Marine insurance

Marine insurance

We are experienced insurance brokers specializing in Hull & Machinery and P&I Insurance. Our sister company, Andrew Liu & Co. Ltd, based in Hong Kong, provides immediate defense and legal advisory services to shipowners involved in marine legal disputes.

Our expertise lies in claims handling, especially in complex cases involving coverage uncertainties and disputes with insurers. We have a skilled team of personnel specializing in Average Adjusting, drafting specialized clauses tailored to shipowners’ needs. These clauses aim to protect their interests in the event of casualties or claims.

Our services include:

  1. Obtaining the best rates and terms for shipowners’ Hull & Machinery and P&I cover.
  2. Advising on Hull & Machinery insurance terms and conditions.
  3. Providing advice on the necessary extent of cover based on tonnage, trade, and deductibles.
  4. Advising on risk apportionment between Hull & Machinery and P&I cover for a comprehensive and cost-effective insurance package.
  5. Offering tailor-made insurance cover, including expertise in various insurance covers such as ITC, Norwegian, Swedish, German, and Chinese covers.
  6. Providing legal advice and assistance through our in-house team of lawyers in handling claims, arbitrations, and disputes.
  7. Advising on freight, demurrage, and defense matters, charterparties, bills of lading, and organizing recoveries for shipowners.
  8. Recommending suitable surveyors, lawyers, and adjusters for complex claims.
  9. Assisting shipowners in adjusting and processing claims themselves or offering a second opinion when independent Average Adjusters are appointed.

We also specialize in cargo insurance, covering loss or damage to goods during transit, expected profits, and financial losses due to delays in delivery. Our coverage is worldwide, including loading, unloading, transshipment, and intermediate storage.

Additionally, we offer insurance coverage for Marine Hull and Machinery, P&I, Freight Defense & Demurrage, Shipowners’ Liability, War Risk, Kidnap and Ransom, Strike & Delay, and Increased Value Insurance. We also provide Innocent Owners Interest Insurance to protect the interests of registered shipowners involved in bareboat charter arrangements.

At ALCO, we have an in-house team of lawyers who provide legal advice and assistance in handling various aspects of claims, arbitrations, and disputes. Our expertise extends to areas such as Freight, Demurrage, and Defense, Charterparties, bills of lading, and organizing recoveries for shipowners. We offer general advice on claims and procedures for P&I, Hull and Machinery insurance, and we can prepare statement of claims for discretionary cases to be presented to P&I Clubs.

Our specific services include:

  1. Advising on matters related to Freight, Demurrage, and Defense.
  2. Offering guidance and support in handling arbitration proceedings.
  3. Assisting in the organization and recovery processes for shipowners.
  4. Providing general advice on claims and procedures for P&I, Hull and Machinery insurance.
  5. Preparing and presenting statement of claims to P&I Clubs for discretionary cases.

In complex claims issues, we can recommend and appoint experienced surveyors, lawyers, and adjusters who are well-equipped to handle the specific challenges involved.

If shipowners choose to handle their claims independently without engaging independent Average Adjusters, we can assist them in adjusting and processing the claims. Alternatively, if shipowners appoint independent Average Adjusters, we can collaborate with them and provide a second opinion that serves the best interests of the shipowners. Our personnel, who have extensive experience in this field, maintain longstanding connections with established Average Adjusters.

Overall, our aim is to provide shipowners with comprehensive support and expertise in managing claims, ensuring their interests are protected throughout the process.

Marine cargo insurance provides coverage for goods during transit, whether by sea, air, or occasionally by rail. The insured must have an insurable interest in the goods, and the coverage is based on the sales arrangement outlined in the Incoterms.

The coverage includes:

  1. Loss or damage to the cargo during transit.
  2. Expected profit from the sale of goods at the destination, including customs dues and freight charges.
  3. Financial losses resulting from delays in project cargo caused by the loss or non-delivery of insured cargo.

Cargo underwriters typically offer insurance policies based on the Incoterm, with ad hoc policies for infrequent shipments and annual policies for high-frequency shipments. The coverage can be arranged worldwide on a “warehouse to warehouse” basis, including loading, unloading, transshipment, and intermediate storage.

