H&M
Hull and Machinery (H&M) Insurance is the marine insurance covering physical damage to the vessel itself — the hull, propulsion machinery, generators, navigation and communication equipment, and other onboard installations. It is distinct from P&I, which covers liabilities to others.
H&M policies pay out for: total loss (actual or constructive), partial damage (collision, grounding, fire, heavy weather, machinery breakdown), salvage costs, sue-and-labour expenses (efforts to minimise loss), and general average contributions. The standard policy is on the Institute Time Clauses Hulls (1995) or International Hull Clauses (2003), with London being the dominant market.
For lenders, H&M is essential: ships are typically financed with the vessel itself as collateral, and lenders require H&M cover with the bank as loss payee. Surveys and certifications by class societies feed into H&M underwriting — a vessel with no recent surveys or a poor PSC record will pay more in premium.
H&M covers the asset itself — collision, grounding, fire, machinery breakdown, total loss. Lenders demand it because the ship is usually the collateral for its own financing, and a vessel's class-survey and port-state record feed straight into the premium.
hull · machinery
cargo · crew · pollution
What does H&M insurance cover?
Physical damage to the vessel — total loss, collision, grounding, fire, heavy-weather and machinery-breakdown damage, salvage and general average — but not liabilities to third parties, which fall under P&I.
Why do lenders require H&M cover?
Because the ship is usually the collateral for its financing. Lenders require H&M with the bank named as loss payee, so the asset securing the loan is protected.