In Hull Insurance market, lot of ship owners realized they could save premium costs by using Increased Value (IV) cover in part of hull value.
Theoretically, when total loss claim occurred, besides hull & machinery insurance, there would be some additional costs associated with replacing the lost vessel, including office expenses, the cost of repairs, spares etc. Hull IV Insurance should be able to fulfill the requirements to recover this “Excess Liabilities” and would give to the owner a safety margin in the event of the sound market value exceeds the hull insured value whereby the vessel would be underinsured.
Practically, underwriter agrees to indemnity the agreed amount when the vessel was total loss according to the Hull insurance cover. The limit of Sum Insured up to the 25% of the hull insured value would be allowed in London market. (e.g. Ship Value $20 million, H&M cover with Insured Value of $16 million and IV cover with Insured Value of $4 million)
Increased Value cover is restricted to “Total Loss” only. Hull IV premium rate should be less than half of her full cover hull insurance rate due to the total loss element applied. Therefore, let say H&M rate is 1% and IV rate is 0.4% as above example. The premium of H&M would be $16 million x 1% + $4 million x 0.4% = $176,000. In other way without IV cover, the premium would be $20 million x 1% = $200,000.
Of course, underwriter has the right to adjust the premium rate if Insured Value be reduced.
Should you have any enquiry, please feel free to contact with us.
Related Clause:
Institute Time Clauses – Hulls Disbursements and Increased Value (Total Loss only, including Excess Liabilities)
See attached file : ALCO Circular 20110021 Whether IV Insurance can save premium in Hull Insurance.pdf
增值保单可否为船东节省船壳险保费?
在船壳险市场，很多船东利用增值/超支保单（简称IV）作为减少保费支出的工具。
理论上，IV保单是为了在船舶发生全损时，除船舶本身价值外，弥补额外支出，例如维修、配件等，还有可为船东减少因船价升值而造成保单保额不足的问题。
实际上，伦敦保险人会同意船东购买不超过船壳险保险价值25%的IV保单以弥补损失。(例如：船舶价值$20,000,000,船壳险保险价值为$16,000,000，而IV的保险价值应为$4,000,000).
增值保障只在全损时生效。正因如此，IV的费率应较一切险费率便宜一半以上。在上述示例中，如果船壳险的费率为1%，IV的费率为0.4%，那么购买了IV的情况下，总保费为USD 176,000，而只购买船壳险H&M的总保费为USD 200,000.
当然，保险人有权因保险价值的变化而对费率做出调整。
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详细信息请参阅附件。
