What Is Hull Insurance?

Hull insurance covers more than the hull. Sails, motors and masts may also be included.

Hull insurance is boat insurance that covers damage to a boat, its machinery and its equipment. According to United Marine Underwriters, it is the closest maritime equivalent to comprehensive and collision automobile insurance. Like other products in the insurance market, coverage and deductibles vary by company, so read and compare insurance contracts before you buy. Hull insurance is a term sometimes used for aircraft.

Coverage

Zebra mussels may be excluded.

Hull policies in most instances will cover all damage not specifically excluded by a policy. In rare cases, insurance carriers will sell policies that cover damage from incidents that are named. If a policy is "all risk" the boat owner or agent should read the list of exclusions to determine what is not covered. Common exclusions include damage from normal wear and tear, insects, zebra mussels and marine life. Some policies may exclude damage to machinery, such as engines.

Brown Water vs. Blue Water

There may be significant differences for blue water insurance policies.

Hull policies often are distinguished by whether they cover incidents in brown water or blue water. Brown water policies refers "to hull and liability coverage for tugboats, barges and other types of commercial vessels and businesses that operate primarily on or near inland and coastal waterways," according to Marine Insurance House. Blue-water denotes ocean-going ships and larger vessels used in international shipping or trade. In addition to blue water and brown water policies, some marine policies will have navigation clauses which stipulate where a boat owner can take the insured vessel.

Hull And Cargo

Cargo is not usually covered by hull insurance.

Hull insurance typically does not apply to cargo. Coverage for cargo, where applicable, is typically sold as a separate policy.

Deductibles

Hurricanes will raise the deductible.

Deductibles vary between insurance policies and the value of the boat that is insured. Some firms use flat deductibles, such as $1,000 per incident. Others base deductibles as a percentage of a boat's value. There may be separate deductibles to cover damage to a trailer or a boat's electronics. If a ship is damaged in a named storm, such as a hurricane, the deductible may rise to a higher percentage of a ship's value when compared to the standard deductible.

Industry Statistics

Marine insurance underwriters face stiff competition.

According to the marine practice group of the reinsurance firm Marsh, hull insurance has been highly unprofitable in recent years. According to a 2008 report: "The marine hull insurance market has been the exception to other marine lines of business by consistently producing an underwriting loss for the prior ten year period -- with underwriters averaging a 30 percent expense ratio, no underwriting year has been profitable since 1996." The report notes that these losses have not stopped new entrants in the market.

References

• Marine Insurance House; About
• Association of Maritime Underwriters of San Francisco; Glossary
• United Marine Underwriters; Boat Insurance
• Marsh; Industry Overview