbuilds. Cover for the construction phase is provided under marine builders risk policies on the Institute Clauses for Builders’ Risks 1/6/88. War risks for hull are placed separately under Institute War and Strikes Clauses-Hulls Time 1/11/95 or via mutual war risks associations [4].
Layered placements are common for high-value vessels: a primary layer takes the first portion of the insured value with separate excess layers above. Loss of hire is typically a separate cover providing daily indemnity for time the vessel is off-hire following an insured peril.
A handysize bulk carrier of 25,000 dwt is insured for hull and machinery value of $18m on Institute Time Clauses-Hulls 1/11/95. The placement is led by a London marine syndicate with a 17.5% line, supported by ten following markets, all subscribing on the agreed slip. The deductible is $100,000 per casualty with a higher deductible for heavy weather. The vessel grounds in shallow water during a port approach, sustaining bottom damage estimated at $1.4m to repair. The shipowner notifies underwriters, an SCR (Salvage Association) surveyor attends, repair tenders are obtained and the vessel is dry-docked. The insurer pays the cost of repairs less the deductible, and the average adjuster prepares the adjustment. The shipowner’s P&I Club deals with any associated pollution liability and the remaining 1/4th of any collision liability, with H&M dealing with the 3/4ths.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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