Insurance of your deductibles under your Hull & Machinery insurance

Shipping has dramatically changed.

Many vessels navigate under difficult economic conditions, facing financial restructuring plans that are often the outcome of months of joint collaboration between the owner’s shipping company, the ship manager and the financing banks.

Already a single loss can jeopardise the financial restructuring plans formulated and permanently damage the reputation of shipping companies or ship managers.

Since, if there is a claim, the vessel not only has to bear the deductible, but losses on the income side due to off-hire, etc. are also simultaneously to be absorbed, even sophisticated continuation concepts may fail unexpectedly.

The low-voltage electronic equipment insurance and deductible insurance (insurance of the deductibles under the Hull & Machinery insurance of the vessel) that supplements the marine hull insurance may cap such risks, and, with premiums that can be foreseen, secure the ship-owning partnership against the unforeseen event of a loss that threatens the company’s financial existence.

Thus, with the low-voltage electronic equipment insurance and deductible insurance that supplements the marine hull insurance, the financial loss to the vessel may be reduced, and the unforeseen claim covered in such a way that financial restructuring, continuation or management concepts are not jeopardised.



The 3.400 TEU container ship “MARTHA” suffers total loss of the auxiliary engine.

Costs of repair EUR 350,000. The hull deductible amounts to EUR 100,000. Within the scope of the financial restructuring concept, an additional machinery excess is agreed with the hull insurer, and this additional machinery excess amounts to EUR 50,000.

The cost facing the shipping company thus amounts to EUR 150,000 EUR in excess of the scheduled budget.

The deductible insurance covers this EUR 150,000 with its own, much lower, excess of EUR 5,000.

Thus, the loss to the shipping company only amounts to a fraction of the original sum, an amount that can also be borne in the case of low charter instalments and, from the perspective of the owner of the vessel, banks and the executives, does generally not jeopardise the company, even under unfavourable general economic conditions.

In many cases extended loss expenses are also borne by the low-voltage electronic equipment cover.



The bow thruster fails on the 1.850 TEU container ship “BLUEBIRD” due to damage to the switchgear cabinet. Loss expenses EUR 65,000 – Hull deductible EUR 100,000.

The loss would therefore have to be borne entirely by the ship-owning partnerships it is below the deductible amount. With an excess of only EUR 500.00, the low-voltage electronic equipment cover pays for the loss. The repair immediately instructed by the superintendent takes three weeks. The switchgear cabinet is built, and taken to Montevideo by plane, as the vessel has continued to serve its South American charter. The costs of the air transport plus the costs of the service engineer required are likewise borne.

Due to local regulations, in the three weeks until the repair is carried out when calling at or leaving the following three ports: Santos, Paranaguá, São Francisco do Sul, or, based on the decision taken by the Captain/Pilot, an additional second steering gear tugboat needs to be fastened to the bow as a substitute for the defective bow thruster.

Such tug boat fees are initially to be borne by the charterer. In its monthly invoice it shall deduct them directly from the charter instalment to be paid. Such losses to the ship-owning partnership on the income side are covered by the deductible insurance that supplements the marine hull insurance as extended loss expenses beyond the actual material damage to the switchgear cabinet.



Crane 2 fails on the “geared” feeder vessel “PALOMA”, due to transducer damage.

The repair is carried out at the next port.

The charterer plans to load goods into Porthole 3 with Crane 2, which is not possible due to the ongoing repair at the port, which is why he orders a mobile land crane.

The costs of an additional mobile land crane for loading goods into Porthole 3 are borne by the insurance.


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