What are IHC and ITC?

Answer

ITC (Institute Time Clauses) and IHC (International Hull Clauses) are standard sets of contractual terms used worldwide in Marine Hull & Machinery (H&M) insurance policies to define what perils are covered, how claims are settled, and what conditions the shipowner must meet.

Both sets were drafted in the London insurance market (by the Joint Hull Committee) and govern fixed-term insurance policies (typically 12 months).

1. Institute Time Clauses – Hulls (ITC-Hulls)

Introduced in 1983 (with a minor update in 1995), the ITC (specifically ITC-Hulls 1/10/83) replaced the traditional Lloyd's S.G. policy and remains the most widely used baseline form for hull insurance globally.

Core Characteristics

• Named Perils Basis: Covers loss or damage caused explicitly by listed perils, including perils of the seas (heavy weather, collision, grounding), fire, explosion, jettison, piracy, and violent theft.

• Inchmaree Clause: Extends cover to machinery breakdown, bursting of boilers, breakage of shafts, latent defects, and negligence of crew, master, or repairers.

• Collision Liability (3/4th RDC): Includes 3/4ths legal collision liability coverage for damage caused to another ship.

• Strict Warranties: Uses traditional, strict express warranties (e.g., maintaining class, geographic trading limits). A breach of warranty automatically discharges the insurer from liability from the date of breach, even if the breach is unrelated to the loss.

Introduced in 2002 and updated in 2003 (IHC 01/11/03), the IHC was designed to modernize marine insurance, streamline claims management, and update warranty terms to better reflect modern shipping practices.

Core Characteristics & Structural Changes

• Three-Part Structure:

  • Part 1 (Principal Insuring Conditions): Core perils, Inchmaree cover, 3/4th RDC, and General Average.

  • Part 2 (Additional Clauses): Optional, customizable covers (e.g., navigation limits, recommissioning, fixed and floating object liabilities).

  • Part 3 (Claims Provisions): Strict, structured procedures governing how claims are handled, appointing leading underwriters, requiring notice of claims, and managing survey processes.

    
    

• Reform of Warranties: Replaces several harsh automatic-cancellation warranties with contractual obligations or "suspensive conditions." (e.g., if a vessel strays outside trading limits, cover is suspended while out of bounds but automatically resumes once the ship returns).

• Clearer Machinery Damage Terms: Provides detailed conditions regarding machinery breakdowns and clear guidelines on common repair costs for latent defects.