Marine Insurance

services details

Marine Insurance

Together with our sister company, Andrew Liu & Co. Ltd in Hong Kong, we have more than 20 years of experience as an insurance broker specializing in Hull & Machinery and P&I Insurance. Our expertise is on claims handling, particularly on large and difficult cases where there are ambiguities in the coverage and insurers allege grounds to decline the claim. Our company, Andrew Liu & Co. Ltd was formed with the intention of providing Shipowners an immediate defense and legal advisory services. This has been proven to be very useful to our Shipowners’ and Charterers’ clients, especially when marine legal disputes are increasing.

ALCO services & strength:

  1. Obtaining the best rates and terms for the shipowner on Hull & Machinery and P&I cover.
  2. Advising on Hull & Machinery insurance terms and conditions.
  3. Advising on the extent of cover required by the Shipowner in relation to the type of tonnage and trade involved, and the level of the deductibles;
  4. Advising the risks apportionment between Hull & Machinery and P&I cover, and making the total insurance package risk effective with premium saving.

ALCO objectives are to offer Shipowners (our clients), not only on standard Hull & Machinery cover, but also provide tailor made insurance cover to best protect their interests. We are unique in having the experience of not only the English Institute Time Clause (ITC) cover but also the Norwegian, Swedish, German and China insurance covers, and are able to advise Shipowners the differences and suitability. In addition, we usually recommend Shipowners to include additional Owners’ Supplementary Clauses or Riders into the policy of insurance. These clauses are tailor made to Shipowners’ needs and to favour them in the event of any casualty or claim.

These clauses are drafted by ALCO’s personnel who have had many years of experience in the Average Adjusting profession. We are familiar with the shipowner’s risks and requirements including the expenses incurred when a casualty occurs, whether it is recoverable or not under the various insurance policies.

Unlike Hull & Machinery insurance, it is usually not possible to amend P&I Clubs’ terms and rules. However, there are certain risks which can be arranged under the Hull & Machinery or P&I coverage. Our ultimate service is to provide the best solution resulting in total premium saving while still enjoying the same insurance cover.

Marine Legal Advisory Service and Claims

ALCO has an in-house team of lawyers that can complement the advice from the insurers, Clubs, and/or handling of claims, and/or arbitration. ALCO’s client hugely benefit by such additional resource available within our organization with no charges.

  • Advising on Freight, Demurrage and Defense matter;
  • Advising on Charterparties, bill of lading etc., handling arbitration proceedings.
  • Assist and organized recoveries for Shipowners;
  • General advice on claims and procedures for P&I, hull and machinery;
  • Present and prepare statement of claims to P&I Clubs for discretionary cases.

We will also recommend and appoint suitable and experience surveyors, lawyers and adjusters to deal with the complex claims issue when the needs arise.

When Shipowners decides to deal with the claims themselves and does not wish to engage independent Average Adjusters, ALCO can offer the Shipowners on the adjusting and claims processing. If Shipowners appoint an independent Average Adjusters, ALCO can liaise and offer a second opinion on the case for the best interest of the Shipowners. We have close connections with the established Average Adjusters as our personnel have been working in this field for many years.

Cargo Insurance

Goods in transit covers transportation by sea or air and occasionally by rail. Insured must have an insurable interest in the goods. Coverage is based on the sales arrangement which is laid out in the Incoterms.

The marine cargo insurance covers:

  • Loss of damage to cargo during transit;
  • Expected profit from sale of goods at place of destination; customs dues, freight etc;
  • Financial losses attributed to delay in start-up (for project cargo insurance) caused by loss or non-delivery of insured cargo

Coverage scope

Cargo underwriters usually offer Ad Hoc insurance policy based on the Incoterm and for high frequency shipments, annual policy is offered based on agreed terms and conditions. Coverage can be arranged worldwide to worldwide on “warehouse to warehouse’ basis including loading, unloading, transshipment and intermediate storage.

Why transshipment is very important in shipping?

