Protection and compensation insurance: coverage and quotes (2023)

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Owning and managing a boat or vessel can create numerous obligations. In addition to damage to the ship and cargo, owners must also consider potential lawsuits that may arise from the ship's passengers and crew. Imagine a cruise ship hit with a virus outbreak – this event can trigger many lawsuits and claims, making it necessary to have protection and compensation insurance.

What is protection and indemnity insurance?

Protection and Indemnity (P&I) insurance protects shipowners against the liability risks associated with owning and operating a ship. That is one of its main titles.marine insurance, detailedhelmet covericargo coverage.

There is no standard form of insurance for P&I coverage, although most will cover losses related to illness, injury, loss of life, medical expenses, damage to other vessels and property, cargo damage, debris removal, and quarantine costs. . For P&I insurance, insurers will work with ship owners to tailor certain coverages based on the risks involved in their voyages and the desired amount of coverage.

Why was protection and indemnity insurance created?

Protection and compensation insurance arose from the shipowner's need to have coverage beyond the traditionalhelmet covericargo coverage, that is, the responsibilities towards third parties that may arise from the crew and passengers, from other ships and from property. In the last 200 years, marine insurance has changed significantly and shipowners have to protect themselves against increased legal obligations.

Why do I need protection and indemnity insurance?

Boat owners are exposed to a variety of unique third-party liabilities that could result in costly lawsuits and lawsuits. The physical threat that maritime vessels can pose to other vessels in the water, the dangers of carrying crew and passengers on a moving vessel, and other potential damages for which the vessel may be liable, make protection and compensation an issue. important aspect for ship owners. comprehensive coverage plan.

Exciting news stories about ocean voyages that have taken a disastrous turn show just how important liability insurance is to ship owners and operators. The Deepwater Horizon oil spill in 2010 spilled 4.9 million barrels of oil into the Gulf of Mexico and caused one of the largest environmental disasters in US history. The passenger ferry MW Sewol in South Korea capsized off the coast of Jeju, killing 304 passengers and crew in 2014. More recently, a norovirus outbreak infected 475 passengers on a Caribbean cruise ship in January 2014. 2019.

What unique risks does the ship pose to people, property and the surrounding environment? In the event of an oil spill from a tanker, millions of dollars worth of environmental damage could trigger many civil lawsuits. Deaths and injuries to people on board would give rise to claims and lawsuits. Similarly, a virus outbreak on a cruise ship could result in a significant number of lawsuits and legal settlements for medical expenses. As a boat owner, are you prepared to face responsibilities that could be financially devastating? The P&I insurance will cover third party liabilities that may arise from the ownership and management of the vessel.

What does protection and indemnity insurance cover?

The common categories of coverage for protection and indemnity insurance are the following:

Illness, injury and loss of life.

This is the main coverage of P&I insurance. Coverage for illness, injury and loss of life will apply to crew members, passengers not covered by the Personal Injury Compensation Law and even stowaways. People who work in the immediate vicinity of the ship, for example, dock workers, are also covered.

  • Example: Two dock workers were injured when a luxury yacht pulled into the docks without slowing down enough.

treatment costs

This covers hospital and other related medical expenses for passengers, crew, and nearby workers who have suffered injuries or illnesses as a result of the ship in question.

  • Example: When two beachgoers are seriously injured by an anchored boat, they ask for $200,000 for medical expenses.

Damage to other vessels or property

Covers damage suffered by other vessels and fixed assets in the water, such as docks, docks and port equipment, both due to risk of collision and other causes, excluding coverage already provided.Comprehensive insurance.

  • Example: The tugboat crashes into the pier causing extensive damage to the pier and nearby storage facilities.

cargo damage

This coverage applies to owners of passenger cargo and baggage.

  • Example: As the cruise ship embarks passengers for its maiden voyage, the porter loses control of the dockside luggage cart and the pile of luggage falls into the port. Passengers end up suing the cruise line for damaged luggage.

wreck removal

This covers the cost of cleaning up the wreck, which is often required by law, even if the shipowner is not responsible for the wreck.

