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What is a deductible in a hull and machinery policy, and how would it operate?

A deductible is a claim value which must be reached before the claim will be met by the insurer, in other words the amount of the loss which the assured must bear himself If, for example, the cost of repairing grounding damage is $100, 000 and the deductible is $40, 000, the insurer will pay $60, 000 only. 

No claims arising from an insured peril are payable unless the aggregate of all such claims exceeds the deductible. In return, the shipowner’s premium is reduced. The more claims the owner makes in a policy year, the higher his deductible is likely to be in the next policy year. The deductible is not applied to a claim for total or constructive total loss.

 

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