Marine hull insurance

A steady course to protection at sea

Marine hull insurance covers physical damage to a vessel and its machinery. It is designed to keep ships trading after accidents, weather events, collisions or machinery failures by funding repairs or, in serious cases, paying for total loss. In the UK, the London market remains a global centre for this cover, with Lloyd’s bringing deep underwriting expertise and competitive capacity.

The market has been resilient. Global marine hull premiums reached roughly USD 9.67 billion in 2024 with growth of around 3.5 percent, supported by rising vessel values and larger fleets. Europe contributed more than USD 5.1 billion, reflecting stable loss ratios for several years. For UK buyers, this means a mature, well-capitalised marketplace and experienced claims handling. In 2025, new managing general agents have added capacity in London, helping to moderate rates for well-managed fleets.

This guide sets realistic expectations. It explains how cover works, where exclusions commonly sit, and what evidence insurers need when you claim. It also highlights emerging risks such as fires, groundings and conflict exposures that are shaping underwriting in 2025. If you understand the limits and obligations up front, you are better placed to choose a policy that actually performs when needed.

Insurance can offer real protection - but only when you know exactly what it covers and where the gaps might be.

We will walk through cover types, options, costs and eligibility in plain English, using practical examples. The aim is simple: help you make a confident, informed decision without overspending or overlooking critical risks.

What is covered in practice

Hull and Machinery cover sits at the heart of most policies, protecting the vessel’s hull, engines, and essential equipment against accidental physical loss or damage. This segment is expected to account for around 59.6 percent of the market in 2025, reflecting its central role for modern ships that rely on advanced propulsion and navigation systems.

Policies typically include perils of the sea, heavy weather, collision, grounding, fire, explosion and machinery breakdown. They can also respond to general average contributions and salvage charges. Many owners add increased value or freight interest to align the insured value with real financial exposure.

Limitations matter. Wear and tear, gradual deterioration, poor maintenance, and unseaworthiness are commonly excluded. Losses from delay or loss of market are usually not covered. War and strikes risks are often written separately, and pollution liabilities or cargo claims fall under different policies. If navigation limits are breached or class conditions are not maintained, cover can be restricted or avoided.

Claims are evidence led. Following an incident, the master’s report, log extracts, class recommendations and surveyor findings will be central. Insurers may appoint surveyors and request maintenance records and voyage plans. In a grounding scenario, for example, the policy may fund emergency towage and repairs subject to the policy excess and any deductible for machinery damage. Transparent records speed settlement and support favourable outcomes.

Who benefits and when it may be unnecessary

Marine hull insurance is essential for shipowners, bareboat charterers who assume hull risk, financiers holding a mortgage interest, and operators with contractual obligations to maintain cover. It is particularly valuable for vessels with complex machinery, higher replacement values, or trading routes with heavy weather or congested waterways.

Ports, workboat operators, fishing fleets and inland vessels can also benefit, provided navigation limits and use are correctly declared. For offshore energy units, specialised wordings apply, and market conditions have been challenging, with premiums declining in 2024 alongside shifting risk appetites.

It may be less necessary where a vessel is laid up for an extended period and only named perils or laid-up cover is needed, or where contractual arrangements place hull risk elsewhere. If a vessel is at end-of-life value and repair economics no longer stack up, owners sometimes opt for minimal cover within legal and contractual requirements. The key is aligning insurance spend with real exposure and operational realities.

Picking a level that fits your vessel

1. Basic Hull Only
   • Covers accidental physical loss or damage to the hull on named or restricted perils. Lower sums insured and higher excesses are common. Suitable for low-value or laid-up vessels with limited navigation.
2. Standard Hull and Machinery
   • Broad accidental damage cover for hull, engines and essential equipment, including collision liability to fixed and floating objects. Often includes general average and salvage charges. Appropriate for most trading vessels.
3. Enhanced H&M with Increased Value
   • Adds Increased Value or Freight Interest to bridge gaps between market value and full financial exposure, supporting mortgage obligations and improving total loss protection.
4. War and Strikes (separate policy)
   • Covers war, terrorism, seizure, and detainment per listed areas and conditions. Required when trading to regions with heightened geopolitical risk. Can be bought voyage-by-voyage.
5. Breakdown and Loss of Hire Add-ons
   • Machinery breakdown extensions may refine deductibles. Loss of Hire compensates lost income during repairs after an insured event, subject to waiting periods and daily limits.
6. Navigation and Trading Area Extensions
   • Extends standard limits to specific ice, river or high-risk areas, often with seasonal or escort conditions.
7. Cyber and Electronic Navigation Extensions
   • Addresses certain cyber-related physical damage triggers, subject to strict wording and exclusions for non-physical loss.

