The origin of this policy came about in the early 1800’s
as a result of changes in hull policies (physical damage to the vessel). Marine
underwriters instituted a clause in the hull policy, which limited their losses
by collision to three-fourths of the shipowners
collision liability. Believing shipowners would be
more careful if held liable for one-fourth of the damages, this limitation, which
came to be known as the British three-fourths running down clause, led to the
formation of shipowners associations for the purpose
of mutually insuring their exposure. These associations were known as
Protection & Indemnity (P&I) clubs and as members, shipowners
were able to pool their losses left uncovered by the hull policies. Over time
these P&I clubs have grown to represent approximately 95 percent of the
world’s maritime P&I insurance. In the
Modern typical P&I policies provide for loss due to injury, illness and loss of life (normally defined broadly enough to provide damages required under maintenance and cure, Jones Act, and general maritime law) to which the Insured is legally obligated to pay. P&I also extends benefits for hospital and medical expenses incurred by the Insured beyond those he is legally obligated to pay as well as, repatriation and other medically necessary transportation expenses; damage to other vessels caused by collision or other non-collision losses such as the dropping of cargo on the deck of the vessel or forcing another vessel aground; damage to property other than vessels; wreckage removal; damage to cargo; fines and penalties; expenses related to the prosecution of mutiny or misconduct; quarantine expenses and defense costs.
Crew cover, loosely and
informally explained is an extension of the P&I to
cover the liability of a vessel owner/operator to the crew, similar to the way
that Workers' Compensation covers employees in non-marine environments.
Specific wordings are in each policy to define the Insurer's intent regarding
the coverage of Captains and/or crew and should be consulted in all cases.
IMPORTANT NOTE: The terms and descriptions of terms on this page or
these pages is not meant to replace or define any policy wording or term or the
limit or enhance any meaning of any term(s) or conditions of any policy of
insurance. These comments are just that, comments and nothing more. They are
provided for you to refer to, so you can ask your insurer for an exact meaning
or explanation of the coverage you own or are contemplating purchasing. All
policies are subject to exclusions and revisions of meanings of standard terms.
Your policy covers you, and you need to ask questions now- before any loss, to
understand what you have. We are not lawyers, and we do not provide legal
opinions. We are Insurance Brokers and we provide guidance and try and help you
understand coverages and coverage issues. READ YOUR
POLICY, a boring but informative task and ask questions. Use this document to
help you ask those questions and learn from your Agent or Broker. He or she is
there to help you, if they don’t do the job, find another one.