What is mainly covered under a Yacht’s Protection and Indemnity (P&I) policy?

A Protection and Indemnity (P&I) insurance policy is a type of marine insurance that covers a range of potential third-party liabilities that shipowners, operators, and charterers may face. The risks covered under such liability policy include but are not limited to:

1. Collision with other vessels, in case of contact or not, and loss or damage to property of others. For instance, a claim had once happened with one of our insured whereby a speedy motor yacht caused damages to 2 other sailing boats. Due to the speed of waves, two sailboats hit each other and one of their mast had to be replaced. Third party personal injury or death arising out of collision is also covered.
2. Owner’s liability for deaths, personal injuries or sickness (illnesses) which occur on board, including death or injury to crew, passengers, stevedores, pilots and visitors to the ship. Related medical costs and other expenses are also covered. To be noted that liability vis-à-vis seafarers or workmen is excluded under the Institute Yacht Clauses.
3. Crew repatriation and substitution which is covering a shipowner’s liability to pay for the costs of repatriating sick or injured crew members while on board, the crew’s hospital bills and costs of sending replacement personnel to the yacht, if necessary.
4. Owner’s liability for loss of or damage to personal effects like cash, precious metals or stones or other objects of a rare or precious nature belonging to crew, guests or others.
5. Shipowner’s liability for pollution and environmental liabilities caused by the vessel, such as pollution by oil spillage and other hazardous substances.
6. Liabilities arising from the use of Tenders, Toys and/or watersports equipment which are used in conjunction with the insured vessel.
7. Liability for costs or expenses relating to wreck raising, removal, destruction, lighting or marking of the insured vessel, when such costs are compulsory by law.

What are some available extensions to a P&I policy?
Hereafter are three optional cover extensions to a P&I policy available in the market:

1. Yacht Legal Costs extension covering the legal costs and expenses which are incurred by a member to ascertain and protect the member’s legal rights in respect of a claim for which cover is available under the P&I entry for the Ship.
2. Personal Accident extension cover providing accidental death or permanent disablement benefits for insured crew on a 24-hour basis, whether or not the accident is related to the yacht itself.
3. Yacht Owners Pre-Delivery Liability extension providing liability cover for employees, liabilities to contractors and liability of employees to others, as well as the owner’s contractual liabilities and use of tenders prior to delivery. Coverage is from the moment that a contractual liability attaches to member as a result of signing a contract for the construction of a yacht which member is purchasing and which member intends to insure with the P&I insurer once navigating, provided it is within the Period of Insurance or prior to Delivery, whichever is the earlier. Cover will continue until the end of the Period of Insurance stated in the Certificate or Delivery, whichever is the earlier. Cover is in place whether the yacht is ashore or afloat and during launching and, in the absence of other insurance, periods of sea trials taking place prior to Delivery.

The Maritime Labour Convention (MLC) is an International Labour Organization (ILO) convention, established in 2006 as the fourth pillar of international maritime law and embodies “all up-to-date standards of existing international maritime labour Conventions and Recommendations, as well as the fundamental principles to be found in other international labour Conventions”. The convention entered into force on 20 August 2013. Although the Convention has not been ratified worldwide, it has widespread effect because vessels from non-signatory states that attempt to enter ports of signatory states may face arrest and penalties for non-compliance with the MLC.

The 2014 amendments to the MLC, 2006 entered into force on 18 January 2017 whereby as of that date all ships which are subject to MLC are required to carry and display on board two certificates confirming that financial security is in place for:

(a) shipowners’ liabilities for repatriation of crew, essential needs such as food, accommodation and medical care and up to four months’ outstanding contractual wages and entitlements in the event of abandonment

(b) contractual payments for death or long-term disability due to an occupational injury, illness or hazard set out in the employment agreement or collective agreement

FREQUENTLY ASKED QUESTIONS (FAQS):

What is the difference between insuring with a P&I club and a fixed premium insurer?
A P&I club is a mutual insurance association that provides risk pooling, information and representation for its members. Unlike a marine insurance company, which reports to its shareholders, a P&I club reports only to its members. With a mutual company, in principle you buy your insurance cover at cost. There are no shareholders to satisfy.

Does MLC apply on all yachts?
No, it applies on all commercial (chartered) yachts and there are some relaxations for yachts with a gross tonnage less than 200GT. 

Commercial yachts will require MLC certificates if they are:

• registered in a State where MLC is in force, or
• calling at a port in a jurisdiction where MLC is in force.

Under MLC and as yacht owner for which liabilities towards the seafarers am I covered? 
For a liability which may have arisen out of statute, common law or a crew contract.

Are tenders covered? If so in which circumstances? 
Yes, subject that they are used in conjunction with the yacht meaning that they are stored on board, towed by your yacht or used to transfer from/to your yacht your guests, the crew or yourself.

Am I covered for ransom or kidnap?  
No but you will be covered if the crew/guests are injured during a piracy act, and they make a claim against you, and you are found liable.

Under a P & I cover can I get a Greek, Italian and Spanish certificates in the respective languages?
Yes 

If my yacht is registered under a charter use, which requirements am I expected to follow?
Your yacht must be manned by and operated in compliance with the flag state requirements.

Though my yacht is registered as privately used and I charter her, am I covered?
Not only you are NOT covered but your yacht is at risk of being seized since your yacht should always be operated in accordance with the flag state requirements.  This is irrespective of the fact that it is mentioned in your policy that yacht charters are covered.  

As a beneficial owner of the yacht do I need to be named as an additional insured to be covered?
No, you are covered irrespective of you being named in the policy.

Under MLC are the medical expenses of an injured seafarer covered?
Yes, emergency medical expenses reasonably incurred following injury or illness are covered.