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⚓ '''Disbursements insurance''' is a marine insurance product that covers the shipowner's out-of-pocket expenditures and anticipated financial interests in a vessel — such as management costs, equipment upgrades, stores, fuel, and expected earnings — that would not be recoverable under a standard [[Definition:Hull insurance | hull and machinery]] policy if the vessel were lost or declared a [[Definition:Constructive total loss | constructive total loss]]. It exists because the insured value under a hull policy may not capture the full economic stake a shipowner has in a vessel, and disbursements insurance fills that gap by providing an additional layer of indemnity tied to these ancillary financial exposures.

📋 Coverage typically attaches alongside the vessel's [[Definition:Hull insurance | hull]] policy and responds to the same perils — total loss, [[Definition:Constructive total loss | constructive total loss]], or, in some wordings, [[Definition:General average | general average]] and salvage contributions. The sum insured is usually capped at a percentage of the hull value (traditionally up to 25%, though market practice varies) and is agreed in advance between the shipowner and [[Definition:Marine insurance | marine]] [[Definition:Underwriting | underwriters]]. In the London market, disbursements cover is commonly written under the Institute Time Clauses (Hulls) — Disbursements and Increased Value form — while other markets may use locally adapted wordings. [[Definition:Insurance broker | Brokers]] placing marine programs treat disbursements as a standard component of a comprehensive fleet arrangement, negotiating its terms in tandem with hull, [[Definition:Protection and indemnity (P&I) insurance | P&I]], and [[Definition:Loss of hire insurance | loss-of-hire]] covers. [[Definition:Reinsurance | Reinsurers]] active in marine treaty business factor disbursements exposure into their aggregation models, since a single vessel loss can trigger claims across multiple policy layers.

💡 The importance of disbursements insurance lies in its role as a financial safety net for shipowners who invest heavily in vessel preparation, provisioning, and operational overhead — costs that accumulate continuously but vanish instantly if the ship is lost. Without this cover, a shipowner recovering only the agreed hull value might still face a significant uninsured shortfall, particularly for vessels that have recently undergone expensive dry-docking or equipment retrofits. The product also has strategic value in lending contexts: financiers and [[Definition:Mortgagee | mortgagees]] often require disbursements insurance as part of the overall marine insurance package securing a vessel loan, ensuring that the economic value pledged as collateral is fully protected. While disbursements insurance is a niche line by [[Definition:Gross written premium (GWP) | premium]] volume, it exemplifies the granular, layered approach to risk transfer that characterizes the [[Definition:Marine insurance | marine insurance]] market globally.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Hull insurance]]
* [[Definition:Marine insurance]]
* [[Definition:Constructive total loss]]
* [[Definition:Increased value insurance]]
* [[Definition:Loss of hire insurance]]
* [[Definition:General average]]
{{Div col end}}

Definition:Disbursements insurance - Revision history

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