Could someone explain clearly the difference between P&I and Hull & Machinery Insurance?
P&I insurance covers third-party liabilities for shipowners/operators, excluding damage to their own property or direct loss.
Hull and Machinery insurance insures/protects a shipowner’s vessel as its main asset.
What happens in the event of a collision?
Does the Hull and Machinery cover the “Collision liability” which is the “liability of the insured to third parties who sustain injury, damage or loss as a result of the collision of the insured vessel with another vessel”?
The standard English Hull and Machinery insurance terms only provide collision liability coverage up to 3/4 of the ship’s liability towards another vessel in a collision, whereas Norwegian and German terms offer 100% coverage. The UK Hull and Machinery insurance does not cover damage to fixed and floating objects (“allision”), but Norwegian and German terms do.
P&I insurance provides full collision liability coverage, but the shipowner still needs Hull and Machinery insurance for their own vessel. Under Norwegian and German Hull and Machinery insurance conditions, the insurance also covers liabilities arising from the vessel striking third-party property. However, oil spill liabilities are not covered under Norwegian Hull and Machinery insurance, but are under German conditions.
There are variations in the standard Hull and Machinery insurance conditions.
In general, P&I insurance covers liabilities not covered under Hull and Machinery insurance.