P&I is a common term in the shipping industry. Short for Protection and Indemnity insurance, this refers to a liability coverage specially made for commercial ship owners and other marine vessels used for commercial use. It basically offers protection for the owners against various risks of liability.
If land vehicle owners have auto insurance, so should ship owners. One of these is P&I insurance. It is a must-have for all shipping business owners. It offers protection for the safety of those who are in the insured marine vessel. Likewise, it will provide compensation in case of sea accidents that may have compromised the vessel, cargo, and people’s safety.
Protection and Indemnity insurance has been around since the 1800s. Originally, the “protection” and “indemnity” aspects of the insurance operated separately. But in 1874, the two entities were combined and formed into the modern Protection and Indemnity insurance that is known of today.
What does P&I insurance policies cover?
For starters, this type of marine insurance has comprehensive coverage for ship owners against various types of liability risks. For one thing, the insurance mostly covers risks and potential damages due to unforeseen circumstances that are deemed accidental.
Among its part of coverage include damaged property caused by the marine vessel as well as injuries inflicted to a vessel’s crew members. However, any damage incurred that are proven to be intentional won’t be covered by the policy. Other instances that the insurance will cover situations may include:
- Property damage afflicted to another marine vessel due to collision
- Damage to harbor, dock, and pier property including installations and equipment
- Bodily damage incurred by the ship crew while they are in the ship or marine vessel
- Bodily damage incurred to people outside the marine vessel (e.g., those who are working near the pier or shore)
- Wreckage removal and salvaging operations
- Damages due to oil spills and other types of pollutions
What are P&I clubs for?
These entities aim to ensure fleet owners and ship operators against risks of liabilities that are not usually covered by hull and machinery insurances. P&I clubs usually ensure the entire shipping company’s fleet of ships. However, these clubs would leverage more to ship owners that have the same type of fleet.
P&I clubs may also require ship owners’ marine vessels to be subjected to inspection before and during the duration of its club membership. P&I clubs also have a comprehensive list of lawyers, correspondents, and surveyors in case of emergencies and other legal needs. They also provide manuals that contain the club’s rules and regulations as well as useful tips that can help overcome any ship-related troubles that may arise.
P&I clubs are usually managed by a group of directors, who are responsible for reviewing claims before any payment is done. The clubs are also managed with the help of insurance professionals and maritime experts.
Ship operators and owners should have P&I insurance to protect their shipping business from any risk of liabilities. People have life and health insurance, cars have automotive insurance, and so ships and other maritime vessels should also have some kind of insurance to protect their business.