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    OUR COVER

    1-) Protection & Indemnity

    2-) FD&D Types of Dispute

    3-) Hull & Machinery

    4-) Charterers Liability Insurance

    5-)War Risks

    Protection & Indemnity

    Protection and Indemnity insurance, or as it is more commonly known – ‘P&I’, is third party legal liability insurance for ship owners, operators and charterers. “Third parties are any person, apart from the ship-owner himself, who may have a legal or contractual claim against the ship. The principal risks covered are liabilities, costs and expenses for: Injury, illness and death of crew, passengers or other persons on board, Cargo, loss or damage. Legal liability is decided in accordance with the laws of the country where an accident takes place. The P&I insurance cover for contractual liability which is agreed at the time the owner requests insurance cover from the club and is usually in accordance with the owner’s responsibility under crew contracts or special terms relating to the trading pattern of the vessel.

    The basic rule governing P&I cover is that the liability or loss must arise:

    In respect of the Member’s interest in an Entered Ship;

    Out of events occurring during the period of entry of the Ship in the Association;

    In connection with the operation of the Ship.

    Please find below the detailed information for P&I coverage:

    Running Down Clause (RDC) and Fixed or Floating Objects (FFO):

    The P&I cover may include liability for collision, such as when the member’s ship is in collision with another ship, or when the entered ship strikes an FFO, i.e. a quay, dock or buoy. As a Standard P&I cover, 1/4th RDC and 4/4th FFO are included. However, ship owners may adjust the amount of RDC in the P&I cover (i.e. no RDC or 4/4th RDC).

    Loss or Damage to Cargo

    the cargo Insurers (or underwriters) will pay the person or the company who owns the cargo (the receiver) for the costs of loss or damage to that cargo when the cargo has an accident. The cargo underwriters will then seek to receiver their losses from the ship-owner or charterer. The P&I club will usually take over the Handling of such claims on behalf of the assured.

    Other risks covered:

    • Liability arising out of towage contracts
    • Injury, illness and death of crew, passengers or other persons
    • Wreck removal
    • Pollution
    • Stowaways
    • Collision
    • Dock damage
    • Fines or administrative penalties arising out of the operation or management of ships

    FD&D Types of Dispute

    There are many types of risks faced by owner and charterer Members of the Club that are not mutual by nature and that do not, therefore, fall within the scope of P&I cover. The Club is able to support Members involved in these disputes by providing FDD cover.

    Highlights

    – Standard deductible is US$ 7,500 for each dispute.

    – Expert “in-house” advice to optimize results

    – 75% cases are resolved ‘in-house’ using Our  lawyers (without charge)

    – Flexible cover and premiums:

    Up to USD 10 million available cover

    Variable limits/caps 

    Owners/Charterers FDD cover 

    Our Cover

    FDD or “Defence” cover provides support for legal and other expenses incurred when pursuing or defending these types of disputes if they arise in connection with the chartering, trading and/or operation of the entered vessel. 

    The Club’s team of legally qualified claims handlers provide assistance to Members both prior to and after the instruction of external lawyers. Of the FDD matters handled by the Club each year 75% are resolved by the Club’s claims handlers without the need to instruct external lawyers and, therefore, at no additional cost to the Member. 

    • FDD cover is, however, so much more than support for legal and other expenses associated with pursuing or defending FDD disputes. The Club can provide security for costs, and the Club’s claims handlers provide practical support reviewing contracts and clauses, and advise on emerging issues affecting the Members. 
    • When disputes are referred out the Club’s lawyers will assist with the management and conduct of the dispute. Indeed, the discretionary nature of FDD cover requires close cooperation between the Club, the Member, and external lawyers so that:

      (a)    Costs are incurred with the Club’s approval can be supported; and 
    • (b)    There is an agreed strategy to ensure the best possible result for the Member –  that is, so far as possible, either to minimise the Member’s exposure or maximise any recovery, taking account of litigation risk and costs. 

