When you or your clients are on the water, there’s always the chance of something unforeseen happening. Despite best efforts, a mistake can happen, and injury or damage to other people, infrastructure or other vessels can occur.
That’s where third-party liability – or, in the marine world, protection and indemnity (P&I) cover – comes in.
When looking at P&I insurance, there are different options – a P&I Club entry, or more restricted local cover based on Institute Clauses – and it’s important to understand both in order to ensure the most appropriate cover is in place.
P&I cover explained
P&I cover comprises three key aspects – damage to third-party property, collision liability and death or injury to someone other than the crew.
“Third-party property damage could occur when a vessel damages some infrastructure, underwater pipes, or cables, or collides with a pontoon or a marina berth, for example,” explains Anja de Ruiter, National Strategic Underwriter – Hull and Marine Liability, at NTI. “Collision liability occurs if a vessel hits another vessel, moving or stationary.”
The third element is cover for death or injury to someone other than crew members.
“The crew employed by the owner or operator of the vessel should be covered under workers compensation insurance, which is why crew is not covered under P&I cover,” explains Anja.
The P&I cover NTI provides is based on Institute P&I clauses. It’s important to know that our P&I cover is for passengers while on board the vessel, and does not cover off-vessel activities (you’ll need a P&I Club entry for that).
Institute P&I cover does, however, provide cover for removal of wreck, and cover with NTI can be extended to include passenger liability while on board the vessel, as well as pollution, including clean-up costs.
P&I Clubs explained
For larger vessels, cargo ships, those carrying more passengers or involved in specialist operations, a P&I Club entry is likely to be more appropriate.
NTI does not offer the same level of cover as P&I Clubs – which are specialist P&I insurers who cover exposures that are too big and complex to be adequately covered under Institute P&I clauses.
“Club limits are typically $500 million or $1 billion, and the cover is broader,” explains Anja.
“It usually includes cover for passengers when they are travelling to and from the vessel as well as whilst on the vessel, or for those vessels involved in specialist operations, such as pile driving, laying submarine cables, or dredging large areas.”
P&I Clubs also cover passengers for off-vessel activities, such as swimming and snorkelling.
Institute P&I cover or P&I Club entry?
One of the key things to consider here – as well as the limit of liability and the number of passengers – is the activities the vessels are undertaking.
For example, for tourism boats, smaller ferries, charter boats, sightseeing vessels and the like, P&I cover provided by Institute Clauses will likely be sufficient.
Similarly, for smaller port-based craft, including tugs, barges, dredgers and workboats, Institute P&I cover may be suitable, however, there may still be circumstances in which a P&I Club entry is the more appropriate option.
Key considerations:
- The limit required: if up to $20m, and;
- The vessel is certified to carry 25 passengers or fewer, and;
- The purpose of the vessel is primarily tourism, recreation or small-scale transportation;
Institute P&I cover could be the more appropriate option.
NTI does not offer a P&I Club solution; however, we are always very happy to have conversations with our broker partners and clients in order to help you move towards the very best solution.
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This article contains general information only and does not take into account your objectives, financial situation or needs. You should obtain your own professional advice based on your personal circumstances. Our Marine Protect insurance products are subject to limits and exclusions. NTI is not responsible or liable for your use or reliance on the information in this article.