Transshipment plays a crucial role in shipping. Larger vessels that carry a significant amount of cargo may not be able to dock at smaller ports. In such cases, transshipment is the most effective method, as the cargo can be transferred to a smaller vessel to reach the final destination.

Transit cargo refers to goods that remain on board without being discharged at a specific port upon arrival. On the other hand, transshipment involves transferring goods from one transportation line or ship to another.

The majority of cargo in the market is arranged on an ICC (A) [All Risks] or ICC (C) [Named Perils] basis. However, shipments to and from countries under UN and/or US sanctions are usually excluded or subject to limitations.

In summary, marine cargo insurance provides comprehensive coverage for goods during transit, with transshipment serving as a valuable solution for efficiently delivering cargo to its intended destination.

Hull & Machinery insurance provides shipowners with coverage against losses resulting from damage to their ships and auxiliary engines. This damage can occur due to various incidents such as groundings, collisions, running into or being struck by other vessels, or hitting fixed objects like buoys, quays, and lock gates. It also covers risks like fires and explosions.

Shipowners have the option to include the financial interest of banks as mortgagees in their insurance contracts.

The coverage includes:

  1. Total loss of the vessel or expenses for repairs to the hull, machinery, or equipment.
  2. Coverage for instances when the vessel goes missing during the voyage.
  3. General average contribution, which refers to the proportionate share of expenses incurred for the common benefit and safety of the ship and cargo.
  4. Salvage expenses incurred in recovering the ship or its cargo.
  5. Reasonable expenses incurred for preventing, minimizing, or determining the extent of a loss.

In addition to the core coverage, there are additional risks that can be included in the policy, such as:

  1. Loss of hire, which provides compensation for the loss of income resulting from the ship’s inability to operate due to damage or other covered events.
  2. War risks coverage, which protects against damages caused by war perils, including acts of war, invasion, rebellion, and hijacking.
  3. Collision liability with other vessels (RDC) and/or fixed floating objects (FFO), covering the shipowner’s liability for damages caused by collisions with other vessels or fixed objects in the water.

In summary, Hull & Machinery insurance safeguards shipowners from losses arising from damage to their ships, auxiliary engines, and related incidents. It offers comprehensive coverage for various risks, including the option to include additional protections like loss of hire, war risks, and collision liability.

P&I (Protection and Indemnity) insurance is designed to protect shipowners against legal liabilities to third parties. These third parties may have legal or contractual claims against the shipowner for negligence or other acts. P&I insurance is typically obtained by joining a mutual insurance association, also known as a club. Club members include shipowners, bareboat charterers, and ship management companies.

The coverage provided by P&I insurance includes:

  1. Running Down Clause (RDC) and Fixed or Floating Objects (FFO): P&I insurance covers liability for collisions with other vessels or striking fixed or floating objects such as quays, docks, or buoys. The standard coverage includes 1/4th of the liability for running down and 4/4th for fixed or floating objects. The coverage for running down liability can be extended if needed.
  2. Loss of crew members’ personal effects: P&I insurance can be extended to cover the shipowner’s liability for the loss of crew members’ personal effects or belongings in the event of a collision, shipwreck, or fire on board. The personal effects or belongings must be reasonable for a crew member to have on board.
  3. Loss or damage to cargo: P&I policies usually include coverage for cargo liability, which protects the shipowner, charterers, and ship managers. Claims for loss or damage to cargo may arise from cargo owners or their insurers if they have marine cargo insurance policies with subrogation rights.
  4. Other liabilities: P&I insurance also covers various other liabilities, including crew liability, stowaways, drug smuggling, oil pollution, wreck removal, and incidents that block the free navigation of other vessels.

In summary, P&I insurance provides shipowners with protection against legal liabilities to third parties. It covers collisions, damage to fixed or floating objects, loss of crew members’ personal effects, cargo liability, and other specified liabilities. By joining a mutual insurance association or club, shipowners can benefit from collective coverage and support within the maritime industry.

