Yacht: Mortgagee’s and Owner’s Interest

Insurances designed to protect the economic interests of the Mortgagee or Innocent Owner.

Mortgagee’s Interest (MII)

Covers the mortgagee’s interest in an insured vessel in case there is non-payment of the Owner’s insurances following breach of warranty, non-disclosure etc. impacting the underlying policy.

Mortgagee’s Additional Perils (MAP)

Provides cover against the risk of the mortgagee’s financial interest in the vessel being “primed” or overtaken by the interest of third party claimants following an escape of oil or emissions of hazardous substances. Subject to exclusions in the policy, typically identified with P&I cover relating to oil pollution.

Mortgagee’s Rights (MRI)

Offers protection to a mortgagee where there has been a default under the mortgage and repossession steps have to be taken. If the mortgagee cannot exercise his rights over the ship due to actions of, limitations imposed, refusals or failures by the authorities of the ship’s flag country and/or a foreign and/or the Owner’s country, then the MRI policy should respond.

The policy will indemnify the mortgagee for his losses that derive from the effective loss of his security interest over the ship. Ensuring coverage for assets in politically sensitive areas.

Innocent Owner’s Insurance (IOI)

Covers a ship owner’s interest in an insured vessel in case there is non-payment of the bareboat owner/charterer’s insurances
following breach of warranty, non-disclosure etc. impacting the underlying policy. The sum insured is normally the difference between the market value of the ship and the loan amount, as the latter is traditionally already insured by the mortgagee under a MII policy.