Marine transport remains the leading option for transporting goods across borders. Transporting your goods by sea does not however necessarily mean owning a ship. You can charter a ship from an owner on a voyage or time charter contract after the signing of a contract known as the charter party.
As the charterer in this arrangement, you are held responsible for reimbursing the ship-owner for any third-party losses. These arise from your transportation activities or a breach of the contract from your end.
Charterers’ liability insurance is designed to offer coverage against all elements which might damage the ship during the transport of your goods. The common ones covered include shortage or loss of cargo, hull damage, and pollution.
There are different insurance classes for charterers other than the charterers’ liability insurance though this is the most common. Here is what to expect when looking for coverage after chartering a ship.
This is the charterers’ liability cover. It covers damage to a ship’s hull, cargo liabilities, protection and indemnity and other costs of issues in marine transport. Damage to the hull covers the time lost in repairs and hull damage related to unsafe berths and ports, stowage, off-spec bunkers, and stevedore damage.
Cargo liabilities cover issues which are related to the cargo’s discharge, voyage and loading while protection and indemnity will cover damage to third-party goods, pollution, injuries, illnesses, and loss of life.
This is the cargo owner legal liability cover. If the charterer of a ship also owns the goods being transported, a claim might be brought against them challenging their identity as the cargo owner.
The charterers’ liability insurance will not ordinarily respond to this claim since it does not cover liabilities in your identity a charterer. In this instance, class B coverage is the ideal choice since you get liability as in Class A and protection for your identity as the cargo’s owner.
This class will cover the costs of legal defence in disputes which arise under your charter party. The common ones include breach of contract, dead freight and freight, and laytime. Legal issues are quite expensive and not covered by other insurance classes.
Class C insurance, also called the defence cover, is the answer in these cases. This insurance category is purchased as an extension of Class A coverage. It covers legal advice on various issues related to your contract and your defence.
These are designed to offer extra protection of different types to charterers. The common types of fringe covers available nowadays are bunkers, piracy loss of hire, detention, and war among others. With the uncertainty of marine transportation, the fringe covers are worth their cost.
The above charterers’ insurance covers are not only a legal requirement, but they will also give you peace of mind when your cargo is on transit.
Getting the insurance cover and keeping their premiums up-to-date will unfortunately not mean instant compensation in case anything happens to the goods or ship. The only way to guarantee this is to buy your cover from a reputable rather than the cheapest marine insurer.