inLog · 2026-10-28
What is ship insurance? Hull, P&I and what shipowners should know
Ship insurance is one of the oldest and most specialised branches of insurance in maritime transport. Considering the value of a vessel, its cargo, its crew and the possible harm to the environment, one event can cost a great deal. That is why ship insurance is not a single policy but a combination of covers. This article explains the basics shipowners and operators should know.
Why is ship insurance made of several parts?
A shipowner’s risks fall into two main groups: damage to the ship itself (physical asset) and harm the ship causes to others (liability). These are usually insured through different bodies.
Hull and machinery insurance
Hull insurance covers damage to the ship’s hull, machinery and equipment from sinking, collision, grounding, fire and other marine casualties. The policy sets the insured value and the maximum payable. Part of collision liability may also sit in this policy, with the remainder left to P&I.
What is P&I insurance?
P&I (Protection and Indemnity) covers the shipowner’s liability to third parties. Typical heads are injury or death of crew, claims from cargo damage, pollution, wreck removal and damage to piers or port facilities. P&I is mostly provided through P&I clubs operating on a mutual principle. The owner joins as a member, pays calls, and the club meets claims within cover.
War, strikes and extra risks
Standard hull policies usually exclude war and strike risks, which are bought separately. Loss of hire (income lost while the ship cannot trade) and freight insurance are further options.
Why do class, flag and registry matter?
Insurers expect ships to be registered with a classification society and to hold valid certificates. The flag state, age of the ship, maintenance and operational safety also shape the quote. Loss of class or certificates can directly affect the validity of the policy.
General average and salvage
In maritime law, sacrifices made for the common safety are shared as “general average”. In salvage, payment may also be shared between ship and cargo owners. The policy states how these costs are met.
Practical tips for shipowners
- Confirm that hull and P&I covers complement each other with no gaps.
- Clarify whether war and strike risks are included.
- Track class and certificate renewal dates.
- Learn claim notice periods and required documents in advance.
- Tell the insurer when trading area or cargo type changes.
Ship insurance requires expertise and usually works through international markets. Send us your vessel, fleet or business details and we will assess the right structure together.
Frequently asked questions
What is the difference between hull and P&I insurance?
Hull covers physical damage to the ship itself; P&I covers the shipowner’s liability to third parties, such as crew, cargo and pollution. They complement each other.
What is a P&I club?
It is an association where shipowners insure each other on a mutual basis. Members pay calls and the club meets liability claims within cover.
Is war risk included in a ship policy?
Standard hull policies usually exclude war and strike risks, which are bought as separate cover.
Does loss of class affect the policy?
Yes. The ship must be registered with a classification society and hold valid certificates; otherwise validity and claim payment can be affected.
Is ship insurance suitable for small businesses?
Suitable policies exist for small commercial vessels, tugs and fishing boats. It is best to get a quote with the vessel’s details.