Marine protection and indemnity insurance (P&I) liability insurance are designed for addressing the needs associated with the marine industry. This insurance helps in providing cover against all maritime risks that can be associated with vessel operation, third-party damages that can be caused to cargo or risks associated with environmental damages such as pollution, war, oil spills, etc.
In the case of marine protection and indemnity insurance, there is no standard form or terms and conditions associated with the insurance policy. The underwriters tailor coverage for each insured based on the character, nature of the risk and the amount of insurance that is desired for the insured. Moreover, it is different that the standard marine insurance, since the marine protection and indemnity insurance policy is a contract associated with indemnity the insurance provider is not liable to pay unless the claim is paid by the insured.
Coverage provided by marine protection and indemnity insurance
The common categories of coverage provided by the marine protection and indemnity insurance are mentioned below.
a. Illness, injuries or the loss of life
This coverage is meant for the injury, illness, and loss of life of the crew members of the ship and also for passengers who do not have insurance covered by an injury compensation act. Moreover, people like longshoremen who work for long hours on the dock are also covered under this insurance.
b. Medical expenditure
This will provide cover against medical expenses that are related to crew, members, passengers and other nearby workers who might suffer from injuries or illness due to the ship being under question.
c. Damage to cargo
This insurance policy is applicable for cargo and passenger baggage in case of any loss or damages.
d. Damage to other vessels or property
By this, coverage is provided to other vessels and properties that are fixed in water such as docks, harbor equipment from the collision and other causes excluding the coverage which is already being provided by marine hull insurance.
The marine protection and indemnity insurance will cover the repatriation of crew members of the ship in case of an outbreak of any serious illnesses.
f. War and other political risks
The marine protection and indemnity insurance covers war and other risks associated with marine terrorism such as seizure, capture, and any other action which is being motivated politically.
g. Oil spill and pollution civil liabilities
This will cover the cost of defense and settlement of civil lawsuits which can arise out of the spill of oil or pollution caused due to the vessels.
Additional Read: What is marine insurance?
Entities which provide marine protection and indemnity insurance
Mostly, marine protection and indemnity insurance policies are provided by non-profit mutual or co-operative associations known as the P&I clubs. These are non-governmental associations as well which consist of operators, ship owners, charters and seafarers. P&I clubs originated in the 19th century in England as in those times there were not many insurance underwriters who readily agreed to providing cover for third-party liabilities associated with cargos.
Today, 13 P&I clubs across the world together form the International Group of P&I Clubs. These associations provide cover for the majority of the world’s ocean-going tonnage. The P&I clubs offer high insurance cover for ships facing any kind of devastation on the sea. The club members of the P&I club contribute to the risk pool and this is utilized for helping the ships when they face losses.
Exclusions of Protection and Indemnity Insurance
However, there are some losses or claims which cannot be covered within the scope of the marine protection and indemnity insurance such as certain kinds of liability claims made by employers or a certain type of claims which are made by some crew members who have suffered from some accidents in the ship.
Hence, marine and protection indemnity insurance include coverage for a larger array of third party liabilities and the well-being of the people on the ship. For a ship owner, the marine and protection indemnity insurance form a major part of an insurance plan that provides full coverage and must be purchased.