Larger vessels which carry significantly more containers and cargo than smaller vessels sometimes cannot berth at small ports. In these circumstances, transshipment is the most effective way of shipping as your cargo can be placed onto a smaller vessel to reach the final destination.

What is the difference between transit and transshipment?

Transit Cargo: Goods onboard which upon their arrival at a certain port are not to be discharged at that port.

Transship: To transfer goods from one transportation line (trade lane) to another, or from one ship to another.

Majority of the cargo in the market is arranged on ICC (A) [All Risks] or ICC (C) [Named perils] basis.

However, shipments to and from or within countries under UN and/or US sanctions are usually excluded or limited.


Marine Hull and Machinery

Hull & Machinery insurance covers the shipowners against loss or losses in connection with damage to the ship itself and auxiliary engines caused by groundings or collisions including running down and being run down by another vessel, striking fixed objects such as buoys, quays, lock gates, fire and explosions etc.

Shipowners may include the financial interest of the banks in the insurance contracts as mortgagees.

Coverage includes:

  1. Total loss of the vessel or expenses for repairs to the hull, machinery or equipment;
  2. Vessel missing during the voyage;
  3. General average contribution;
  4. Salvage expenses incurred;
  5. Reasonable expenses incurred for preventing, minimizing loss or ascertaining its extent.

The following additional risks are also offered in the market;

  1. loss of hire;
  2. war risks;
  3. collision liability with vessels (RDC) and/or fixed floating objects (FFO).

Protection & Indemnity (P&I)

P&I is a shipowner’s insurance cover for legal liabilities to third parties. “Third Parties” who may have a legal or contractual claim against the shipowner for their negligence act. P&I insurance is usually arranged by entering the ship in a mutual insurance association, otherwise referred to as a club. Members of such clubs are shipowners, bareboat charterers and/or ship management companies.

Coverages are:

  1. Running Down Clause (RDC) and Fixed or Floating Objects (FFO): P&I cover includes liability for collision with another vessel or vessels, or the ship strikes an FFO, such as quay, dock or buoy. Standard P&I covers 1/4th RDC and 4/4th for FFO. 4/4th RDC can be extended in the coverage.
  2. Loss of crew members’ personal effects: P&I insurance can be extended to include liability for loss of crew or crews’ personal effects or belongings in the event of a collision, shipwreck and fire on board. Personal effects or belongings must be reasonable for any crew member to have with him/her on board.
  3. Loss or Damage to Cargo: Cargo liability is usually extended in the P&I policy to take care of the shipowners, charterers and ship managers. The claim may come from the cargo owner’s insurers if they are covered by a marine cargo insurance policy by way of subrogation rights.
  4. Other Liabilities such as crew liability, stowaways, drug smuggling, oil pollution, wreck removal and blocking of free navigation of other vessels.

Freight Defense & Demurrage

Freight, Demurrage and Defense is popularly known as FD&D. Shipowners and Operators can consider obtaining insurance covers to protect their legal expense claim which is referred to as “Defense Costs Insurance”. Coverage is mainly for claims handling assistance and legal costs including arbitration & experts expense for disputes arising from the building, buying, selling, owning or operation of vessel which is outside the scope of P&I and Hull & Machinery insurance policy. FD&D coverage excludes principal sum in dispute of demurrage claim or unpaid hire under a charterparty or claim denied by Hull insurers.

Common disputes may arise from:

  •  Marine insurance contracts
  •  Insurance broking, ship broking and management service contracts
  •  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.

Marine & Hull – Third Party Liability

Legal Liability to third parties for loss of life, personal injury or damage to property arising out of the use or operation of the vessel or craft.

Charterer’s Liability

Defense and Liability is the main coverage provided under a Charterer’s Liability insurance.


Pursuing or defending a dispute can result in enormous legal costs. Charterers are indemnified under the policy against legal costs and expenses arising from disputes concerning:

  •   Hire, freight, dead freight and passage money;
  • General and particular average;
  •   Demurrage or dispatch;
  •   Detention Breach of charterparty, bill of lading etc.;
  •   Proper cargo loading etc.;
  •  Quality of bunkers supplied.


