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Protection and Indemnity (P&I) is a type of insurance held by shipowners. Every ship plying its trade anywhere in the world needs to have valid P&I coverage.
P&I plays a critical role in protecting crews, the marine environment, coastal communities and third-party claimants in the event of a shipping casualty or incident. The very high limits of cover offered by the major P&I Clubs in the International Group of P&I Clubs (see below) ensure that even the biggest claims – which can exceed the total assets of a shipowner – are paid, protecting communities and crews.
Why do Shipping Companies need P&I?
While shipping companies always plan to mitigate the risks of accidents at sea, factors beyond their control can sometimes lead to incidents that affect the crew, cargo or marine life.
Determining legal liability after an accident or incident can be complex, with a shipowner potentially facing significant liabilities. P&I Clubs help settle these liability issues and provide immediate support, while the extensive cover ensures a shipowner can continue to trade and that communities, crews and the environment receive the support they need.
How do P&I Clubs work?
The most cost-effective approach for the vast majority of shipowners is to become a Member of a mutual P&I Club, where shipowners pool together to secure increased protection limits for third-party losses.
P&I Clubs were set up during the 1800s in response to increased third-party liabilities imposed on shipowners by rapidly developing legislative changes in the UK and elsewhere. Before then, insurance had traditionally been limited to damage caused by collision. Today, P&I insures their Members against a wide variety of risks including:
Injury, illness and death of crew
Injury, illness and death of passengers and other third parties on board
Stowaways and the costs of repatriating them
Damaged or lost cargo
Collisions
Wreck removal
Damage to property
Pollution
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