P&I Overview

P&I Overvie


A shipowner is exposed to many risks and needs to avert or minimise the financial uncertainty and hazards that surround his day-to-day business.

There are two main types of insurances that are available to resolve this uncertainty: Hull and Machinery (H&M) Insurance and Protection and Indemnity (P&I) Insurance. The former provides cover for the vessel herself and her equipment (navigation equipment, machinery, cargo gear etc.) while the latter covers shipowners’ third party liabilities (damage to cargo, pollution, death, illness and injury to crewmembers, passengers, stevedores working on board the vessel etc.).

In addition to these two types, there are other insurances available to shipowners to remedy or alleviate the many liabilities and risks that are not covered by the traditional P&I and H&M insurances, such as:

Freight, Demurrage and Defence (FD&D) Insurance – As opposed to what its term suggests, the FD&D cover, also known as defence cover, does not afford insurance to such risks as disputes over charter parties, hire, sale and purchase of ships, bunkers, etc. Instead, the defence cover is only for the costs incurred in defending or prosecuting claims and disputes and for providing legal and technical assistance on matters that do not fall within the scope of the P&I cover. Most of the P&I clubs would also provide defence cover on a mutual basis.

Strike Insurance – It protects the shipowners for losses arising out of strikes by port workers, vessel’s officers and ratings and other that may affect the normal operation of a ship causing extensive financial losses.

War Risks – This cover comes to play when the ship is exposed to risk in zones of war and hostilities where the ordinary H&M and P&I may be suspended.

The marine insurance is undoubtedly strongly connected with the shipping history generally but whilst it has been suggested that ancient civilizations such as the Phoenicians had a primitive form of marine insurance, it was the expansion of merchant shipping that emerged more than two thousand years later that actually boosted the development of the marine insurance, P&I included.

This modest overview is concentrated on P&I insurance that is the core of our principals’ activities.

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