Charterers are indemnified under the policy against disputes arising from shipowner or other claimant regarding the following aspects inter alia:

  •     Loss of or damage to vessel;
  •     Loss of or damage to cargo;
  •    Oil pollution (except that arising from a tanker in US territorial waters;
  •     Loss of or damage to third party property;
  •     Death or personal injury;
  •     Fine;
  •     General average;
  •     Liability arising under certain indemnities and contracts;
  •     Quarantine expenses;
  •     Collision;
  •     Wreck liabilities;
  •     Liability under towage contracts;


What is War Risk Insurance?

War Risk insurance covers damage due to war perils such as acts of war including invasion, insurrection, rebellion and hijacking.

War risk insurance is for liabilities arising out war perils: P&I liabilities, Hull and Machinery liabilities as well as the Loss of Hire liabilities. P&I liabilities arising from the war perils can be obtained from the P&I Clubs as an additional coverage to the P&I cover. Other war risks cover can be obtained from the mutual war risks underwriters or fixed insurance companies specializing in providing such covers. In some insurance market all liabilities arising of war perils can be covered under one policy.

What does War Risk Insurance Cover?

War Risk Insurance covers loss of or damage to the vessel caused by, in particular, perils set out as below:

  •  War, civil war, revolution, rebellion, insurrection, or any hostile act;
  •  Derelict weapons of war (mines, torpedoes, bombs);
  •  Confiscation or expropriation of the vessel;
  •  Capture, seizure, arrest, restraint or detainment of the vessel;
  •  Violent theft by persons from outside the vessel, example theft of mooring ropes or paint drums;
  •  Strikers, lock-out workmen, riots or civil commotions;
  •   Any terrorist or any person acting maliciously or from a political motive;
  •  Piracy – some war risk covers includes but others excludes as it is considered as a marine peril. Included in Hull & Machinery and P&I policies. If pirates used hand guns, rifles, AKD47s and RPGs it is not excluded as marine risks but if weapons such as mines, torpedoes, bombs, rockets, shells and explosives then those risks will have to be covered under the war risks cover;
  •   Misconduct of Masters, Officers & Crews;
  •   Passenger Liability Regulation (PLR War);

Piracy can be extended to the war risk cover to avoid having to prove the motive of perpetrators and also no deductible for piracy claim.

War risk insurance is intended to take care of war risks specifically excluded in the Hull & Machinery or P&I insurance policy.

What is JWC excluded area?

War risks cover ordinarily offered is for the risks that occur during peacetime for a moderate premium cost for the owners. Vessels operating in actual active war zones the risks are dramatically increased require a higher premium. For this purpose, the Joint War Committee (JWC) in London insurance market maintains a list of areas, which are excluded from the ordinary war risks cover. When vessel enters one of the excluded areas it is deemed to breach the War Risks Trading Warranties unless Shipowners agree to pay an additional premium which is based on the degree of perceived risk in that particular area.

Under the Institute War and Clauses, the war risks insurance can be terminated on short notice when there is an increased risk of war or warlike activities in a new area so that this new area can be included in the areas of perceived enhanced risk. The justification for allowing the market to cancel cover on short notice to adjust the trading limits is due to the fact that without this facility the premium that the owners would have to pay for his ordinary / annual war risk cover would have to include the possibility of the risk for warlike activities increasing somewhere in the world sometime during the policy year, a risk that may not materialize at all. It can, therefore, be said that his cancellation clause allows the market to assess the premium realistically in accordance with the actual risk.

In the war risks cover there could be conditional areas, where the vessel is covered under the war risks policy as long as the additional conditions as stipulated in the war risk cover are satisfied by the vessel. However, certain maritime regions of the world are designated “Additional Premium Areas”. These areas are considered much more likely to be affected by war risks and so represent a significantly greater risk to the vessels transiting these areas.

What is Kidnap and Ransom Insurance?

