Protection and Indemnity Insurance

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Protection and indemnity insurance, also known as P&I insurance, is an important type of marine insurance, customized especially to manage the special liabilities and needs that ship operators and owners face. Undoubtedly, global and international trade is expanding vastly, and maritime businesses not only experience the physical challenges of the sea but also complicated financial and legal risks.

Protection and Indemnity Insurance

This is where protection and indemnity insurance step in. It operates as protection and handles the downsides, which may include damage to cargo, injuries to crew, and environmental pollution that a standard hull and machinery quote do not offer protection for.

What is Protection and Indemnity Insurance

Protection and indemnity insurance, also known as P&I insurance, is a specialized type of marine insurance usually purchased and beneficial for ship operators, charterers, and ship owners to offer coverage for third-party liabilities that they may encounter when their vessels are on commercial operations. Additionally, P&I insurance is very important because of the high risks involved in maritime jobs or assignments that can cause injuries or death of passengers and crew members, environmental pollution, and damage to cargo.

How Does it Work?

P&I insurance operates on a shared and mutual basis within clubs, where members pool their resources to cover collective risks. Thus, when a ship operator or owner joins a protection and indemnity club, they officially become a member of that club and commit to a shared pool of funds. On the other hand, these funds are used to cover claims made by members of the club. Meanwhile, protection and indemnity clubs are non-profit organizations that manage for the benefit of their members only, and according to the terms of entry and the level of risk, claims are shared and handled among the members.

What does Protection and Indemnity Insurance cover?

A wide range of liabilities are covered by protection and indemnity insurance, and they include:

  • Personal injury or loss of life.
  • Pollution.
  • Collision liabilities.
  • Illness.
  • Wreck removal.
  • Fines.
  • Stowaways and refugees.
  • Cargo liabilities.

What Does It Not Cover?

P&I insurance does not offer coverage for the following, which include:

  • Profit losses.
  • War risks.
  • Ship’s hull and machinery.
  • Malicious acts.

Who needs a policy?

This type of insurance is particularly beneficial for a wide spectrum of people in the maritime industry. Here are some people who need to consider getting or purchasing a P&I insurance policy:

  • Ship owners.
  •  Malicious acts.
  • Ship operators and managers.
  • Bareboat charterers.
  • Ports and terminals.
  • Yacht owners.

The need for protection and indemnity insurance depends on the high risk involved in maritime operations, where a slight or simple accident can cause legal complications and significant financial losses.

How much does Protection and Indemnity Insurance cost?

The cost of protection and indemnity insurance differs vastly. But keep in mind that this depends on the size and type of the vessel, trading routes, history of losses by the ship operator or owner, and the nature of its operations. The insurance company you choose also affects and determines the premium amount. Coverage limits and the risks involved significantly determine the cost of this type of insurance as well. 

How to Get Protection and Indemnity Insurance

Getting a protection and indemnity insurance, or P&I, policy involves a bunch of steps that you need to follow gradually to successfully get a policy that offers the right amount of coverage for you, your marine crew, and your vessels. With this in mind, here is what you need to do:

  • Assess your needs and the risks involved.
  • Shop around for insurance providers.
  • Get in touch with insurance agents or brokers.
  • Prepare all the necessary information.
  • Gather quotes.
  • Review the terms and conditions.
  • Negotiate and personalize coverage.
  • Purchase the quote.

After purchasing the quote, do not forget to review and update it regularly to make sure that you are still getting enough coverage.

Frequently Asked Questions

Can I get temporary P&I insurance for a single voyage?

Yes, it is 100% possible to get short-term coverage for certain voyages.

Are there any deductibles?

Yes, P&I quotes often come with deductibles that differ depending on the specifics of the policy and the type of claim.

How are claims handled in foreign jurisdictions?

P&I clubs usually have a system consisting of legal experts and correspondents internationally to manage claims in various jurisdictions.

Can P&I insurance be customized for specific types of vessels or operations?

Yes, protection and indemnity insurance can be personalized to meet the needs of various types of maritime assignments. For example, container ships, passenger vessels, bulk carriers, and tankers. Every operation type carries special risks that can be handled with personalized coverage.

Are crew health and medical expenses covered under P&I insurance?

Yes, this form of insurance generally covers repatriation costs, medical expenses, and reimbursement for illness or injury to crew members while they are still pledged.