Answer
Hull and Machinery insurance principally covers physical loss of or damage to the vessel, hull, machinery and equipment due to insured marine perils such as perils of the sea, fire, explosion, collision, grounding, piracy, jettison, machinery accidents and, subject to the policy wording, negligence and latent defects.
Barratry means a wilful wrongful or fraudulent act of the master or crew, without the owner's knowledge or consent, which prejudices the owner's interest. Barratry is normally covered as an insured peril under H&M.
H&M normally does not cover ordinary wear and tear, corrosion, gradual deterioration, wilful misconduct of the assured, delay or loss of earnings, crew claims, cargo liabilities, pollution liability, wreck removal and most third-party liabilities. These liabilities are generally dealt with under P&I or other separate insurance. War risks are also normally insured separately.”
What is covered under H&M?
Typical covered risks include:
- Perils of the sea: heavy weather, grounding, stranding, sinking, collision, contact damage.
- Fire and explosion.
- Piracy.
- Jettison.
- Earthquake, volcanic eruption, lightning.
- Accidents in loading/discharging or shifting cargo/fuel.
- Bursting of boilers, breakage of shafts, latent defects in machinery or hull, subject to policy wording.
- Negligence of master, officers, crew or pilots, provided the loss is not due to the assured's lack of due diligence.
- Negligence of repairers or charterers, subject to the policy conditions.
- Barratry of master, officers or crew.
- Salvage and general average contributions, where applicable.
- Collision liability, commonly a proportion such as 3/4 Running Down Clause liability under traditional Institute Time Clauses, depending on the policy wording.
Barratry means a wilful and wrongful act committed by the master or crew against the interest of the shipowner, without the owner's knowledge or consent.
Examples:
- Master intentionally scuttles the ship.
- Crew deliberately sets fire to the vessel.
- Master fraudulently diverts or steals the vessel.
- Deliberate unlawful disposal of cargo or ship's property for personal benefit.
Yes, normally barratry is an insured peril under traditional H&M clauses.
What is NOT normally covered under H&M?Typical exclusions / matters not normally covered include:
- Ordinary wear and tear, corrosion, rust, wastage, gradual deterioration.
- Inherent vice or normal machinery deterioration.
- Lack of maintenance / unseaworthiness where attributable to the assured's lack of due diligence.
- Wilful misconduct of the assured.
- Delay and loss of earnings/off-hire, unless separately insured.
- Cargo loss or damage — normally covered under cargo insurance / liability arrangements.
- Crew injury, illness or death — generally P&I.
- Passenger injury/death — normally liability/P&I/PAL arrangements.
- Pollution liability — generally P&I, subject to applicable statutory insurance.
- Wreck removal liability — generally P&I.
- Fines and penalties — generally not H&M; some may be covered by P&I subject to rules.
- Most third-party liabilities other than the specific collision liability provided in the hull policy.
- War risks, strikes, terrorism, mines, torpedoes and similar risks where excluded from ordinary H&M and insured separately under War Risks cover.
- Nuclear/radioactive risks, subject to standard exclusions.
- Loss caused by insolvency or purely commercial/financial loss.