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🚢 '''Increased value insurance (IV)''' is a specialized form of [[Definition:Marine insurance | marine insurance]] that provides an additional layer of [[Definition:Insurable interest | insurable interest]] coverage on a vessel's hull and machinery beyond the amount stated in the primary [[Definition:Hull insurance | hull policy]]. It exists because a ship's market value can appreciate — or because owners deliberately underinsure on the primary hull policy to manage [[Definition:Premium | premium]] costs — leaving a gap between the insured hull value and the vessel's true economic worth. IV coverage fills that gap, ensuring the shipowner can recover closer to the vessel's actual value in the event of a [[Definition:Total loss | total loss]] or a [[Definition:General average (GA) | general average]] contribution calculated on the full value of the ship.

⚙️ Structurally, increased value insurance operates as a separate policy, written by [[Definition:Underwriting | underwriters]] who may or may not be the same as those on the primary hull risk. The IV policy responds only in the event of a total loss — actual or [[Definition:Constructive total loss (CTL) | constructive]] — and does not cover partial losses or particular average claims, which remain the domain of the primary hull and machinery cover. The sum insured under the IV policy, when added to the primary hull value, should approximate the vessel's agreed or market value. In the London market, IV placements often follow the [[Definition:Institute time clauses — hulls (ITC) | Institute Time Clauses — Hulls]] framework, with modifications specific to increased value risks. Importantly, many hull policies and club rules cap the total IV amount as a percentage of the hull value to prevent moral hazard — a typical ceiling is 25 percent of the primary insured value, though this varies by market and class of vessel.

💡 For shipowners and their brokers, structuring the split between hull and increased value coverage is a meaningful exercise in risk management and cost optimization. By keeping the primary hull sum insured at a manageable level and layering IV on top, owners can reduce the partial-loss exposure that drives the bulk of hull [[Definition:Claims | claims]] costs, potentially achieving better overall [[Definition:Premium | premium]] economics. From the [[Definition:Underwriting | underwriter's]] perspective, IV business is attractive because it responds only to total-loss events — low-frequency, high-severity risks — making it a fundamentally different risk profile from the primary hull account. [[Definition:Reinsurance | Reinsurers]] and participants in marine [[Definition:Excess of loss reinsurance | excess-of-loss]] programs pay close attention to IV values because they directly affect the total insured exposure on any single vessel and, by extension, the probable maximum loss for catastrophic marine events.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Hull insurance]]
* [[Definition:Total loss]]
* [[Definition:Constructive total loss (CTL)]]
* [[Definition:Institute time clauses — hulls (ITC)]]
* [[Definition:Marine insurance]]
* [[Definition:Insurable interest]]
{{Div col end}}

Definition:Increased value insurance (IV) - Revision history

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