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🚢 '''Increased value insurance''' is a specialized form of [[Definition:Marine insurance | marine insurance]] that provides additional coverage on a vessel's hull beyond the amount insured under the primary [[Definition:Hull insurance | hull policy]]. It is designed to address situations where the [[Definition:Agreed value | agreed value]] under the main hull policy may not fully reflect the vessel's true market or replacement value, ensuring that the shipowner has recourse to additional indemnity in the event of a [[Definition:Total loss | total loss]]. This type of cover is a well-established feature of the London and international marine insurance markets and is closely linked to [[Definition:Disbursements insurance | disbursements insurance]] and excess liabilities cover.

⚙️ Under a typical marine hull arrangement, the primary hull policy covers the vessel up to a specified [[Definition:Sum insured | sum insured]]. However, shipowners may find that this amount falls short of the vessel's actual value due to market fluctuations, capital improvements, or the costs associated with a total loss — including freight loss, management expenses, and other consequential outlays. Increased value insurance fills this gap by providing a supplementary layer that pays out alongside the hull policy if the vessel becomes a [[Definition:Constructive total loss | constructive total loss]] or [[Definition:Actual total loss | actual total loss]]. The coverage is typically written as a percentage of the hull value and is subject to limits established by market practice and the [[Definition:Institute Hull Clauses | Institute Hull Clauses]] or equivalent [[Definition:Policy conditions | policy conditions]]. Importantly, the combined total of the hull value and increased value cover is generally capped to prevent moral hazard — ensuring that the insured cannot recover more than the vessel's true worth.

📊 For shipowners, increased value insurance serves as an essential tool for closing the gap between insured and actual economic exposure on high-value assets. Marine vessels represent enormous capital investments, and their market values can fluctuate significantly with shipping cycles and commodity demand. Without increased value cover, a shipowner suffering a total loss might find the hull policy payout insufficient to replace the vessel or cover associated financial losses. From an [[Definition:Underwriting | underwriting]] perspective, marine insurers and [[Definition:Reinsurer | reinsurers]] carefully monitor the ratio of increased value coverage to hull value, as excessive additional coverage could create perverse incentives. The product remains a staple of the [[Definition:Lloyd's of London | Lloyd's]] market and major marine insurance centers in Scandinavia, Asia, and Continental Europe, reflecting the enduring complexity of insuring assets that operate across international waters and multiple legal jurisdictions.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Hull insurance]]
* [[Definition:Marine insurance]]
* [[Definition:Total loss]]
* [[Definition:Constructive total loss]]
* [[Definition:Disbursements insurance]]
* [[Definition:Institute Hull Clauses]]
{{Div col end}}

Definition:Increased value insurance - Revision history

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