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Marine insurance is not only a finance or legal topic. For procurement managers, ship managers and technical superintendents, insurance directly affects supplier selection, contract terms, documentation requirements, delivery planning and claim handling.
When a spare part is damaged in transit, when a technical item fails after installation, when provisions create a crew welfare issue or when a supplier’s delivery causes operational disruption, the procurement trail becomes part of the insurance discussion.
The most important point for procurement teams is simple: insurance does not replace good purchasing practice. It supports risk management, but buyers still need clear specifications, reliable suppliers, accurate documentation, strong delivery records and well-defined liability clauses.
This article explains the practical basics of P&I, H&M, cargo insurance and supplier liability from a procurement perspective. For broader ship supply support, see Global Ship Supply.
Marine insurance is usually discussed through several different cover areas. For procurement teams, the three most relevant concepts are Hull & Machinery insurance, Protection & Indemnity insurance and cargo insurance.
Each one addresses a different type of risk. Confusing them can lead to wrong assumptions during supplier negotiations or claim handling.
Hull & Machinery, often called H&M, generally relates to physical loss of or damage to the vessel’s hull, machinery and installed equipment. It is mainly connected to the vessel as an asset.
From a procurement perspective, H&M may become relevant when purchasing:
However, procurement teams should not assume that every spare part in transit is automatically covered by H&M. Coverage depends on the policy wording, the point of risk transfer, whether the item is installed, the nature of the damage and the insurance arrangement in place.
Protection & Indemnity, or P&I, generally relates to third-party liabilities connected to vessel operation. P&I can be relevant to crew, pollution, third-party damage, certain cargo liabilities, illness, injury and operational liabilities.
For procurement teams, P&I becomes important when purchasing items or services that may affect:
P&I does not mean every procurement problem is automatically covered. The claim must fit the relevant club rules, policy terms and facts of the incident.
Cargo insurance generally protects goods while they are in transit. For marine procurement, this is highly relevant when spare parts, technical stores, provisions or urgent supplies are being moved from a supplier warehouse to a port, agent, freight forwarder or vessel.
Cargo insurance may be important for:
Procurement teams should clarify who is responsible for insurance during transit, when risk transfers and what documents are needed if damage or loss occurs.
P&I clubs are especially relevant when procurement decisions touch crew welfare, medical response, food safety or operational liability. This does not mean the buyer manages insurance directly, but procurement decisions can influence whether a later claim is clear or difficult to support.
Provisions procurement can create insurance-sensitive situations when food quality, storage, hygiene or documentation becomes an issue. If poor-quality provisions affect crew health, the claim discussion may involve food safety records, supplier details, delivery notes and onboard handling.
Procurement teams should pay attention to:
Good provisions procurement is not only about price. It also protects crew welfare and reduces operational risk.
Medical supplies, medicine-related purchases and emergency response items require careful documentation. Procurement teams should ensure the requested items match vessel requirements and that expiry dates, packaging and delivery records are checked.
Key controls may include:
If the wrong item is supplied or documentation is missing, the problem can become both operational and insurance-sensitive.
Some supplies can create third-party exposure if they fail, leak, contaminate, damage property or affect port operations. Examples may include chemicals, hoses, lifting gear, mooring ropes, safety equipment or pollution response materials.
For these categories, procurement should focus on:
This helps protect the ship manager if a later incident needs to be reviewed by insurers, lawyers or P&I correspondents.
H&M is often associated with the physical condition of the vessel. Procurement teams do not usually manage H&M policies directly, but their decisions can affect repair quality, claim clarity and recoverability.
When buying equipment connected to hull, machinery or vessel operation, procurement teams should treat technical accuracy as a priority. A cheaper alternative can create serious problems if it is not compatible with the vessel or not accepted by the technical team.
For high-risk items, buyers should confirm:
This is especially important for machinery parts, safety-critical systems and equipment that may later become part of a damage or repair claim.
When a vessel has suffered damage, procurement may need to source parts or materials for repair. In that case, the purchasing trail can become part of the claim file.
Useful documents may include:
If procurement records are incomplete, it can become harder to explain what was purchased, why it was selected and whether the cost was reasonable.
Warranty and insurance are often confused. A warranty usually relates to the supplier’s or manufacturer’s responsibility for product quality or defects. Insurance relates to covered risks under a policy.
For example, if a part fails because of a manufacturing defect, warranty may be relevant. If the part is damaged during an insured event, insurance may be relevant. If the part was incorrectly specified or installed, neither route may be straightforward.
Procurement teams should keep warranty terms, supplier liability and insurance assumptions separate.
Supplier liability is one of the most important procurement topics in marine supply. Insurance may support risk transfer, but the contract still needs clear wording.
A supplier liability clause defines what the supplier may be responsible for if something goes wrong. An indemnity clause may require one party to protect the other from certain losses, claims or liabilities.
Marine supply involves time pressure, operational complexity and high-value assets. A small delivery issue can create large consequences if it delays a vessel, causes re-delivery, damages equipment or results in third-party claims.
