What is the nature of deductibles in Hull Coverage?

In Hull Coverage, deductibles serve as the portion of a loss that the insured must pay before the insurance coverage applies. The correct answer describes deductibles as being either a percentage of the loss or a fixed amount, with the added complexity that separate deductibles may apply depending on whether the vessel is in-motion or not in-motion.

This structure reflects the realities of marine insurance, where risks can vary significantly based on the activity level of the insured vessel. When a vessel is in-motion, the risk exposure can be different compared to when it is stationary. Therefore, having different deductibles for these scenarios allows insurers to more accurately assess and determine risk.

The other options do not encompass how deductibles function under Hull Coverage. For example, stating that they are a fixed amount only ignores the flexibility of a percentage option. Similarly, restricting deductibles to only fire incidents or to vandalism and theft does not reflect the comprehensive nature of Hull Coverage, which encompasses a wider range of risks related to the operation and condition of the vessel.