Mortgagees Interest Insurance

The mortgagee of a vessel will almost always require to be co-insured under the hull insurance taken out by the ship owner. The need for a separate additional insurance to cover the mortgagee's interest arises because the mortgagee has no involvement in the running of the vessel and is therefore unable to act in the event of any negligence or breach on the part of the owner. Under a hull policy, any defence available to the hull insurer against a claim by the owner is also valid against the mortgagee.

Mortgagee's Interest Insurance provides cover to the mortgagee, independent of any fault or other circumstances that could lead to a loss of cover for the owner under the hull policy. It can be seen as a back-up policy for the mortgagee.

Covers provided for banks and financial institutions:

MII - Mortgagees Interest Insurance - cover for the assured (bank/financial institution) for outstanding loans and interest, if the claim itself is collectible under the hull or P&I policy, but not paid - due to breach of cover, breach of warranty or owner's non-disclosure of facts.

MAPI - Mortgagees Additional Perils Insurance (pollution) - this insurance indemnifies the assured (bank/financial institution) if an insured peril results in legal liabilities for the owner exceeding the P&I policy/cover, e.g. confiscation of vessel, priority liens, sequestration of claim settlements or sale proceeds.