H&M COVER [HULL AND MACHINARY COVER]
HULL AND MACHINERY COVER:-
Hull and machinery cover, commonly known as H&M cover insures against ---
1) Actual or total constructive loss of ship's hull, machinery or equipment
2) Accidental damage to hull, machinery or equipment
3) Liability against owner of other vessel with which ship collides, commonly known as collision liability. Normally collision liability is 3/4th of total liability but can be extended to 4/4th.
4) Liability for general average charges
5) Liability for salvage charges
H&M policies are generally time policies, the maximum period of insurance usually being 12 months. Coverage for a vessel under H&M policy is written with a vessel value, which has been agreed upon between the shipowner and the policy underwriter. But it is not necessary to insure property for its full value, and some assureds, in return for a lower premium, prefers to carry part of the risk themselves. A H&M policy might state the insured value as for e.g. $4,000,000 on hull and machinery valued at $ 5,000,000.
H&M cover is generally arranged for owners or managers by brokers, who acts as agents of assureds. On instruction from assureds the broker prepares a slip for presentation of the subject matter details to underwriters. The broker supplements the basic facts on the ship with all material information about the risk as supplied by assured( under the principle of utmost good faith).
The broker contacts with one or more underwriters to pay an agreed premium for a policy covering loss or damage. Unless the insured value of the vessel is small, the broker takes the slip first to an influential 'lead' underwriter, then to a succession of others, until the risk is 100% covered. Some underwriters may not be interested in covering any part of the risk, while those who are interested will usually write a line only a small percentage of the insured value of the ship. Each underwriter indicates acceptance of his share of risk by writing his signature or initials against the line on the slip bearing the percentage he accepts on behalf of his syndicate or company.
When the slip is complete, i.e. the risk is 100% covered, the broker prepares details of the cover on a cover note and sends this to the assured for approval. If assured approves of the term, a formal policy is drawn up.
The policy form has inner section for attaching the applicable clauses and warranties. Standard clauses of H&M cover are:-
1) International hull clause
2) Institute war and strikes clauses
3) Builder's risk clause.
Hull and machinery cover, commonly known as H&M cover insures against ---
1) Actual or total constructive loss of ship's hull, machinery or equipment
2) Accidental damage to hull, machinery or equipment
3) Liability against owner of other vessel with which ship collides, commonly known as collision liability. Normally collision liability is 3/4th of total liability but can be extended to 4/4th.
4) Liability for general average charges
5) Liability for salvage charges
H&M policies are generally time policies, the maximum period of insurance usually being 12 months. Coverage for a vessel under H&M policy is written with a vessel value, which has been agreed upon between the shipowner and the policy underwriter. But it is not necessary to insure property for its full value, and some assureds, in return for a lower premium, prefers to carry part of the risk themselves. A H&M policy might state the insured value as for e.g. $4,000,000 on hull and machinery valued at $ 5,000,000.
H&M cover is generally arranged for owners or managers by brokers, who acts as agents of assureds. On instruction from assureds the broker prepares a slip for presentation of the subject matter details to underwriters. The broker supplements the basic facts on the ship with all material information about the risk as supplied by assured( under the principle of utmost good faith).
The broker contacts with one or more underwriters to pay an agreed premium for a policy covering loss or damage. Unless the insured value of the vessel is small, the broker takes the slip first to an influential 'lead' underwriter, then to a succession of others, until the risk is 100% covered. Some underwriters may not be interested in covering any part of the risk, while those who are interested will usually write a line only a small percentage of the insured value of the ship. Each underwriter indicates acceptance of his share of risk by writing his signature or initials against the line on the slip bearing the percentage he accepts on behalf of his syndicate or company.
When the slip is complete, i.e. the risk is 100% covered, the broker prepares details of the cover on a cover note and sends this to the assured for approval. If assured approves of the term, a formal policy is drawn up.
The policy form has inner section for attaching the applicable clauses and warranties. Standard clauses of H&M cover are:-
1) International hull clause
2) Institute war and strikes clauses
3) Builder's risk clause.
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