The insurance is designed to indemnify the shipowner against loss of or damage to ship and liability of shipowner arising from maritime perils which include perils of the sea such as heavy weather, stranding or collision and other similar perils.
The Institute of London Underwriters publishes several sets of standard Hull Clauses for use with the policy coverage. These Hull Clauses are most widely used. For the insurance of ships on a time basis, the policy would be, normally, effected for a period of twelve months: these are known as the Institute Time Clauses (Hulls). For the insurance of ships on a voyage basis, these are known as the Institute Voyage Clauses (Hulls). Both clauses cover only those perils specified in the clauses.
The cover for loss of or damage to the ship is extended to embrace collision liability, subject to a limit of three fourths of the liability or three fourths of the insured value, whichever is the less. This cover, which is additional to any other claim attaching to the policy, relates solely to legal liability incurred by the assured in consequence of collision whereby losses are suffered by the other ship, or by property thereon, for which the insured ship is wholly or partly at fault.