Freight, Demurrage, and Defense, often referred to as FD&D, is an insurance coverage option that shipowners and operators can consider. It provides protection for their legal expenses and is commonly known as “Defense Costs Insurance.” This coverage is primarily focused on assisting with claims handling and covering legal costs, including arbitration expenses and expert fees. It applies to disputes that arise from activities such as building, buying, selling, owning, or operating a vessel, which are outside the scope of P&I and Hull & Machinery insurance policies. It’s important to note that FD&D coverage does not include the principal sum in dispute for demurrage claims or unpaid hire under a charterparty, nor claims that have been denied by Hull insurers.

Common areas where disputes may arise and be covered by FD&D insurance include:

  • Marine insurance contracts
  • Contracts related to insurance broking, ship broking, and management services
  • Vessel building contracts
  • Vessel sale and purchase contracts
  • Vessel repair contracts
  • Contracts of Affreightment
  • Charterparties
  • Contracts of Carriage
  • Bills of Lading
  • Vessel agency, stevedoring, towage, and salvage contracts
  • Bunker and necessaries contracts
  • Crew contracts.

In summary, FD&D insurance provides coverage for legal expenses and claims handling assistance in disputes that arise from various contracts and activities related to the building, ownership, and operation of a vessel. It fills the gaps left by P&I and Hull & Machinery insurance policies and offers protection for defense costs in a wide range of scenarios within the maritime industry.

Legal Liability refers to the responsibility of shipowners for any harm caused to third parties, including loss of life, personal injury, or damage to property. This liability arises from the use or operation of a vessel or craft. In such cases, shipowners are legally obligated to compensate third parties for any losses they have suffered. The liability can arise from incidents that occur during the normal operation of the vessel or craft. It covers a wide range of scenarios where harm or damage is caused to individuals or their property. Shipowners must ensure that they have appropriate insurance coverage to protect themselves against these potential liabilities.

Charterer’s Liability insurance primarily provides coverage for Defense and Liability. Let’s take a closer look at each of these coverages:


Disputes can lead to significant legal costs, and charterers need protection against such expenses. The policy indemnifies charterers for legal costs and expenses related to disputes involving:

  1. Hire, freight, dead freight, and passage money.
  2. General and particular average.
  3. Demurrage or dispatch.
  4. Detention.
  5. Breach of charterparty, bill of lading, etc.
  6. Proper cargo loading, etc.
  7. Quality of supplied bunkers.


Under the policy, charterers are indemnified for disputes arising from claims made by shipowners or other claimants related to various aspects, including:

  1. Loss of or damage to the vessel.
  2. Loss of or damage to cargo.
  3. Oil pollution (excluding pollution caused by tankers in US territorial waters).
  4. Loss of or damage to third-party property.
  5. Death or personal injury.
  6. Fines.
  7. General average.
  8. Liability arising from specific indemnities and contracts.
  9. Quarantine expenses.
  10. Collision.
  11. Wreck liabilities.
  12. Liability under towage contracts.

In summary, Charterer’s Liability insurance offers coverage for legal defense costs and liability claims, ensuring that charterers are protected financially in case of disputes or incidents related to their operations.


War Risk Insurance is designed to cover damages caused by war-related perils such as acts of war, invasion, insurrection, rebellion, and hijacking.

The coverage under War Risk Insurance includes:

  1. Liability Coverage: This encompasses P&I liabilities, Hull and Machinery liabilities, and Loss of Hire liabilities. P&I liabilities arising from war perils can be obtained as additional coverage from P&I Clubs. Other war risks coverages can be obtained from mutual war risks underwriters or specialized fixed insurance companies, which may offer comprehensive coverage for all liabilities arising from war perils.
  2. Vessel Damage: War Risk Insurance covers loss of or damage to the vessel caused by specific perils, including:
    – War, civil war, revolution, rebellion, insurrection, or any hostile act.
    – Derelict weapons of war, such as mines, torpedoes, or bombs.
    – Confiscation or expropriation of the vessel.
    – Capture, seizure, arrest, restraint, or detainment of the vessel.
    – Violent theft by external individuals, such as theft of mooring ropes or paint drums.
    – Strikers, lock-out workmen, riots, or civil commotions.
    – Terrorism or malicious acts with a political motive.
    – Piracy, depending on the coverage terms. If pirates use firearms, it may be covered, but if – they use weapons like mines or explosives, it may fall under the war risks cover.
    – Misconduct of masters, officers, and crews.
    – Passenger Liability Regulation (PLR War).


