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Marine Insurance Law By Your Name Class Name University’s Name Due Date Q. 1 (A) Protection and Indemnity Insurance (P&I) refers to the marine insurance that is provided by P & I club. A ship is open to many risks when it leaves for a voyage…
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Download file to see previous pages The insurance also covers some liabilities that arise in cases where there is a collision with another ship and also the liability for colliding with other objects (FFO-Fixed and Floating Objects). Typically, claims under Hull and Machinery insurance include, total loss of the ship; damage to ship, engines and equipments; explosions and fires; groundings; collisions; and striking other objects. The scope of the type of damages covered by Hull and Machinery Insurance has been defined by International Hull Clauses (IHC). In clause 2.1.6, it states that HM & I covers the losses caused to the ship due to “contact with land conveyance, dock or harbor equipment or Installation.”1 There are certain risks and liabilities that are not covered under Hull and Machinery insurance. A prudent ship-owner may look to get insurance cover for liabilities to third parties. Such liabilities might arise due to a third party’s legal or contractual claim against the ship. P & I insurance is arranged by entering the ship into a mutual insurance association which is usually referred to as a “club”. All the members of this club are ship-owners. Therefore, the P & I club is only answerable to its members. A Marine Insurance company, on the other hand, is answerable to its shareholders. P & I clubs provide insurance covers for much broader risks than the Hull and Machinery insurance schemes. When a ship has an accident due to the perils of the sea, Hull & Machinery insurance provides cover for the loss that has occurred to the ship. There are many other things that are connected with the ship. The crew of the ship, the employees, may also get hurt and claim compensation for their injuries. Also, the owner of the cargo that may have been carried in the ship would also claim for his loss against the ship-owner. Hull & Machinery insurance does not provide cover for such liabilities to third parties. However, the ship-owner can get protection from such claims by pursuing P & I insurance. As far as the liability to the owner of the cargo is concerned, the cargo owner has a first claim against the carrier. The cargo owner may not succeed in his claim because either the ship-owner was not responsible for the loss or he is protected under Hague-Visby2 rules. In such cases, the cargo owner claims compensation from his insurer under Cargo Insurance. By the right of subrogation, the insurer, after compensating his client, would be able to pursue the claim in his own right against the carrier. To avoid this claim against him, the carrier seeks the services of P & I club. This means that the same cargo can be insured twice. P & I clubs also settle the claims against the ship-owner when the crew is injured. There can be other “Third” parties that can have legal or contractual claims against the ship-owner. P & I insurance addresses all of those claims. There are risks that are not covered by P & I insurance because they are covered by another form of insurance. In relation to Hull & Machinery Insurance, P & I insurance is able to cover almost all the risks that H & M leaves out. Even for the claims that are not fully covered by H & M insurance, the portion of the claim that is left out can be covered under P & I insurance. Therefore, P & I insurance complements Hull and Machinery insurance as the risks that are not covered by one are covered by the other. When both forms of marine insurance are ...Download file to see next pagesRead More
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