Procurement teams should review supplier terms for:
A low-cost supplier with weak liability terms can create a higher long-term risk.
For critical suppliers, procurement teams may request evidence of relevant insurance. This may include public liability, product liability, professional liability, cargo insurance or other coverage depending on the service type.
The goal is not only to collect a certificate. Buyers should also check whether the insurance is relevant to the supplier’s actual scope.
Useful checks include:
This is especially important for technical suppliers, logistics providers, service vendors and high-risk product categories.
Marine procurement often involves moving spare parts across countries, airports, seaports, warehouses, agents and vessels. Each movement creates risk.
A spare part may be damaged, delayed, lost, stolen, mishandled or held at customs. If the part is urgent, the financial loss may be more than the item value because the vessel may miss a repair window or need a next-port solution.
Responsibility depends on the contract, Incoterms, purchase order terms, freight arrangement and insurance setup. Procurement teams should clarify this before shipment, not after damage occurs.
Key questions include:
Clear answers reduce disputes when something goes wrong.
High-value and urgent spare parts need stronger logistics and insurance control. Buyers should avoid vague shipping instructions when the part is expensive, fragile or time-critical.
Good practice may include:
For urgent ship supply, speed matters, but speed without documentation can create claim problems later.
Insurance-related procurement issues are often decided by documentation. A buyer may have acted correctly, but without a clear record, it becomes difficult to prove what happened.
The documentation trail should show the full story from request to delivery and, if needed, from damage discovery to claim closure.
The exact documents depend on the incident, policy and contract. However, procurement teams should usually be ready to provide:
The earlier these documents are collected, the easier the claim process becomes.
Procurement should not handle claims in isolation. Insurance-sensitive issues may require input from technical, operations, legal, finance, HSQE, the vessel team and insurers.
A good internal escalation process helps define:
This protects both the procurement team and the wider ship management organization.
AVS Global Ship Supply & Catering supports procurement teams by coordinating vessel supply requirements, clarifying product details, sourcing suitable items, supporting documentation needs and aligning delivery planning with vessel schedules across international ports.
For ship supply, provisions, technical stores, bonded stores or urgent vessel requirements, use Quick Quote.
For related technical governance topics, see The Role of Classification in Modern Shipping.
Marine insurance does not remove procurement risk. It makes documentation, supplier selection, liability terms and delivery control even more important.
Procurement teams that understand the basics of P&I, H&M and cargo insurance can make better supply decisions, ask stronger questions and protect the organization when claims arise.
The safest approach is to combine commercial discipline with operational awareness: clear RFQs, reliable suppliers, accurate PO terms, proper certificates, strong delivery records and early escalation when something goes wrong.
AVS supports marine procurement teams with global ship supply, provisions, technical stores, bonded stores and coordinated vessel supply solutions across international ports.
For procurement support and vessel supply requests, use Quick Quote.
A P&I club is a mutual marine insurance association that provides liability cover for shipowners and operators. P&I is commonly connected to third-party liabilities such as crew, pollution, cargo-related liabilities and operational incidents, depending on the club rules and case details.
Not always. H&M usually relates to the vessel’s hull, machinery and installed equipment. Spare parts in transit may require cargo insurance or a separate transit arrangement, depending on the policy, contract terms and point of risk transfer.
Responsibility depends on the purchase contract, Incoterms, freight arrangement, insurance terms and when risk transfers from seller to buyer. Procurement teams should clarify this before shipment.
Cargo insurance helps protect goods against loss or damage while in transit. For ship supply, it is especially important for high-value spare parts, urgent technical items, international shipments and multi-leg logistics.
P&I may become relevant if provisions create crew health, welfare or liability issues. Procurement teams should focus on food safety, supplier reliability, shelf life, cold chain control and delivery documentation.
Procurement teams should request current insurance certificates, liability details and contractual documentation directly during supplier onboarding or RFQ discussions. Coverage should always be verified based on the current contract, service scope and applicable terms.
An indemnity clause is a contract provision where one party agrees to protect the other from certain losses, claims or liabilities. In marine supply, it can relate to product failure, delivery issues, third-party claims or supplier-caused damage, depending on the wording.
Insurance affects supplier selection by showing whether a supplier has appropriate risk controls and financial protection for its scope. Buyers may review insurance certificates, liability limits, policy validity, exclusions and relevance to the supplied goods or services.
Common claim documents include requisitions, RFQs, quotations, purchase orders, invoices, delivery notes, packing lists, transport documents, photos, certificates, correspondence, onboard receipt and survey reports where applicable.
Warranty and insurance are different. Warranty usually relates to product quality or defects, while insurance relates to covered risks under a policy. A failed part may involve warranty, insurance or neither depending on the facts.
Some crew-related expenses may fall under P&I depending on the club rules, policy terms and circumstances. Procurement teams should not assume automatic coverage and should keep clear records for medical, welfare or provisions-related issues.
Mooring rope failures may involve several areas: product quality, maintenance, onboard use, third-party damage, injury, port damage, P&I exposure or H&M-related consequences. Procurement records, certificates, inspection history and incident details are critical for review.
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