P&I Clubs and Marine Insurance Claims

Insurance can be central to recovering losses following cargo damage, a collision, a crew injury or an oil spill. However, the existence of insurance does not mean that every loss is covered or that every claimant can recover directly from the insurer. The relevant policy, the insured liability and the applicable law must be considered together.

Understanding the different types of cover

Marine cargo insurance generally covers insured interests in goods against loss or damage within the policy terms. Hull and machinery insurance generally concerns physical loss of or damage to the insured vessel and machinery. The precise risks, exclusions and period of cover depend on the wording agreed.

Protection and indemnity (P&I) insurance principally covers liabilities to third parties arising from the use and operation of ships. Depending on the entry and Club Rules, this may include crew injury and death, cargo liabilities, pollution, wreck removal and damage to property. P&I cover should not be treated as interchangeable with cargo or hull insurance.

The policy and governing law

Assessment begins with identifying the assured, the insured vessel or interest, the period of cover and the event giving rise to the claim. Relevant documents may include the policy, schedule, endorsements, Certificate of Entry and the Club Rules for the applicable insurance year. Deductibles, limits and exclusions must be checked alongside notification, cooperation and claims-handling requirements.

The law governing the insurance contract may differ from the law governing the underlying cargo, injury or collision claim. Foreign marine insurance legislation should not be assumed to apply merely because a claim concerns international shipping. Any choice of law, jurisdiction or arbitration provision must be examined with the applicable mandatory rules.

Can a claimant proceed directly against a P&I Club?

A third-party claim against a shipowner is distinct from the shipowner’s right to indemnity under P&I cover. Club rules commonly contain conditions governing recovery, including payment-first requirements, subject to exceptions. A claimant should therefore establish a legal basis for direct recovery rather than assume that identifying the Club is sufficient.

One important example is the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001, to which Myanmar has acceded. Within its scope, the Convention provides for direct action against the insurer or other provider of financial security for pollution damage. Article 7 addresses compulsory insurance or financial security and direct action. Whether a particular claim falls within that regime requires examination of the incident and the Convention’s conditions.

Myanmar requirements for Blue Cards

DMA Marine Guidance 7/2023, dated 29 December 2023, addresses recognition of P&I Clubs and insurance companies issuing Blue Cards for Myanmar ships in connection with Article 7 of the Bunkers Convention. It sets out recognition and supporting-document requirements.

A Blue Card supports the compulsory insurance certification process; it is not a general assurance that every maritime loss is covered. The relevant certificate, provider, period and liability regime should be verified. The Guidance also permits review of the recognised list, so current recognition should be checked where relevant.

Notification and supporting evidence

Notify the insurer or Club promptly in accordance with the relevant terms. Take reasonable measures to prevent further loss, preserve evidence and coordinate any survey or inspection. Urgent safety measures should not be delayed while insurance questions are being resolved.

Depending on the claim, retain shipping documents, incident reports, photographs, survey reports, medical records, repair estimates, invoices and correspondence. Establish the cause of the loss, the liability alleged and the amount claimed. Before admitting liability or agreeing a settlement, check any requirements for insurer or Club consent.

Disputed cover and time limits

If cover or payment is declined, obtain the reasons and the policy provisions relied upon in writing. Review the stated grounds against the full wording and evidence, including any relevant deductible, exclusion or limit.

Insurance notification deadlines, deadlines for proceedings against the insurer and time limits for claims against the responsible third party may differ. Reporting a loss to an insurer should not be assumed to preserve an underlying claim. Any proposed settlement or release should also be examined for its effect on recovery rights.

Legal assistance from ILPC

ILPC provides legal advice and representation in P&I and marine insurance matters, including policy review, claims preparation, negotiations and dispute resolution. We assist clients in assessing cover, liability and available recovery options. Contact ILPC with the relevant policy or Certificate of Entry, incident records and correspondence to discuss the matter.