P&I stands for Protection & Indemnity. A P&I insurance extends the insurance cover of a hull insurance. Hull and Machinery insurance does not necessarily cover all existing risks or the full amount of the damage incurred. The insurance cover of a P&I insurance covers precisely the risks not insured by the hull insurance. If a P&I insurance is to be taken out, it is necessary to join a so-called P&I club, which guarantees insurance cover.
What are P&I Clubs?
P&I Clubs were first established in England. Shipowners have joined forces there to create their own insurance for the risks not covered by hull insurance. In the meantime, these P&I clubs are active worldwide and P&I clubs have also been established in other countries. In Germany, these clubs would correspond to mutual insurance companies. If you want to take out P&I insurance, you have to join such a club. The resulting damages will be apportioned to the members of the clubs.
In the meantime, P&I Clubs offer insurance from various classes of insurance.
What insurance cover do P&I Clubs and P&I Insurances offer?
Today, P&I Clubs offer insurance in various lines of business. As a rule, these are divided into three sub-sectors: Protection, Indemnity and Defence.
The Protection line of business covers personal injury and excess cover, which includes the risks and amounts of damage not insured under hull insurance. Liability for cargo damage is covered by the Indemnity sub-line. In some cases, legal expenses insurance is offered in another sub-section, Defence.
When does P&I insurance apply?
A P&I insurance is usually a subsidiary insurance. A subsidiarity clause stipulates that the normal hull insurance of P&I insurance takes precedence. If insurance cover is provided by a solvent insurance company in the event of a claim, it will take over the settlement of the claim.
The lawyers of O&W represent P&I Clubs. We advise on the defense of claims against the club members and conduct necessary recourse. On the other hand, O&W also advises ship owners and shipowners on P&I insurance.