  3. JWC Excluded Areas: The Joint War Committee (JWC) in the London insurance market maintains a list of areas excluded from ordinary war risks cover. Vessels entering these excluded areas breach the War Risks Trading Warranties unless shipowners agree to pay an additional premium based on the perceived risk in that specific area.
  4. Kidnap and Ransom Insurance: In some cases, Kidnap and Ransom (K&R) coverage is sought to avoid the deemed loss of a vessel after a certain period under seizure. K&R cover provides assistance in ransom negotiation and payment following the seizure of the vessel or crew. It includes ransom reimbursement, benefits for victims, repatriation, financial loss coverage, legal costs, and loss in transit. Opting for K&R cover can lead to cost reductions in Hull War insurance for high-risk areas.

War Risk Insurance offers protection against war-related perils that are typically excluded from Hull & Machinery or P&I insurance policies. It provides coverage for liabilities, vessel damage, and can include additional coverage for piracy and K&R incidents.

This coverage protects the insured parties against income loss in the event of ship delays caused by specific perils. The coverage is typically divided into ashore and onboard incidents.

Ashore Risks – Coverage can be obtained for situations such as labor disputes or force majeure incidents that occur on land, including fires, explosions, mechanical breakdowns, landslides, port or waterway closures, severe weather, and more.

Onboard Risks – Coverage can be obtained for incidents that occur onboard the ship, such as strikes, stranding, grounding, collisions, illness, injuries, death, the presence of drugs on board, actual or alleged pollution of the vessel, quarantine, and other related perils.

Marine Delay Insurance is suitable for ship owners, charterers, and operators, tailored to their specific operations. The maximum limit of indemnity for this coverage is typically set at 14 days. It can be used as a supplementary cover to standard loss of hire insurance, where the deductible period is also 14 days.

SOL Cover, also known as Shipowners’ Liability to Cargo Cover, provides insurance for a carrier’s liabilities resulting from a breach of contract of carriage that would otherwise limit the carrier’s rights or defenses.

The cover includes specific liabilities that are typically excluded from standard Liability Cover. For example, it can protect against geographical deviation or departure from the agreed voyage, which falls outside the scope of standard Liability Cover.

The following are examples of what SOL Cover can include:

  1. Geographical deviation from the contractual voyage
  2. Carriage of cargo on vessels other than those named in the bill of lading
  3. Loading cargo on the vessel after a casualty prior to dry-docking or repair
  4. Carrying cargo beyond its destination and returning it on the same vessel
  5. Stowing cargo in spaces not certified for cargo carriage
  6. Transferring cargo to and from feeder vessels
  7. Discharging and reloading cargo on the same vessel
  8. Discharging cargo onto lighters before surrendering bills of lading
  9. Storing cargo on lighters before loading or after discharging from vessels
  10. Accepting or delivering cargo beyond the normal P&I rule of 14 days
  11. Temporarily storing cargo during vessel repairs

Carriers with full Liability entries, including owner’s P&I and Charterers Liability, are generally eligible for SOL insurance.

Increased Value Insurance, also known as Disbursement Insurance, provides coverage beyond the market value of a vessel for additional costs associated with a total loss event. This insurance recognizes the shipowner’s additional insurable interest beyond the vessel’s market value.

The sum insured for Increased Value Insurance is typically around 20% of the vessel’s market value or 25% of the Hull Value under the Hull & Machinery policy.

Coverage under Increased Value Insurance includes Total Loss, General Average, Salvage and Salvage Charges, Sue and Labour Charges, Collision Liability, among others. The premium rate for this insurance is usually lower than the Hull & Machinery rate.

Innocent Owners Interest Insurance protects a registered shipowner who has leased out a vessel and faces potential losses if the Hull and Increased Value covers do not respond due to breaches by the bareboat charterer. This insurance provides compensation to the actual owner up to the insured value.

Innocent Owners Interest Insurance applies when normal cover becomes void and covers the outstanding loan amount, serving as a parallel cover for the actual owner’s own investments and exposure.

For more information, please Contact Us.

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