    Hull & Machinery

    Despite modern technical and technological progress safety at sea is far from being absolute. Maritime craft are subject to unpredictable natural phenomena like perils of the sea, human errors, as well as modern events like terrorism and piracy. Each of them may cause a severe loss. So it is only fair to say that a probability of accidents in seaborne trade will exist probably forever. Along with that an average amount of H&M losses incurred by ship-owners attributable to such occurrences tends to increase due to expansion of world merchant fleet, growth of ship values and increase of repair costs. An H&M policy protects ship-owners against physical loss or damage to the vessel’s hull, machinery and everything connected therewith.

    SCOPE OF COVER

    Islamic P&I club offer H&M cover which is based on the “named perils” principle – marine perils that a shipowner undergoes during maritime adventure, subject to the standard exclusions, similar to ITC Clauses. On request and for the convenience of Assureds we offer H&M cover based on other markets’ recognized Rules or Clauses.

    Under H&M policy we will cover loss and damage incurred by the Assured up to the sum insured in respect of the following extent of cover:

    • Vessel’s hull, machinery and other equipment
    • Salvage and Salvage charges
    • General average contribution
    • Sue and labour
    • Proportion of Liability for collision with another vessel (3/4ths or 4/4ths)
    • Loss of Hire

    In vessel collisions, vessels may collide with other ships and other objects, such as navigation buoys. In many cases the ship will be liable in law for any damage caused to the other ship or object. The hull and machinery policy, although mainly a physical damage policy, does provide an element of liability cover so long as the collision is with another ship.

    The cover is for the damages that the insured ship will have to pay not only to the other ship, but also any property such as cargo (goods) on the other ship. The P&I cover may include liability for collision, such as when the member’s ship is in collision with another ship, or when the entered ship strikes an FFO, i.e. a quay, dock or buoy. As a Standard P&I cover, 1/4th RDC and 4/4th FFO are included. However, ship owners may adjust the amount of RDC in the P&I cover (i.e. no RDC or 4/4th RDC).

    Charterers Liability Insurance

    Charterers sometimes accept words in a Charterparty, which purport to provide them with the full benefit of the Shipowner’s P&I cover, as being sufficient for their needs. This is not the case because the benefit of Shipowners P&I cover cannot be assigned or extended to include another party unless the P&I entry itself has been formally amended. More importantly, even if the benefit of Shipowners P&I is successfully assigned, its Shipowner focused terms of cover would not be adequate to protect against the additional and special P&I risks that are particular to Charterers.

    Defence and Legal Costs

    Marine Mutual Charterers P&I is designed to cover their Members’ exposure to legal liabilities which may arise in contract, in tort (negligence) or as a breach of maritime or other law. In addition to covering the direct cost of these liabilities, Marine Mutual P&I also covers the expense of comprehensive and pro-active liability defence inclusive of survey, claims adjustment, legal advice and ultimate settlement on best terms for the Member.

    Damage to Hull (DTH)

    Charterparties invariably contain specific terms that obligate the Charterer to both nominate and ensure a safe berth or port. A breach of these obligations could result in a badly damaged ship’s hull and a massive H&M led recovery claim against Charterers for repair costs and consequential losses. Charterers might also be ultimately held liable for wreck removal costs as well. Marine Mutual Charterers P&I covers all of these risks.

    Cargo Damage

    Charterers operating in the liner trades often issue B/L’s that name them as the contracting carrier. As such they will be directly responsible for cargo claims for damaged cargo. In other cases, Charterers may find that despite their intention that the shipowner is to be named as the contractual carrier, an error has occurred in the issue and signature of the B/L. The result being that Charterers are deemed to be the contractual carrier and directly liable for cargo damage. Another direct liability scenario is cargo damage during loading and discharge caused by stevedores engaged by Charterers.  Further, the commonly used NYPE Time Charter contractually apportions damage claims between Charterers and Shipowners. Marine Mutual Charterers P&I covers all of these risks.

    Off-spec Bunkers

    Time Charterers are required to provide bunkers to a chartered ship that meet the owner’s precise technical specifications. If they do not, due to supplier failures or other causes, then Off-spec bunkers can damage the ship’s engines and contaminate the ship’s bunker tanks. Large claims from the shipowner can then be brought against the charterer for engine repairs and delay together with Off-spec bunker removal and tank cleaning charges. Recovery will then have to be accomplished against the bunker provider. Marine Mutual Charterers P&I covers all of these risks.

