What marine insurance covers
Marine insurance for vessels protects shipowners, operators and charterers in two main ways. Hull and machinery (H&M) covers physical loss of or damage to the ship itself. Protection and indemnity (P&I) covers the owner's legal liabilities to others, such as crew, cargo owners, ports and the environment. Related covers include war risks, loss of hire, freight, demurrage and defense (FD&D) for legal costs, and builder's risks for shipyards. According to the IUMI Stats Report 2025, global ocean hull premiums rose 3.5% to about $9.67 billion in 2024. Goods carried on board are insured separately under cargo insurance.
Hull and machinery
H&M is usually written on an agreed value, which is paid in full for a total loss. Common wordings include the English Institute Time Clauses (Hulls), the American Institute Hull Clauses and the Nordic Marine Insurance Plan. Typical cover includes:
- Perils of the sea such as heavy weather, stranding, sinking and collision, plus fire and explosion.
- Damage caused by negligence of the master or crew and by latent defects in hull or machinery, subject to due diligence by the owner.
- Collision liability to other vessels; under some English forms the hull policy pays three-fourths and P&I picks up the rest.
- Salvage, sue and labor costs, and the vessel's share of general average.
Protection and indemnity
Most ocean-going ships buy P&I from mutual clubs owned by their shipowner members. The twelve clubs of the International Group of P&I Clubs insure approximately 87% of the world's ocean-going tonnage, according to the Group, and share claims above a $10 million individual club retention through a pooling agreement backed by reinsurance. P&I covers crew injury and repatriation, liability for cargo, pollution, wreck removal, damage to docks and fixed objects, and certain fines. Smaller vessels and coastal operators often buy fixed-premium P&I from commercial insurers instead.
Mandatory requirements
Several forms of marine liability insurance are effectively compulsory. In the US, vessels over 300 gross tons generally need a Certificate of Financial Responsibility from the Coast Guard's National Pollution Funds Center under the Oil Pollution Act of 1990 and CERCLA to operate in US waters. International conventions on oil pollution, bunker fuel, wreck removal and seafarers' rights require insurance certificates, which P&I clubs evidence with so-called blue cards. Without them, a ship can be detained or refused entry.
Common exclusions
- Unseaworthiness the owner knew about, and lack of due diligence in maintenance.
- Wear and tear, corrosion and the cost of replacing a defective part itself.
- War, strikes, piracy in some markets and terrorism, which are insured under separate war risks cover.
- Trading outside navigation limits or in breach of sanctions.
- Loss of class or change of flag or management without the insurer's agreement.
What drives the price
- Vessel type, age, size, value, flag and classification society.
- Quality of ship management, crew and maintenance.
- Trading area, including high-risk and war zones.
- Deductibles and the owner's loss record.
- For P&I, the club's general increase at renewal and its financial results.
How claims work
Notify the hull insurer and the P&I club immediately; clubs have correspondents in ports worldwide who appoint surveyors and lawyers. Serious casualties may involve salvage under contracts such as Lloyd's Open Form and a general average declaration handled by an average adjuster. Keep logbooks, records and photographs and follow the insurers' instructions on repairs.
How to choose and compare
Compare agreed values, deductibles, navigation limits and the financial strength of hull insurers and clubs. Owners of workboats, ferries and yachts used commercially need the same building blocks on a smaller scale, often combined with workers' compensation or maritime employer's liability for crews. Polis Re helps you compare insurers and request quotes for hull, P&I and war risks through one request.
