The vessel should be insured against specific risks the most important of which are (1) the Hull & Machinery (H&M Insurance) and (2) the Protection and Indemnity Insurance (P&I Cover).
- The Hull and Machinery Insurance covers risks related with the loss or damage on the vessel and her machinery/equipment
- The P&I Insurance covers the shipowner/operator/manager of the ship for any risks related with third party liability. For example, for any environmental pollution or any crew injury.
Therefore, the P&I Insurance is mandatory in order for the vessel to trade. However, it is common that the ¾ of the collision liability insurance to be covered by the H&M Underwriters and for this reason the H&M Cover is also required here. Otherwise, if the 100% of the collision liability insurance is covered by the P&I Club, the H&M cover remains to the Shipowner’s discretion.
The H&M Insured value can be found in the H&M Certificate which is issued by the underwriters. Sometimes, there may be more than one underwriters having a stake in the vessel’s cover however the insured value is the same for all underwriters.
The P&I certificate is issued by the Insurers of the vessel. There are 13 major P&I Clubs which are members of the International Group of P&I Clubs and provide higher standards of protection. Here you will find a list of these clubs along with more details on the way they are organized and work.
The name of the H&M underwriter should be mentioned here. Despite the fact that the vessel is insured with only one P&I Club, it is not as straightforward when it comes to H&M Insurance.
As mentioned in paragraph 7.1. above many underwriters may have a stake in the vessel’s H&M coverage. This makes sense since the insured values involved are too high and both the owner and the underwriter diversify their risk in an effort to minimize costs.
In case that more than one underwriters exist, you have to mention the leader (the underwriter with the higher stake).
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