Choose limits that reflect real repair costs, not just book values. The new hull repair cost indices show inflation can outpace standard uplift assumptions.

What influences the price

Prices vary by market cycle. In 2025, increased capacity in London and Europe has moderated rates for well-run fleets, though underwriting remains selective with tighter terms and conditions.

Who can apply and common hurdles

Insurers usually require vessels to be classed, maintained to class standards, and crewed in line with flag and international requirements. You will be asked for recent surveys, maintenance logs, trading history, safety management certificates, and loss records. Finance agreements and mortgagee details must be disclosed where relevant. Trading areas, cargo types and any towage or special operations should be declared upfront.

Applications can be declined if there is a poor safety record, unresolved class recommendations, evidence of unseaworthiness, sanctions exposure, or undisclosed high-risk trading. Offshore units and older vessels may face tighter terms or higher deductibles. War cover may be restricted or priced separately for listed areas. Clear, consistent information helps underwriters price fairly and prevents cover restrictions later.

From quote to claim - the simple path

1. Gather vessel, trading, class and loss data before requesting quotes.
2. Approach a broker or insurer active in the London marine market.
3. Compare sums insured, deductibles, trading limits and exclusions carefully.
4. Select cover levels and add-ons that match operational risk.
5. Bind the policy, confirm mortgagee clauses and named assureds.
6. Implement onboard claims reporting and document retention procedures.
7. In an incident, notify immediately and follow surveyor guidance.
8. Submit evidence promptly to support repairs and settlement.

Balanced view of the benefits

Key checks before you commit

Review the insured value carefully and consider whether Increased Value is needed to cover real exposure. Check excesses and any separate machinery deductibles to understand your likely out-of-pocket costs on common claims. Confirm navigation limits, seasonal restrictions and survey warranties, as breaching them can restrict cover. Note any waiting period on loss of hire and renewal terms that allow premium adjustments if claims worsen. Make sure repair yards, salvage arrangements and surveyor appointments are agreed in advance where possible. Keep documents to hand, including class status, safety certificates and maintenance logs, so claims progress smoothly.

Alternatives and related protections

1. Protection and Indemnity (P&I)
   • For third party liabilities such as injury, pollution, and cargo claims.
2. Builders Risk
   • For vessels under construction or conversion where hull risk sits with the yard or owner.
3. War and Strikes
   • Separate cover for conflict and detention exposures beyond standard hull policies.
4. Loss of Hire
   • Income protection during repairs after an insured hull event.
5. Offshore Energy Packages
   • Tailored wordings for mobile offshore units with sector-specific conditions.

FAQs

Q: Is hull insurance legally required in the UK? A: There is no blanket legal requirement, but finance agreements, port regulations and contracts often require it. Many owners carry hull cover to manage repair costs and protect trading continuity.

Q: How are premiums trending in 2025? A: Capacity has increased in London and Europe, so fleets with strong safety and clean loss records may see modest reductions. Underwriting remains careful, with tighter terms for higher-risk profiles.

Q: What is the difference between H&M and P&I? A: Hull and Machinery covers physical damage to the vessel and engines. P&I responds to third party liabilities like injury, pollution and cargo claims. Most operators carry both for complete protection.

Q: Are fires and groundings covered? A: Accidental fires and groundings are standard perils under most hull policies, subject to exclusions and deductibles. Poor maintenance or breach of class may lead to restrictions or non-payment.

Q: How do insurers handle repair cost inflation? A: Insurers track repair cost trends and may adjust rates, deductibles or sums insured accordingly. Using recognised inflation indices helps set realistic values and avoid underinsurance.

Q: Can I get cover for war risks? A: Yes, usually via a separate policy or a specific section with listed area clauses. Premiums can change quickly based on geopolitical developments and recent incidents.

Q: What documents help a claim settle faster? A: Master’s report, logs, class status, maintenance records, photographs, voyage plans and prompt surveyor access. Clear, complete evidence supports fair and timely settlement.

What to do now

If hull insurance suits your vessel and trading plans, gather your documentation and compare like-for-like quotes through a trusted broker. Focus on sums insured, deductibles and navigation limits. Take your time, ask questions, and only bind cover once you are confident the wording matches your real risks.

Important note

This article provides general information, not personal financial advice. Policy terms, limits and exclusions vary by insurer and vessel type. Always read the schedule and wording carefully and seek professional guidance before purchasing or changing cover.