Customarily, most Hull War policies provide for a deemed loss of a vessel after 12 months under seizure. However, many Owners wish to seek a shorter deeming period, such as six months. In both the scenarios, Kidnap and Ransom cover (“K&R”) cover provides the customary means i.e. ransom by which claims for a total loss under the Hull policy are avoided.

In such cover, the insurers pursuant to K&R over provides expert claims assistance in most aspects of negotiation and payment of ransom following seizure of vessel or crew. The usual K&R cover includes the following:

  • Ransom reimbursement and the delivery of ransom;
  • Various benefits to victims including cover for injury and treatment;
  • Repatriation and financial loss;
  • Legal costs and associated expenses;
  • Loss in-transit.

Taking up K&R cover can lead to significant reductions in the cost of Hull War insurance (in high risk or “breach” areas).

Strike & Delay

This cover protects the assureds for loss of income if the ship is delayed as a result of certain perils. Cover is normally divided between ashore and onboard incident.

 Shore risks – Cover can be obtained for labour disputes and/or force majeure incidents such as fire, explosion on land, mechanical breakdown, landslides, port /waterway closure, severe weather etc.

 Onboard risks – Cover can be obtained for strikes, stranding, grounding, collision, illness, injury, death, presence of drugs on board, actual or alleged pollution of vessel, quarantine etc.

 Marine Delay insurance suits owner, charterer and operator’s particular operation. Usually, the maximum limit of indemnity of this cover is 14 days. It could be used as a supplementary cover to the standard loss of hire in which the deductible is 14 days.


Loss of Hire

Loss of hire insurance covers the total or partial loss of income or financial loss incurred as the result of the loss of use of a vessel following an incident that is covered under the Hull & Machinery policy, e.g. breakdown of machinery, collision, grounding, stranding, striking FFO etc.

A typical Norwegian Hull Plan covers the loss of income due:

  1. Ship stranding;
  2. Ship prevented by physical obstruction (other than ice) from leaving port or similar limited area;
  3. Consequence of measures taken to salvage or remove damaged cargo;
  4. Consequence of an event that is allowed in general average pursuant to the 1994 York Antwerp rules.

Time loss is calculated from the time of happening of the incident and the time spent for repairs till the vessel resume the voyage or activity.

Time loss insurance will also cover the extra costs (sue & labour) incurred in connection with the temporary repairs and in connection with extraordinary measures taken in order to avert or minimize loss of time insofar as such extra costs are not recoverable from the hull insurer limited to 90 or 180 days depending on size of the fleet and the type of incident. The deductible is usually 14 days for such incident.

The Loss of Hire insurance also extends to cover the off-hire period caused by War Risks. Insurer will charge additional premium to cover the war risks loss of hire when the vessels trade worldwide except the war zone subject to declaration to insurer when the vessel trade to the war zone listed on the updated “Joint War Committed Listed Areas”. Assureds are warranted to declare all breach voyages to the insurers when their vessels trade to the war zone which is listed on the updated “Joint War Committee



SOL COVER or Shipowners’ Liability to Cargo Cover is a common term used to describe the insurance arranged to cover a carrier’s liabilities arising from a breach of contract of carriage, where such a breach deprives the carrier of the right to rely on defences or rights of limitation which would otherwise have been available to him.

There are numerous occasions when a carrier has to deviate from the normal route or the agreed B/L for various reasons. In these situations, there is exposure to cargo liability. Although such deviations to the B/L can be covered on the specific occasions by Liability Insurers, SOL cover provides for liberties to deviate under the policy period.

SOL cover includes a number of specific liabilities that are mainly excluded from the Liability Cover. A typical SOL example is geographical deviation or departure from the contractually agreed voyage; liability for loss of and/or damage to cargo arising out of such a deviation falls outside the scope of standard Liability Cover.


