H&M Cover — Scope and Exclusions
Hull & Machinery (H&M) insurance protects the shipowner against physical loss or damage to the vessel hull, machinery and equipment, salvage charges, and a proportion of collision liability. It is fundamentally different from cargo (goods) insurance — the insurable interest is the vessel's value, not its cargo.
Perils of the Seas
Storm damage, stranding, sinking, collision and sudden physical damage arising from sea conditions.
Fire and Explosion
Engine room fire, fuel system or electrical failure resulting in fire or explosion.
Theft (forcible entry)
Forcible theft of vessel equipment — scope subject to wording and policy conditions.
Salvage Charges
Reasonable salvage costs, including sue and labour expenses incurred to prevent or minimise loss.
Collision Liability — 3/4 RDC
Three-quarters of the insured vessel's liability to another vessel following a collision (under Institute Time Clauses Hulls or equivalent wording).
General Average
Proportionate contribution to sacrifices and expenditures made to avert a common peril at sea.
Standard Exclusions
- War and seizure — covered by Institute War Clauses (separate endorsement)
- Strikes and civil disturbance — Institute Strikes Clauses available separately
- Nuclear hazards
- Wear, tear and maintenance neglect — routine maintenance is the owner's responsibility
- Construction and conversion risk — Shipbuilders' Risks policy required
Actual vs. Constructive Total Loss
Actual Total Loss (ATL): The vessel is physically destroyed, lost without prospect of recovery, or so damaged that it ceases to be a ship of its kind.
Constructive Total Loss (CTL): The vessel is not physically destroyed, but the cost of repair or recovery would exceed its insured value. The owner may abandon the vessel to underwriters and claim a full loss. Abandonment procedures under the policy must be followed precisely — conditions including the form and timing of notice of abandonment vary by hull clauses and applicable law — failure to do so may forfeit the CTL claim.
Sue and Labour
Reasonable and properly incurred expenses by the owner or their agents to avert or minimise a covered loss are recoverable under the sue and labour clause — separately from and in addition to the main claim.
Coordination with P&I Cover
H&M and P&I (Protection & Indemnity) are complementary covers that together form the foundation of a shipowner's insurance programme. In a collision scenario:
- H&M covers 3/4 of the collision liability (Running Down Clause)
- P&I covers the remaining 1/4 and all non-vessel liabilities (cargo, personal injury, pollution)
Neolife analyses both covers simultaneously to identify any gaps or overlaps before placement.