Liability Insurance Defense In Tanker Accidents: The Role Of Attorneys

 Liability Insurance Defense In Tanker Accidents: The Role Of Attorneys - A collision between the parties clause is part of a marine insurance policy which states that if due to the negligence of both parties a ship collides with another ship, the owners and shippers of the two ships share the loss in proportion to the monetary value of their cargo and their interests before the collision. Both the cargo owner and the shipping company must compensate for the loss.

As globalization grows, so does the transportation industry. In the event of a collision, the company's liability and risk shall be limited to marine insurance. Marine insurance covers losses caused by ships. Provides protection in case of damage or destruction of hull and/or cargo.

Liability Insurance Defense In Tanker Accidents: The Role Of Attorneys

The Hague-Visby Rules state that the carrier is not liable for claims arising in part or in whole from collisions caused by negligent navigation if the carrier has exercised due care to ensure a seaworthy vessel (Article IV Rule 2(a)). Generally, both vessels are partially responsible for a collision and shipping interests may have claims for damages against the non-carrying vessel.

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Under US law, the claimant can claim the full amount from the owner of the other ship, who can then claim half from the carrier. This rule bypasses navigation error defenses. This also created a situation where the cargo owner could not receive compensation if the carrier was fully liable. The collision clause was designed between the parties to maintain the protection that the carrier enjoys under the Hague-Visby Rules through contractual remedies for cargo interests.

If ship A collides with ship B due to the fault of ship B, and any cargo on ship A is damaged or lost due to the fault of ship B, its owner can claim 100% of the damages from the owner of ship B.

However, due to the existence of a conflict clause between the two parties, provided that the division of liability is deemed to be 50/50, Shipowner B is entitled to claim 50% of the liability from Shipowner A.

In this way, A should bear half the cost of the damage, so that A passes the cost on to the owner through conflicting provisions in the bill of lading.

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By clicking "Accept all cookies" you accept that we store cookies on your device to improve site navigation, analyze site usage, and assist in our marketing efforts. There are three basic types of marine insurance: hull insurance, machinery insurance, cargo insurance and protection and indemnity (P&I). This article provides an overview of P&I and related insurance issues.

Protection and indemnity insurance is shipper's liability insurance. The main providers of protection and indemnity insurance for ocean-going vessels are "clubs", which are generally assessable offshore associations managed by the owners of the vessels they insure. If the original premium is not sufficient to cover the club's losses and expenses during the coverage period, the club may charge the member additional premiums. Most of the clubs are located in London. In the United States, traditional insurers primarily write P&I insurance in inland and coastal waters.

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P&I coverage is subject to numerous exclusions and special conditions. P&I clubs do not use standardized policy forms. Each club has its own "club rules". The US domestic P&I market primarily uses forms SP-23 and SP-38 and the American Institute of Marine Insurers (AIMU).

Subject to exclusions and conditions, a typical protection and indemnity policy covers loss of life, injury and illness of crew, passengers and other third parties, damage to the ship's cargo, damage to other floating objects not caused by collision, wreckage removal costs, collision liability, damage to fixed objects, repatriation costs, damage to the car and the cost of defense fines and any other wrongful property, average costs of resistance to damage.

The most important and most expensive risk covered by protection and indemnity insurance is liability for loss of life, injury or illness, particularly injury or death to a crew member. P&I insurers offer their policyholders very high liability limits. The need for such a high limit was the original driving factor for the formation of the club.

Why do we see cases of P&I clubs refusing to defend and pay in cases involving injuries to crew members?

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A relatively recent example that perfectly illustrates how broad interpretations of crew member status can have the effect of denying them wages and dependent employer insurance is Larry Naquin, Sr. v. Elevating Boats, LLC, decided on March 10, 2014 by the US Court of Appeals for the Fifth Circuit in Louisiana (Texas).

The job title of the injured worker in this case was Ship Repair Supervisor. Supervise the maintenance and repair of floating elevators in the employer's fleet (mostly tied). About 70 percent of his working time is spent on ships, which are usually anchored in the shipyard's canals. His duties include inspection, cleaning, painting, replacement of defective or damaged parts, engine repair, occasional test runs and operation of ship's cranes and lifting legs. The remaining 30% of his time is spent in the factory in the shipyard or operating floor cranes. In other words, he was a ship repairer.

The plaintiff was injured while operating a floor crane. The cause of the overturning of the crane has not been determined. According to the tort principle of res ipsa locuitor, the defendant is liable for negligence – it is obvious that something went wrong and someone had to be at fault.

A jury in a federal district court trial found that a ship repairman had fulfilled seamanship for the crew of his employer's ship, a decision upheld by the 5th Circuit Court of Appeals. The decision presents a broad interpretation of the term "master or crew of any vessel," a definition taken from the language used for "seaman" in the Dock and Harbor Workers' Compensation Act.

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One (unintended) consequence of this decision was that the employer's P&I insurer refused to defend and indemnify based on the policy language.

"Subject to all other exclusions and terms of their policy, the Advocates agree to indemnify the insured for all amounts that the insured, as owner of the vessel, is obligated to pay and should pay."

During the period in which the document is in force, but only as a result of any other matter under this Agreement...”

An insurance company won summary judgment when a business owner sued the insurance company to enforce its coverage. The court held that there was no causation between the "ship owner" and the accident on land, and therefore there was no coverage under any protection and indemnity policy. The court held that the words "in my capacity as owner" and "any victim or event" should be read together. There must be some causal connection between the vessel and the injury, otherwise there is no P&I cover.

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Therefore, the employer did not insure against liability for its crew members who were injured during and within the scope of work.

This is not a surprising or unprecedented result, but it is a striking example and reminder of the limitations of coverage. As the definition of a seafarer or seafarer is interpreted more broadly, particularly to include an increasing number of shore-based workers, and exposure conditions change, policy language may need to be modified to reflect the policyholder's intentions and expectations.

It's safe to say that business owners/insurers (and brokers) are not happy with this turn of events. An employer lost a liability judgment against an employee who turned out to be a "crewman" in the broadest sense. Then, although his employer had taken out P&I insurance to cover his liability for the injured crew, there was no such cover for this accident.

Although the employer-employee relationship between the "owner" and the "crew" and events within and during the employment relationship are sufficient to provide sufficient causation for the application of P&I to transfer vicarious liability to the owner in the event of an employee's default, this is not always the case.

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John A. (Jack) Marton spent 27 years at the US Department of Labor's Office of Workers' Compensation Programs as Chief of the Insurance and Financial Management Division and Acting Director of the Terminal and Port Workers' Compensation Division. Jack joins the American Stock Underwriters Company. (AEU), one of the group companies, in 2006.

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