What is Protection and Indemnity Cover?
- Interns @btwimf.com
- Jul 26
- 2 min read
Introduction
Maritime operations involve various risks, including third-party liabilities and environmental damage. For shipowners, understanding protection and indemnity cover is essential to protect against legal and financial responsibilities. This blog discusses P&I cover, its advantages, and data trends that show its increasing significance.
What is Protection and Indemnity (P&I) Cover?
Protection and indemnity cover is a specific type of marine liability insurance for shipowners, operators, and charterers. Unlike traditional hull or cargo insurance, P&I focuses on third-party risks and liabilities that come up during vessel operations.
Key features of P&I cover include:
Liability for injury or loss of life of crew, passengers, or third parties.
Damage to fixed or floating objects, such as docks and ports.
Pollution liabilities and cleanup costs.
Wreck removal expenses.
Key Risks Covered Under P&I Insurance
A P&I policy typically provides protection against:
Crew claims:
Compensation for injuries, illness, or death.
Passenger liabilities:
Damages from accidents involving passengers.
Cargo-related liabilities:
Loss or damage to third-party cargo.
Environmental damage:
Oil spills or pollution events needing cleanup.
Legal defense costs:
Coverage for lawsuits and claims from maritime operations.
Claims in P&I Cover
32% of P&I claims worldwide are related to crew injuries and illness.
21% involve disputes or damage related to cargo.
15% are linked to pollution incidents, with average cleanup costs reaching millions.
Infographic idea: A bar chart showing the percentage distribution of P&I claims by type, including crew, cargo, pollution, and legal costs.
Benefits of Protection and Indemnity Cover
Comprehensive liability protection:
Covers risks not included in standard hull or cargo policies.
Financial security:
Helps shipowners manage high-cost events like oil spills or wreck removal.
Legal support:
Provides access to legal expertise and defense against claims.
Regulatory compliance:
Many international shipping regulations require liability coverage like P&I.
Understanding protection and indemnity cover is vital for shipowners and operators who could face liabilities beyond cargo and hull damage. With increasing risks such as pollution and crew-related claims, P&I coverage helps ensure financial stability and meets regulatory requirements. Assessing your operational risks and selecting the right P&I club or insurer is an important step towards safer and more secure shipping.
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