P&I and Insurance Abbreviations
B/L – Bill of Lading
C/P – Charterparty
COFR – Certificate of Financial Responsibility
FD&D – Freight, Demurrage and Defence
H&M – Hull and Machinery
IWL – Institute Warranty Limits
K&R – Kidnap and Ransom
LOU – Letter of Undertaking
P&I – Protection and Indemnity
PI – Personal Injury
Types of Insurance
P&I – This type of insurance provides liability coverage for clients and their third-party liabilities arising from the operation of the vessel. Claims can include bodily injury, property damage, wreck removal and more.
H&M – Hull insurance covers physical damage to the vessel including, hull, machinery, equipment and fittings. This can be from situations arising from collisions, sinking, fire and natural disasters.
K&R – Kidnap and Ransom insurance is a specialised type of insurance that covers companies and individuals against financial losses and liability associated with kidnapping, extortion and related threats.
FD&D – This type of insurance, often simply referred to as ‘Defence’ provides financial protection against the legal expenses of pursuing claims and defending claims which are not otherwise insured under the P&I category. FD&D cover is discretionary and isn’t always taken out by shipowners with their P&I cover.
War Risks – This type of insurance covers damage or loss caused during warlike actions. This can include acts of terrorism, civil unrest, armed conflict, piracy and more. This type of insurance is also not part of standard marine insurance and is purchased separately.
Cargo – This type of insurance protects all goods when being transported against loss or damage whilst in transit. It covers theft, damage, sinking, fire and environmental hazards.
Freight – This type of insurance can also be known as freight forwarder’s liability insurance and this covers the liability of the freight forwarder against loss and damage to goods while they are in their care. It’s a lot like P&I cover for shipowners.
Personal Injury – This type of insurance covers bodily injuries suffered during maritime activities. This can be crew members or passengers and other personnel involved.
Marine Liability – This type of insurance covers a broad range of liabilities associated with liabilities arising from collisions, pollution, salvage, towage and more. P&I cover is marine liability insurance.
Charterers Liability – This type of insurance covers and protects charterers from liabilities arising out of their operations and contractual obligations from their activities. It offers protection against unforeseen circumstances and potential legal disputes.
Cyber Risk – This insurance comes from the increasing risk of the digitization of maritime operations. This provides coverage for losses resulting from cyberattacks, data breaches and any other cyber-related incidents.
Fixed Premium – This refers to the type of insurance policy where the amount paid by the insured remains constant or fixed for a specified period of time, just as with your own home or car insurance. This differs from the variable cost insurance typically offered by P&I clubs where the amount of premium, known as calls, is estimated at the beginning of the year and topped up with ‘supplementary calls’ if the P&I club has a shortfall.
Roles within the Industry
Claims – Responsible for handling and managing insurance claims, ensuring the policyholders receive fair and timely settlements whilst also protecting the financial interests of the insurance company. Claims handlers will investigate the incidents which may involve gathering evidence and collaborating with others.
Underwriting – Underwriters assess and evaluate risks associated with insuring vessels, cargo and the marine liabilities. They will analyse insurance applications, determine the terms and conditions and then set appropriate premium rates. They will decide whether to approve or decline an application as well as suggest modifications of insurance risks.
Adjuster – Responsible for investigating and evaluating insurance claims relating to marine incidents, determining the extent of the loss and negotiating the settlements. Adjusters analyse the insurance policy and determine the scope of coverage and then negotiate with claimants / policyholders and other parties to reach an equitable settlement.
Broker – Brokers act as intermediaries between insurance companies and clients seeking insurance coverage. They represent clients in the search for the most suitable insurance coverage as the market can be very complex. They will conduct research and analyse the products and policies to meet their client’s needs best.
