Why Should Charterers Protect themselves against loss with Liability Insurance?
Protection and Indemnity (P&I) insurance has been available to ship owners since the 1800s. However, it was not until much later that charterers got their own version of liability insurance. Charterers’ liability insurance is not compulsory but is increasingly sought by Charterers as owners will not charter or fix to them unless they have adequate Insurance with a reputable Insurer that is capable or responding to and paying claims.
There are numerous risks involved in trade many of which may occur during their transport from buyer to seller or shipper to receiver. Seaborne trade holds many dangers to cargoes including weather, high seas, jettison, poor lashing or stowage and shipborne problems with holds, hatches and seaworthiness.
As a charterer, the hire or freight you pay to an owner is not an insignificant amount to transport your cargo and often loss or delay causes disputes between owner and charterer regarding performance of the vessel, cranes, ports or stevedores leading to extra costs for hire, demurrage or detention. Lacking the proper protection means that you are at the mercy of owners and their IG Owners P&I Clubs who by their nature protect shipowners and bring costly claims against charterers. Insuring against such claims, casualties or issues with charterers liability insurance with a dedicated and reputable charterers liability insurer is a must in the current legal climate.
Different Kinds of Liability Classes
The MECO Group’s charterers’ product covers three main liability areas. These areas are ones that tend to be the most common in shipping and charterparties.
- Loss or Damage to the Vessel
Otherwise known as Damage to Hull (DTH), this claim often arises when the charterer sends a vessel to a port or berth deemed unsafe and damage or loss is suffered by the vessel from a grounding, collision, allision or other physical problems that impact the ship or vessel. Claim may also arise when the vessel is damaged by the cargo, through a breakdown of stow or a fires or by way of the stevedoring, cargo handling loading or discharging process. A DTH claim can take years to close and the charterer can be responsible for the damage, time lost, wreck removal and very significant legal fees defending their position.
- Loss or Damage to the Cargo
Cargo claims are the result of instances where damage or loss occurs during transport. This is usually pursued under a charterparty or a bill of lading, both complicated documents that can result in loss or damage being past down to Charterers in the contractual chain.
- Other Liability Risks
Other liability risks that do not concern DTH or Cargo fall under P&I. This coverage protects the charterer against claims that arise from incidents such as personal injury, fines and penalties, pollution, stowaways and even death.
The legal costs that can occur with a large contractual liability claim can be eyewatering. An arbitration can cost hundreds of thousands of dollars and defending a serious claim such as wreck removal or loss of a vessel can be millions of dollars. With the protection of a policy from the Charterers P&I Club you can be safe in the knowledge that you will be guided by well qualified claims handlers and a policy that will respond to the costs.
The MECO Group
Established over 40 years ago, the MECO Group operates as a global team with regional hubs in London, Shanghai and Dubai. Our years of experience in the industry have given us the knowledge and wisdom that can help you with your insurance needs. We will work closely with you to identify the risks to your business so that we can provide you with the appropriate solutions to manage them effectively and efficiently.
For more information about The MECO Group and our services, call us on +44 20 7702 3928 or email your enquiries to firstname.lastname@example.org.