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.