What value should my vessel be insured for and can I save premium by insuring on a lower Hull insured value for the vessel?
In principle you will be paying a lower premium for a lower insured value, however as the rate is a variant of the value, a higher premium rate would be commensurate with a lower value. However if the vessel’s insured value is lower than the sound market value at the time of a casualty, you will not be able to obtain a full indemnity under both the hull and P&I insurances. The shipowner should ensure the vessel’s insured value sufficiently covers her sound market value.(click here for more details) Unlike a non marine insurance policy the Hull insurance pays the agreed insured value in the event of a total loss regardless of the lower sound market value of the vessel. In practice it is customary for shipowners to insure on a value slightly more than the vessel’s sound market value in order to provide a margin for fluctuating ship prices and to take into account the additional losses arising from a total loss such as bunkers and stores and spares.
