Introductory guide to P & I Cover
Shipowners insure against loss of or damage to their ships with hull underwriters. They look to their P&I club for insurance in respect of third party liabilities and expenses arising from owning ships or operating ships as principals.
The term “P&I” stands for Protection and Indemnity. It is not hull insurance, war risk insurance, loss of profit/freight insurance, detention insurance, strike insurance or uninsured legal expenses (Defence) cover.
The following risks typically covered by P&I Clubs are briefly described in this 'layman's guide' to the Rules of the Club
• Personal injury to or illness or loss of life of
crew members
• Personal injury to or loss of life of stevedores
• Personal injury to or illness or loss of life of
passengers and others
• Loss of personal effects
• Diversion expenses
• Life salvage
• Collision Liabilities
• Loss or damage to property other than cargo
• Pollution
• Towage contract liabilities
• Liabilities under contracts and indemnities
• Wreck liabilities
• Cargo liabilities
• Cargo's proportion of general average or salvage
• Certain expenses of salvors
• Fines
• "Omnibus" cover
Freight, demurrage and defence risks can be insured with the UK Defence Club. For example, The UK Defense club provide insurance for the legal and other costs of pursuing and defending claims related to entered ships where the sum in dispute is not insured.
1. Personal injury to or illness or loss of life of crew members
The shipowner may be exposed to such claims in tort or under statute law, although it is more usual for the claims to be made under the crew member's collective agreement or particular contract of employment. The cost of medical treatment and of repatriation is covered, as are the funeral expenses of dead seamen and also the cost of sending abroad a substitute for a seaman who is sick or injured or for a seaman who dies. Where there is a particular employment contract and this provides for unusually generous compensation in the event of death, injury or illness, the shipowner will normally be expected to have cleared it in advance with the managers of the Club so that his additional exposure under the contract can be taken into account in the assessment of his premium.
2. Personal injury to or loss of life of stevedores
This is a frequent source of heavy claims in tort or under statute law against shipowners and thus by them against their Clubs. Claims have been specially heavy in US ports, although the number of these claims has been reduced somewhat since the introduction of the 1972 Amendments to the Longshoremen's and Harbour Workers' Compensation Act which narrowed the circumstances in which the shipowner, as opposed to the employer of the stevedores, is liable for stevedore deaths and injuries.
3. Personal injury to or illness or loss of life of passengers and others
The shipowner may be exposed to claims in respect of passengers carried on board his ship in respect of injury, illness or death. These claims may in certain jurisdictions be defeated or limited in amount by the terms of the passenger ticket but, whether this is so or not in the particular case, the shipowner is covered for this risk. He may also be liable in tort to persons other than crew, stevedores and passengers who come on board his ship for one purpose or another, including surveyors, Customs officials, pilots and so on. Cover in respect of liability to these persons is also included.
4. Loss of personal effects
Liability of the shipowner to crew, passengers and others in respect of loss of or damage to the personal effects of these persons is also covered.
