Insurance for Charterers

Chartering a vessel inevitably entails certain risks, and as a charterer, you may find yourself exposed to certain legal and contractual liabilities. That means that the last thing you want is to be inadequately insured.

The key risks you face as a charterer include:

■ Loss of, or damage to, the chartered vessel (including damage caused by stevedores, an unsafe berth, the cargo or use of the wrong fuel)

■ Problems with cargo (including loss, damage, late delivery or delivery to the wrong port)

■ Other marine liability risks (including death, injury or illness suffered by the crew or third parties, collision, pollution, salvage or fines)

Depending on your role in the logistics chain, and the type of Charter Party you have signed, you may also face other liabilities. If, for example, to help you avoid liability, you appoint your own agents and stevedores, or hire your own superintendents to monitor loading and unloading, this may actually bring additional liabilities. The same applies if your name is on the Bill of Lading, or if you sign it yourself

Taking out Charterers’ Liability Insurance to cover your liabilities is not mandatory: you are, of course, free to take on the risk yourself. But there are a number of reasons why you would be well-advised to protect yourself with an appropriate Charterers’Liability Insurance. For example:

■ Under many jurisdictions, a charterer is often considered to be a carrier, with the responsibilities and liabilities that this entails

■ The management of warranties and conditions under a Charter Party can often be extremely complex

■ Litigation is becoming increasingly common in our society, and in the event of an incident, the chances of facing third-party liability actions are high

■ Relying on the operational excellence of others is no guarantee that you will not one day be exposed to extremely expensive claims

■ Even if, in a particular case, you are not liable, defending yourself against an erroneous claim can prove very expensive

■ 50% of cargo damages are caused by cargo handling, or errors for which the charterer is ultimately responsible

■ 20% of pollution claims are caused by the cargo being shipped, or by charterers during bunkering

■ 70% of hull damage claims occur in port