LO4 - 2d Insurance H&M-P&I
LO4 - 2d Insurance H&M-P&I
Insurable interest
• Must be a physical object exposed to peril
• Assured must
• have some legal relationship
• stand to benefit by its preservation
• must stand to lose by its loss or damage
Marine Insurance
Principles of Insurance
Utmost good faith
Assured must disclose to the insurer before the contract is
concluded, every material circumstance which is known to the
assured and which would influence the insurer’s judgement in
fixing the premium or whether they would accept the risk.
For example a shipowner must disclose that his ship has failed a
special survey.
Can cover:
Can cover:
The most famous being Lloyd’s Coffee House. This basic concept
created the first P&I Club.
The basic principle is that the contributions ("mutual premium") paid by the
Membership in relation to any one year should be sufficient to meet all the
claims, reinsurance and administrative expenses of the Club for that year.
If there is a shortfall because claims are high, the Members may pay a pro-rata
"additional call" and if there is a surplus, a return may be made to the
Membership, or the surplus transferred to reserve to meet losses on other
years.
The mutual system is therefore very different to most other forms of insurance,
because the aim of the P&I Club in accepting business is not to make a profit for
shareholders.
Protection & Indemnity Clubs
International Group of P&I Clubs with Insurance for the maritime industry - YouTube
Identify a P&I Club and note 2 - 3 recent topics that are likely to
be relevant to your forthcoming oral exam, ie published either
as guidance, articles or news, which relate to navigation, cargo,
environmental protection or safety.
In general, P&I Clubs cover the losses arising from most incidents
at sea, with the following exceptions:
• Hull damage
• cancellation of contract and loss of hire
• towage by the insured vessel or towage of an insured vessel
• wilful misconduct
• refugees
Documents normally found
on board:
•Certificate of entry
•Handbook of club rules
•List of club correspondents
•Loss prevention bulletins,
circulars, posters, dvds
The risks covered usually include:
1. Death and personal injury of
• Seamen
• Passengers
• Third parties
2. Stowaways or persons saved at sea
3. Collisions
4. Groundings
5. Damage to fixed and floating objects
6. Pollution
7. Wreck removal
8. Towage operations
9. Cargo.
Includes the legal and other costs associated with dealing with
these claims.
When to call a P&I Club
correspondent…
1. Oil spill
2. Collision
3. Contact damage with quay/other ship
4. Stowaways
5. Cargo damage
6. B/L problems
7. Discovery of drugs onboard
8. Dispute regarding NOR of ship to load
9. Problematic cargo
10. Crew member hospitalisation
Summary of Risks Covered
• Liability to Persons other than • Indemnities and Contracts for
Seamen other Services
• Injury and Death - Seamen • Wreck Removal
• Illness - Seamen • Cargo
• Wages and Shipwreck • Irrecoverable General Average
Unemployment Indemnity Contributions
• Repatriation and Substitutes • Ship’s Proportion of General
• Diversion Average
• Spouses and Children • Property other than Cargo on
• Stowaways, Deserters and board an Entered Ship
Refugees • Fines
• Life Salvage • Confiscation
• Effects of Seamen and Others • Official Inquiries
• Quarantine • Special Direction of the Committee
• Collision with Other Vessels • Sue and Labour and Legal Costs
• Pollution (special compensation) • Omnibus Rule
• Towage • Special Cover for Salvors
Third Party Cover
• Cargo claims - short delivery, loss or damage to cargo
• Crew claims - medical expenses, repatriation, compensation for death
and injury, etc
• Collision liabilities - 1/4th
• Fixed and floating objects: damage to dock, buoys, etc
• Third party injury and death claim: passenger, stevedore injury/ death
• Fines for Innocent breaches of regulations
• Diversions
• Landing Refugees, Sick Persons
• Contractual Liabilities including Customary Towage
• Ship’s proportion of General Average
• Salvor’s expenses under Lloyd’s Open Form
• Oil pollution liability (CLC)
• Special compensation or compensation under SCOPIC clause.
• Expenses incurred in landing refugees, sick persons and stowaways,
fines, unrecoverable general average contributions, wreck removal
costs, etc
• Freight, demurrage and defence cover (FD&D cover) - indemnifies
members for legal costs incurred in connection with FD&D dispute, but
not the actual sum itself.
Not Covered:
• Bogus Bill of lading
• Delivery of cargo without B/L
• Clean bill issued for damaged cargo
• Deck cargo carried on terms of under deck loading
• Arrest or detention of a ship
• Failure to arrive or late arrival at loading port