Different insurance issues can arise depending on whether the insured:
- owns and operates vessels;
- demise or time charters vessels; or
- provides employees to work on vessels that it does not own, operate or charter.
When an insured does not own or charter a vessel, a different kind of insurance is required. If a company owns or bareboat charters a vessel, it will generally purchase a protection and indemnity (P&I) policy, which will cover its liability as the vessel's owner for personal injuries to the captain, crew, employees and third persons working on the vessel. However, these policies can be amended. For example, the crew and employees may be excluded or only the crew may be insured. Depending on policy endorsements, who is considered to be 'crew' should be agreed in the policy. The P&I policy should give the insurer the benefit of the insured's limitation of liability defence.
In general, if a company does not own or bareboat or demise charter the vessel on which its employees are to work, it cannot purchase a P&I policy. Rather, it can purchase a workers' compensation and employers' liability policy with a maritime liability endorsement. The endorsement will cover the company's liability to its employees injured on a vessel that it does not own. However, the policy is designed not to cover employees insured under a P&I policy, as the endorsement states that coverage:
"Shall not attach with respect to any liability of the Insured if there is in force for the Insured or for his benefit a protection and indemnity or similar policy which would cover any part of such liability except for an "Other Insurance clause," deductible or limitation of liability clause or similar clauses."
Further, it is important to note in the policy form or endorsement that a standard maritime employers' liability (MEL) policy will exclude "the captain and crew and employees on owned and/or operated watercraft". The idea is to exclude losses expected to be covered under a P&I policy issued for vessels that the insured owns or charters.
The limits of liability in a maritime liability endorsement are often low – possibly $25,000 per accident or occurrence. However, some maritime liability endorsements have higher limits and, in any event, excess coverage may be provided by an excess MEL or umbrella policy. P&I and MEL policy forms can be worded in many ways and have various endorsements, which can be negotiated to reduce premiums. As complete coverage cannot be taken for granted, it is important for an insured to ensure that it:
- fully details its marine-related operations to its broker; and
- has appropriate coverage for personal injury claims arising from its maritime operations.
An experienced broker will carefully evaluate the placement of coverage under the correct policies and ensure that – under the combination of P&I, workers' compensation and employers' liability, MEL and excess or umbrella policies, including endorsements – there are no gaps or overlaps in coverage with respect to the insured's liability for maritime personal injury claims regarding owned, chartered and non-owned, non-chartered vessels.
For further information please contact please contact Mat M Gray at Fowler Rodriguez by telephone (+1 504 523 2600) or email (email@example.com). The Fowler Rodriguez website can be accessed at www.frfirm.com.
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