Marine Hull Insurance. Fleet Insurance.

    Another classification is that of " fleet insurance," as contrasted with the insurance of a single vessel. Where a large number of steamers is owned by a single corporation it is manifestly a great convenience to have all covered on time under a single policy, particularly when the entire amount of insurance, often amounting to several millions, may be accepted as a single account and then distributed by the insurance company on some share or participation basis among a large number of other underwriters.

    By insuring a number of vessels jointly a more favorable rate of premium may also be obtained as a rule. A single vessel must be judged by itself, and if in poor condition may fail to obtain insurance altogether or, at least, be underwritten at a very high rate. A fleet of vessels, however, has usually been built up in the course of a considerable number of years, and thus represents an average of old and new or good and inferior vessels. If the vessels composing the fleet are considered separately, the underwriter will naturally be inclined to accept the good and avoid the inferior. But under fleet insurance he is confronted with the proposition of insuring " all or none." His privilege of free choice as between the vessels is limited. He will thus accept the entire fleet, either as an individual or in conjunction with other underwriters. But his retained line will necessarily be limited to a certain percentage only, the balance being spread over other underwriters on some share or participation basis. The rate will be uniform for all the insurance on the fleet, and will probably be arrived at by segregating the vessels of the fleet into groups and applying the premium on each group, the final premium being the sum of the several group rates.

     At one time it was the almost universal practice for large fleets of steamers to be owned and operated by a single corporation. While this is still the case in many instances, there has developed a wide-spread practice of having a separate corporation formed (the corporate name usually including the name of the particular vessel) for the ownership and operation of each individual steamer. In other words, the ownership and management of the vessels composing a large fleet may be distributed over as many separate corporations as there are vessels in the fleet. Legally, such a practice has the advantage of limiting liability, in case of the assessment of damages for collision or otherwise, to the individual vessel involved rather than the entire fleet as would be the case if all vessels were owned by the same corporation. In fact, should the vessel at fault also be destroyed, there might be little left of the assets of the corporation, representing that vessel, to meet the damages assessed against it. In practice, however, uniformity of action may be obtained through a managing company chartering all the individual vessels, or attending to the loading and management of the same. Despite the growing practice of distributing the ownership of vessels composing a group, fleet insurance has nevertheless assumed large proportions, and its importance is indicated by the fact that the American Hull Underwriters' Association until recently had as one of its main functions the recommendation of rates at which various fleets of steamers should be underwritten by its members.