    Salvage and General Average (GA)

    The provision of salvage services will require the benefiting parties to contribute proportionately to the salved value of the maritime property saved inclusive of cargo, bunkers, freight at risk and the ship itself. Time Charterers, with respect to the value of their bunkers, will, therefore, be required to provide a salvage guarantee and then contribute pro-rata to the salvage award. Voyage Charterers who are also the owners of the cargo on board will be obligated to do the same. Additionally, if GA is then declared by shipowners, similar but separate guarantees and contributions will be required to be made through the shipowners appointed GA adjustors. Bunker and cargo values can be very high. Marine Mutual Charterers P&I covers all of these risks.

    Fines

    Fines can be imposed by maritime authorities, inclusive of customs officials, against a ship and her cargo for a variety of reasons. These can include fines arising out of alleged cargo shortage or damage claims, non-compliance with cargo related regulations, smuggling and immigration breaches. Such fines can be issued directly against a Charterer or form part of a subsequent indemnity claim by Shipowners or Sub-charterers.

    Injury or Death of Stevedores, Ship’s Crew or 3rd Parties

    Charterparty terms may be such that the Charterers are both financially responsible and legally liable for the loading, stowing and discharging of cargo. In such circumstances, Charterers could be held directly liable for the death or injury of any person engaged in cargo handling and tallying inclusive of stevedores, ship’s crew or other parties. Alternatively, a Shipowner’s indemnity claim against Charterers could arise in the event of negligent cargo handling or unsafe stowage resulting in personal injury or death.

    Fixed and Floating Objects (FFO)

    Claims for damage to jetties, shore cranes, navigational buoys and other such FFO type objects will normally be brought directly against the Shipowner. However, if the damage arose from the proven breach of a Charterparty ‘safe port/berth’ warranty, then the Shipowners and their own P&I Club would likely bring a recovery claim against Charterers.

    Pollution

    Pollution from a cargo of persistent oil loaded on board a tanker or from its bunker tanks will be regulated by the Civil Liability Convention (CLC). It requires claims to be brought directly against the registered Shipowner and no one else. As such, the CLC appears to provide a shield against an attack on Cargo Owners and Charterers. However, it will not negate an indemnity claim against Charterers if the spill occurred as a consequence of a proven breach of a Charterparty ‘safe port/berth’ warranty. Nor will the CLC deflect blame in countries that have created and legalised methods of attacking Charterers under the provisions of national criminal law.

    Pollution from the bunker fuel tanks of any vessel, except a CLC regulated tanker, will be regulated by the Bunker Convention. This convention has extended the range of strict liability to include the Charterer of the vessel who may be held directly liable by 3rd parties for bunker spill pollution damage and consequential economic losses.  It would then be necessary for the Charterer to defend themselves by formally joining in the Shipowner to the legal proceedings. This is a complex situation that would be both time consuming and expensive.

    War Risks

    Loss or damage caused by an act of war including civil war, revolution, rebellion, riot, hijacking or detention whereas normally these risks are excluded from the usual coverage. Such cover is given under other standard clauses like the Institute War and Strikes Clauses. It is also now common place for the War Risk policy to cover such risks as terrorism, piracy and hijacking.

    War risks insurance is designed to cover risks that standard hull insurance and P&I insurance choose to exclude. This typically includes damage or loss caused by:

    • War, civil war, revolution and rebellion
    • Capture, seizure, arrest, restraint or detention
    • Mines, torpedoes, bombs or other weapons of war, even when derelict
    • Damage or loss caused by strikes and labour disturbances
    • Terrorists, people acting maliciously or from a political motive
    • Piracy or violent theft by people from outside the ship

    In addition to the physical damage that may be caused to the ship from an act of war, most marine war risk policies will incorporate the primary cover that would otherwise be given by the vessel’s P&I Club for any third party liabilities. This cover is normally limited to an amount equivalent to the vessel’s hull value, thereafter the P&I Club provides cover on an “excess” of hull value basis. This covers the legal liability and expenses that a charterer may face as a result of war or terrorism risks.

    Marine Mutual P&I Club’s War Risks, we work with brokers all around the world to provide comprehensive international war risks cover for ships of all size and type. Our aim is to provide the best possible insurance for the clients, while making it faster and simpler to organize cover, manage changes and oversee any claims that may arise.