  • Example: The sailboat is destroyed when it is caught in a strong storm. The wreckage of the ship washes ashore and the ship owner must pay the cost of clean up and removal.


This covers losses arising from ship quarantine.

Example: A cruise ship bound for Alaska suffers an outbreak of measles. The crew quarantines all the passengers and diverts the ship to the nearest port. The rest of the cruise is canceled and the ship must be disinfected.

Other coverages include:


This covers the cost of repatriating any crew members.

Example: A cruise ship in the Caribbean suffers an outbreak of Norovirus and several crew members become ill. The cruise line pays for the return of affected crew members to their home countries, including repatriation costs.

Civil liability for oil spills and pollution

It covers the costs of defense and resolution of civil claims derived from oil spills and pollution caused by the ship.

Example: An oil tanker explosion in the Gulf of Mexico dumps millions of barrels of oil into the Gulf, causing significant coastal damage. A group of citizens who own properties on the coast are suing the oil company for the material damages caused.

War and political dangers

This covers risks arising from maritime and wartime terrorism, including arrests, seizures, detentions and other politically motivated actions.

Example: Two US oil tankers have been attacked by Iranian ships in the Gulf of Oman amid escalating tensions between the two countries.

Note on exceptions

It should be noted that P&I insurance is not "comprehensive" and covers all types of civil liability against shipowners. For example, courts have previously held that P&I coverage will not apply to certain employers' liability claims or claims by crew members who have been involved in accidents near ships.

How much does protection and indemnity insurance cost?

The cost of protection and indemnity insurance depends to a large extent on various factors such as the type of business, type of ship, route to follow, destination, cargo and claims history. Protection and indemnity insurance is highly adapted to the business and specific needs of the company. Although premiums can vary, there is generally a minimum premium amount of $1,000 to $3,000.

To get an accurate price estimate, it's best to get a quote from a reputable insurance company. Here are some of our trusted partners who offer protection and indemnity insurance:

Supplierocean marine insurancemarine cargo insuranceinland navigation insurance
Smith cover??????

What are P&I clubs?

Most protection and indemnity insurance policies are provided by non-profit, non-governmental associations or cooperatives called P&I associations. Composed of shipowners, operators, charterers and seafarers, P&I clubs have their roots in 19th century England. Since insurers were reluctant to take third-party cargo liability risk at the time, shipowners responded by forming their own mutual P&I clubs.

As shipping became a more popular mode of transport in the second half of the 19th century, liability claims against third parties increased and larger protective associations were created. P&I clubs originated in London but have spread to other major shipping hubs, including China, Japan, Norway, Singapore, Sweden, the United Arab Emirates, the US, and South Korea.

Today, 13 P&I Clubs from around the world have come together to form the International Group of P&I Clubs, an association that provides insurance for 90 percent of the world's ocean tonnage. Club members contribute to a venture fund that pays out money when a member's boat suffers losses. P&I clubs offer very high insurance limits to protect against catastrophic losses at sea. Individual P&I Clubs international clubs are capped at $10 million in claims, while larger claims, up to $100 million, will be split among the 13 clubs.

final word

Shipping is a complex task that involves many risks. To survive, ship owners and operators must anticipate potential claims and lawsuits that may arise from crew and passengers, other vessels, and property. under, undermarine insurance,helmet covericargo coverageit will provide protection against the loss of the physical body of the ship and its cargo. Protection and indemnity insurance covers a wide range of third-party liabilities, including threats to the physical well-being of passengers, damage to other ships or property, damage to cargo not covered by cargo insurance, and costs associated with quarantines, removal debris and repatriation. and pollution. For any boat owner, protection and indemnity insurance is a key part of a comprehensive coverage plan.

This article may contain links to partners who pay for our business, but these partnerships do not influence our research, recommendations, or advice in any way.


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