Marine Insurance

Type of marine insurance:

 Protection & Indemnity Protection (P&I Insurance)

Liability insurance for practically all maritime liability risks associated with the operation of a vessel,
other than that covered under a worker compensation policy and under the collision clause in a hull
policy. There is no standard P&I form with the specific terms and conditions for each insured
tailored by underwriters based on the nature of the risk and the character and amount of insurance
desired by the insured. Additionally note that since the P&I policy is essentially a contract of
indemnity, the insurer is not obligated to pay unless the insured must actually pay the claim.

 Freight, Demurrage & Defense (FD&D/ Defense Insurance)

This insurance, often referred to as "FD&D" or simply "Defense," provides members with cover for
claims handling assistance and for legal costs in relation to a wide range of disputes. Such disputes
are outside the scope of P&I or H&M insurance and arise from the building, buying, selling, owning
or operation of an entered vessel. For instance, FD&D insurance would cover, among other things,
the costs of pursuing or defending claims and disputes that may arise in respect of the following:

 Charterparties
 Contracts of Carriage
 Bills of Lading
 Contracts of Affreightment
 Vessel building contracts
 Vessel sale and purchase contracts
 Vessel repair contracts
 Vessel agency, stevedoring, towage and salvage contracts
 Insurance broking, ship broking and management service contracts
 Bunker and necessaries contracts
 Crew contracts
 Marine insurance contracts
 This insurance covers the expense of obtaining legal advice and assistance, including the cost of
employing experts as may be necessary to pursue or defend such disputes. As such, it is sometimes
also called "Defense Costs" insurance. FD&D insurance does not, however, cover the principal sum
in dispute, such as unpaid hire under a charterparty or a claim that is being denied by a hull insurer.

 Hull & Machinery Insurance (H&M Insurance)

Hull & Machinery insurance is fundamental protection of a vessel against damage. The vessel,
including her machinery and equipment, is insured to her full value and, depending on the chosen
cover, the following risks may be indemnified:

 Total loss (actual or constructive) or expenses that might be incurred in repairing / replacing
damaged parts of hull, machinery and other equipment
 Actual loss is a condition when; the ship is destroyed; ship owner can’t have their ship back
(irretrievable deprived); the ship declared missing (hasn’t back to the ship owner for 6
month).
 Constructive loss is a condition when; ship owner can’t have their ship back (deprived) and
searching estimate price is more expensive than the ship worth; and the ship broke but the
repairing price is more expensive than the value of insurance.
 Expenses paid for prevention, minimizing of damages or calculation of loss, in case such
expenses are caused by an insured peril
 Vessel gone missing
 General Average contribution
 Salvage expenses

Apart from the risks above Hull & Machinery policy may also include additional cover, such as:

 Increased Value Insurance

 Loss of Hire
 War Risks
 Fuel and Stores onboard
 Cash onboard
 Running Down Clause
 Fixed and Floating Objects
Marine insurance are divided to certain type based on the object;
 Cargo Insurance  Cover especially to cargo of the ship.
 Cover the loss, damage or shortage of cargo; and the additional cost of cleaning or
extermination of broken cargo, and additional cost for securing or withdrawal cargo.
 The indemnity for cargo insurance is subject on Hague or Hague-Visby Rules, Hamburg Rules,
and SDR Protocol.
 Hull Insurance  Cover the torso/ body of the ship including what inside of it.
 Liability Insurance  Cover the matter of ship crash or collide and other including attacks.
 Freight Insurance  Cover company loss of money in form of freight due to the accident.

The most common marine insurance underwriter is P&I Club, based on England.
One of P&I Club product that common used is Fixed Premium P&I, it cover all things that related to
operational of the ship.  Cargo Liability, Crew Liability, Collision Liability, and other claims
(Environmental Pollutions, cost of ship rescue, etc).

Ship Detention or Ship Arrest

Ship arrest or ship detention is subject to International Convention of Ship Arrest, not all country has
ratified this Convention, including Indonesia.
Ship arrest or ship detention happen on some circumstances, such as:
 The ship is used as insurance coverage, so all claim can be fulfilled;
 Court order;
 Account payable matter;
Ship arrest or ship detention registered on Letter of Undertaking (LOU). Letter of Undertaking is useful
as a guarantee for the ship owner.