Institute Time Clauses Hulls
London market standard conditions for time insurance of ship hulls, on a named-perils basis, whose Inchmaree clause extends cover to latent defects and crew negligence.
The Institute Time Clauses Hulls, in their 1983 and 1995 versions, are the standard conditions published by London market bodies for insuring a ship over a period, usually a year, as opposed to voyage insurance. They remain widely used worldwide, alongside the more recent International Hull Clauses of 2003 and the Nordic Plan, which dominates in Scandinavia. They work on a named-perils basis: covered are damage caused by perils of the seas, fire, explosion, violent theft, jettison, piracy, contact with a fixed or floating object, earthquake and lightning. The so-called Inchmaree clause, named after a ship whose claim was declined in the nineteenth century, extends cover to accidents in loading, boiler explosions, latent defects in hull or machinery, and negligence of master, crew or repairers, provided the owner exercised due diligence. The clauses also organize liability for collision with another ship, general average and salvage costs, and the deductible. War and strikes risks are excluded and insured under separate clauses. Understanding their structure is the foundation of all hull underwriting.
Hypothetical case: a propeller shaft breaks at sea because of a forging defect invisible at inspection. The break is not a peril of the sea, but the Inchmaree clause, drafted in response to the House of Lords ruling of 1887 on the ship of that name, covers the latent defect: the hull insurer pays the resulting damage, after the deductible, without paying for replacing the defective part itself.
ITCH, Institute Time Clauses Hulls, International Hull Clauses, Inchmaree clause
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