Marine protection and indemnity insurance (P&I) liability insurance is designed for addressing the needs associated with the marine industry. This insurance provides cover against all maritime risks associated with vessel operation, third-party damages caused to cargo. It also safeguards insured against 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 underwriter’s tailor coverage is based on the character, nature of the risk, and the amount of insurance required to suit each insured Moreover, it is different than the standard marine insurance. The marine protection and indemnity insurance policy is a contract associated with indemnity. Hence, the insurance provider does not have to pay unless the claim is paid by the insured.
Coverage provided by marine protection and indemnity insurance
Below are the common categories of coverage provided by marine P&I liability insurance:
a. Illness, injuries, or the loss of life
The insurance covers the cost for the injury, illness, and loss of life of the crew members of the ship. It also provides coverage for passengers without any insurance cover for an injury compensation act. Moreover, it covers people like longshoremen working for long hours on the dock.
b. Medical expenditure
This will provide cover against medical expenses that are related to crew, members, passengers, and other nearby workers. It covers the expenses of insured people suffering 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
The policy covers damages made to other vessels and properties fixed in water such as docks. It also bears damages to harbor equipment from the collision and other causes excluding the coverage which is already being provided by marine hull insurance.
The marine P&I 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 politically motivated actions.
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 that 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. In those times, not many insurance underwriters readily agreed to provide 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, the scope of the marine P&I insurance policy does not cover some losses or claims within. For example, it does not cover certain kinds of liability claims made by employers or certain types of claims as made by some crew members suffering 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 shipowner, the marine and protection indemnity insurance forms a major part of an insurance plan, providing full coverage and thus a must-buy policy.