What Protection and Indemnity (P&I) Insurance Covers That Hull Insurance Does Not

What is the difference between hull insurance and protection and indemnity?

What does protection and indemnity insurance actually cover?

It covers your liabilities to other people arising from operating the vessel. In practice that means injury to crew, injury to passengers, damage to other vessels and to fixed property such as pontoons and lock gates, pollution and its clean-up, and the cost of removing your wreck when the authority requires it.

Wreck removal deserves a word, because it is the item that most often turns out to sit somewhere the owner did not expect. Internationally it is governed for larger ships by the Nairobi wreck-removal convention, in force since 14 April 2015, but for a boat below its threshold the question is decided entirely by your own wording and your berth agreement. On some wordings it sits inside the liability section, on others it is capped or withheld, and several berthing contracts name it separately from the third-party figure. We compare two scheme wordings and six United Kingdom berthing contracts on our page about third party only cover, which is where that question is answered properly rather than in a sentence here.

Is protection and indemnity insurance compulsory?

Does a hull policy cover liability to your own crew?

No. A hull and machinery policy insures the vessel. It does not insure your role as an employer, and that is the line protection and indemnity answers across. Once a boat has paid crew, its owner has employer liabilities that no amount of hull cover will answer.

Which regime applies to you then depends on where your crew are employed and under what flag, and each of those has its own page here rather than a paragraph in this one. In the United States an injured seaman sues their employer under the Jones Act, 46 U.S.C. 30104, while a maritime worker who does not meet the legal test for a seaman falls instead under the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. 901. Which of the two applies to a given hire is not a do-it-yourself test.

Where each branch is answered

• The United States seaman and longshore distinction, set out in full, is on marine business insurance.
• The crew endorsement on a yacht that earns charter income, priced on the number of crew carried, is on charter yacht insurance.
• The Maritime Labour Convention 2006, which governs a flagged, crewed large yacht, is on superyacht insurance.
• The United Kingdom duty, which comes from the Employers' Liability (Compulsory Insurance) Act 1969 rather than from anything maritime, is on commercial boat insurance.

How does a fixed-premium policy differ from a mutual club entry?

A fixed-premium policy is bought like any other insurance: you agree a price before the year starts and that price is what you pay. A mutual club is different in kind, because members are participants rather than customers, and a bad year for the group can be met by calling for further contributions after the policy year has already run.

The largest of those clubs belong to the International Group of P&I Clubs, and they exist to serve ocean-going commercial shipping.

That difference has a consequence rather than just a definition. On a fixed-premium contract your liability for the year ends at the premium. On a mutual entry it may not, because a supplementary call is a request for money you had not budgeted, arriving after the cover period you have already paid for. The mutual clubs are built around ocean-going commercial tonnage, so for a vessel at the scale this page is written for the fixed-premium market is almost always the relevant one. It is still worth knowing which of the two you are being offered, because the question is rarely put to you directly, and the answer decides whether your cost for the year is actually settled when you pay it.

What does a small commercial vessel need, a dive boat, an angling charter or a workboat?

At this scale the exposures are concrete and local: a passenger stumbles on a wet deck coming back aboard after a dive, a crew member catches a hand in a line while making fast, you touch a moored boat coming alongside in a crosswind, a fuel line weeps into the harbour overnight.

A workboat carries a further wrinkle: it is certificated under the Workboat Code Edition 3, while an angling, dive or sightseeing boat carrying up to 12 passengers is certificated under the Maritime and Coastguard Agency's Sport or Pleasure Vessel Code. They are different documents with different scopes, and which one applies to you is worth establishing before you discuss cover.

None of those events is a hull claim, and none of them is exotic. They are the ordinary working risks of a boat that carries people and does a job, and they belong to the liability side of the schedule. The practical starting point is not the certificate table above, because that table showed you sit below all of it. It is the berthing agreement you have signed and the statutory employers liability that attaches the moment you take somebody on.

Our page on commercial boat insurance sets out what a small commercial vessel arrangement covers in the United Kingdom and European market and where its boundaries fall.

What does a yacht with paid crew need?

The same boundary, with more weight on the crew side. On a crewed yacht, liability to the people who work aboard is the exposure owners most often assume is somewhere inside the hull policy, and it is not.

Wages, repatriation, medical care and the shipowner's financial security obligations are set out in the Maritime Labour Convention 2006, an International Labour Organization instrument, and applied through the yacht's flag.

This is also the end of the market where the 300 GT line stops being theoretical. A large yacht can exceed it, which brings the wreck-removal duty into play where a small commercial vessel never meets it.

Our superyacht insurance page covers the crew layer, the war cover and the rest of a full programme.