  • Geographical deviation of the vessel from the contractual voyage;
  • Cargo being carried on vessels other than that named in the bill of lading;
  • Cargo being loaded on the vessel after a casualty prior to dry-docking or repair;
  • Cargo being carried beyond its destination and returned by the same vessel;
  • Cargo being shipped on board vessels other than those of the carrier prior to the delivery of such cargo to the carrier's vessels for the carriage thereof and similarly after such carriage;
  • Cargo, including mail and/or merchandise, being stowed in spaces not certified for the carriage of cargo;
  • Cargo remaining on board the vessel during dry-docking;
  • Cargo being transferred to and/or from and/or being carried on board feeder vessels;
  • Cargo being transferred from one point to another by water and/or rail and/or air and/or motor trucks and/or other conveyances;
  • Cargo being transhipped at any port or ports, place or places instead of being carried on board the original vessel to the destination stated in the bill of lading;
  • Cargo being discharged from and reloaded upon the same vessel and/or cargo being shifted within the confines of the vessel for any reason whatsoever at any port or place of shipment or destination and/or at any port or place between the point of shipment and the point of destination;
  • Cargo being discharged onto lighters at any port or place prior to the surrender of bills of lading by the consignees or their representatives;
  • Cargo being lightered to other than the scheduled loading or unloading berth;
  • Cargo being stored on lighters before loading or after discharging from vessels;
  • Cargo being accepted for shipment or delivery beyond the normal P&I rule of 14 days prior or after the transport;
  • Cargo being temporarily stored whilst the vessel is undergoing repairs.


In general, carriers with a full Liability entry (including owner’s P&I and Charterers Liability) can apply for SOL insurance.

Increased Value Insurance

Traditionally, under the “Marine Insurance Act”, Marine Policy (Hull & Machinery Insurance) covers the market value of the ship which refers to the Shipowners’ “insurable interest”. Any cover in excess of market value was prohibited. However, in the past century, a demand has been seen by the ship owners for obtaining cover for additional costs associated with a Total Loss event, for example, the sundries for the ship replacement. Therefore, the Insurance Market started to recognize that the assured has an additional insurable interest beyond the vessel’s market value and in excess of the sum of insured under Hull & Machinery Insurance.

Increased Value Insurance was instituted as an additional cover, commonly known as “disbursement”, which insures an additional of 20% to 25% over the Insured Value of the vessel in case of her Total Loss. Due to the likelihood of a total loss event is relatively small by comparing with other risk elements in Hull & Machinery Cover, a lower premium level would normally be offered in Increased Value Insurance.

In addition, these days, many shipowners use Increase Value insurance to cover the part of Ship’s market value in order to save the premium costs.

Sum Insured

In practice, it is normally a 20% of the market value of the vessel or 25% of the Hull Value under Hull & Machinery policy.


This insurance covers Total Loss (both Actual and constructive) against a list of peril insured which is the same as the period insured under Hull & Machinery policy. It also normally covers the following:

  • General Average
  • Salvage and Salvage Charges
  • Sue and Labour Charges
  • Collision Liability

Premium Rate

The premium rate is customarily lower than the Hull & Machinery rate in London Lloyd’s Market.

Innocent Owners Interest Insurance

A registered shipowner (the actual shipowner, usually refers to the lease finance company) who has bareboated out a vessel is exposed if Hull and/or Increased Value covers do not respond, due to the arrangements becoming void following an act by the bareboat charterer (disponent owner), being the assured. Innocent Owners Interest (IOI) Insurance pays the owner of a vessel up to the insured value.

In a bareboat charterparty there is a provision stating that the actual owner is entitled to the proceeds from Hull and Machinery cover and any Increased Value cover, in case of total loss or if the claim exceeds a set value.

Hull or Increased Value cover, in some instances, will not respond to a claim. For example, in a scenario, where an assured - in this instance the bareboat charterer – is in breach of warranties or acted with gross negligence. Since cover at that time is void, there is no payment from the insurers and, the actual owner of the vessel will not receive any proceeds. Innocent Owners Interest Insurance may be claimed only if normal cover becomes void and provides cover for the outstanding loan amount, and is a parallel cover for the actual owner’s own investments and exposure