When it is about securing goods transported from one destination to another, you would want to get them insured before they leave the shore. This is where marine insurance policies come into the picture to provide adequate insurance coverage. If you are thinking transit insurance is as easy to understand as any other type of insurance product, you might not know the specific requirements and their subtypes. Given the risk of maritime disputes, you cannot ignore the legal costs involved. For this particular aspect, specific freight insurance takes the center stage – Freight Demurrage & Defense insurance insurance.
Want to know more about FD&D insurance? Let’s get started.
What is Freight Demurrage and Defence (FD&D) insurance?
Also known as Defense insurance, FD&D insurance provides the insured with insurance coverage related to assistance for handling claims and legal costs for a wide range of disputes. The need for this insurance arises from the fact that many of these disputes lie outside the scope of Protection & Indemnity (P&I) and Hull and Machinery (H&M) insurance. Also, the majority of these disputes are related to buying, selling, building, owning, and operating a vessel.
At large, Freight Demurrage and Defence (FD&D) insurance covers the cost of defending or pursuing claims/disputes related to:
- Contracts of carriage
- Charterparties
- Contracts of Affreightment
- Bills of landing
- Vessel sale and purchase contracts
- Vessel building contracts
- Insurance broking contracts
- Vessel repair contracts
- Crew contracts
- Marine insurance contracts, etc.
The insurance coverage here encompasses the expense of getting legal assistance or advice to pursue or defend maritime disputes. A key point to note here is that this type of transit insurance does not cover the principal sum under the dispute, such as the claim denied by the hull insurer.
Scope of Insurance Coverage Provided Under FD&D Transit Insurance
Before you would purchase this type of transit insurance online, you would want to know the types of disputes and claims that are covered under the policy. Let’s take you through the finer details of the scope of cover:
- Cancellation of charter parties
- Unpaid freight, demurrage, and hire
- Detention, loss of use, and delay of a ship
- Damage or loss caused to a ship
- General average contributions recovery
- Breach related to a charter party, bill of lading, or similar other carriage contracts
- Claims related to the supply of fuel, equipment, or materials to a ship
- Negligent repairs of a ship
- Payments due to and from marine insurance companies
- Disputes with port authorities, custom authorities, and terminal owners
How are Freight Demurrage & Defense insurance insurance Claims Handled?
Most marine insurance companies invest in a team of claims handlers who are entitled to offer the insured having FD&D insurance cover a complete advisory service on different types of issues that may arise. The matters include advice on constructing charter party clauses, analysis of unsafe berths, damage to hull disputes, and interpretation of demurrage provisions.
Once the claim is filed, the defense team pursues recovery of freight, demurrage, or hire whenever it is appropriate, especially in cases where the disputes are not solved amicably. They will also assist the insured to take the matters to litigation or arbitration. In many cases, these disputes cover different jurisdictions across the world, which is where the insurer involves its international network of correspondents and lawyers to deal with the claims.
If you require outside legal advice, the insurer will instruct the attorneys and counsel while also monitoring their costs. All this is done to keep the overall legal expenditure low without compromising the standard of services.
What are Deductibles and Limits under FD&D Insurance?
This varies from one policy to another, and from one insurer to the other. The specifics of the policy mainly depend on your selection of insurance coverage and other benefits. In general, the insurance company covers the first few expenses (up to a certain limit) after which you need to contribute a certain amount as defined under the policy terms. Also, there will be an upper capping on the maximum recovery under one claim.
Buying Transit Insurance Online from SecureNow
As you can see here, buying the most suitable Freight Demurrage & Defense insurance insurance provides protection against various shipping-related liabilities, can be a tough nut to crack. However, you can make things easier for yourself by joining hands with SecureNow – a trusted insurance broker dealing in different types of commercial insurance policies, including marine insurance, liability insurance, and others. To know more, click here.
About The Author
Simran
MBA Insurance and Risk
With extensive experience in the insurance industry, Simran is a seasoned writer specializing in articles on marine insurance for SecureNow. Drawing from 5 years of expertise in the field, she possesses a comprehensive understanding of the complexities and nuances of marine insurance policies. Her articles offer valuable insights into various aspects of marine insurance, including cargo protection, hull insurance, and liability coverage for marine-related risks. Renowned for their insightful analysis and informative content, Simran is committed to providing readers with actionable information that helps them navigate the intricacies of marine insurance with confidence.
