Charterers liability cover is a type of insurance that is primarily designed for charterers of vessels to provide the necessary coverage for their contractual or legal obligations to a ship-owner as spelt out in the charter agreement.
This coverage usually deals with liability exposures like safe berth, loading, stowage of cargo and unloading, hull damage and possible harm to other vessels or berthing facilities. It also addresses bodily injury, loss of life to third parties arising out of the charterer’s acts.
The Importance of Charterers Liability Insurance
This type of insurance is very complex and a potential risk that is often overlooked. One reason for this is the fact that a lot of regulations has come into force in the liability environment on topics such as pollution and safety. A charterer is also supposed to be a carrier in many countries, and this entails immense liabilities and responsibilities. Charterers are often vulnerable to enormous risks directly to third parties or due to factors like indemnities and contractual liabilities. Sometimes such exposures are so huge that it can even threaten the financial condition of highly established companies. This is the reason why those who charterer a cargo vessel ought to understand the need to go for insurance protection, although this is not at all mandatory.
Signing the Charter Party
Before chartering a cargo vessel, the charterer should enter an agreement with ship owners called the Charter Party. A charterer will have an obligation to indemnify the owner for third party liability if it results from a violation of this Charter Party on the part of the charterer or such activities that are the sole responsibility of the charterer. Ships can be chartered on a voyage or time charter basis. This means that a charter party can be availed of for a particular voyage/s or for a particular period.
The Usual Coverage
- Protection and indemnity risks such as crew, collision, removal of wreck, etc.
- Liability for any damage or loss to the ship chartered
- Liability, third-party cargo
- Personal injury or death
- Legal liability of the cargo owner
- Consequential loss
- Legal expenses like defence cost
- Fines and quarantine costs and fines
Choosing the Right Charterers Liability Cover
Nearly 50 per cent of the damages that occur to cargo happen as a result of the Charterer’s faults or omissions, while around 20 per cent of pollution claims arise out of the cargo and/or the bunkers provided by the Charterers. Also, most of the damages that happen to the hull do so while port operations are going on. These are reasons enough for charterers to enter into a Charter Party with a sound marine insurer who is savvy, dedicated, reputable and can provide top quality consulting.
When applying for a charterers liability cover, make sure that you do a background check on potential partners, and research what they can offer you. Gather all the knowledge you need to make an informed decision. This is necessary to ensure that you get the best deal possible.