Over the years shipping is turning out to be one of the most preferred modes of transporting goods from one place to another. It is cheaper, environmentally friendly and helps when the size of products is big. There can be a lot of eventualities that take place during the shipping process resulting in damages to the goods in transit. With aspect to these scenarios today we have something known as Protection & Indemnity Insurance.
Protection and indemnity (P&I) liability insurance comes into existence to take care of the needs of the entire marine industry. All risks that are involved in operations of the shipping industry are covered under this Protection & Indemnity Insurance. It covers aspects like liability claims due to collisions, damages or loss that happens to cargo in transit, Civil liabilities that come into effect after an oil spill. This policy happens to be very essential for shipping companies as it protects them from unforeseen eventualities that could cause hassles in transit.
A P & I club is the coming together of ship owners members to form an association in order to support seafarers ‘safety by providing certain necessities. A cooperative association of marine insurance providers meets the needs of all its members. The P&I clubs first originated in London and today are present across the world in countries where shipping is flourishing. The history of Protection & Indemnity Insurance clubs can be traced back to the 19th century where ship owners had begun coming together to get insured.
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If in transit a ship owner faces an accident and the goods he is transporting get damaged then there is a great financial loss incurred by them. Besides the goods there is alarming danger to something even greater and that is human life. P&I clubs provide for assistance in any such eventualities by providing compensation in the form of insurance cover.
The P&I club sets something called as a premium for an individual owner and this is based on the risks for which cover is required, the gross tonnage of the fleet and the exposure of risk that the fleet experiences. The club then covers all the risks involved in transit as discussed above.
The duties of Protection & Indemnity Insurance clubs are very essential for all shipping companies. They ensure protection of ship owners and operators against third-party liabilities; they conduct thorough inspection of vessels before entry into the club, they circulate information bulletins among members to reduce accidents and risks involved in transit, they offer a list of highly qualified lawyers and surveyors in case of any eventualities and so on.
With the development of Protection & Indemnity Insurance clubs the shipping industry has received a big boost in operations. The safety of crew is guaranteed and the high losses incurred by shipping companies are now reduced considerably. Protection & Indemnity Insurance clubs have turned out to be a lifeline to the shipping business and have helped the companies as well as the families of the crew to benefit immensely.
