The origin of this policy came about in the early 1800’s as a result of changes in hull policies (physical damage to the vessel). Marine underwriters instituted a clause in the hull policy, which limited their losses by collision to three-fourths of the shipowners collision liability. Believing shipowners would be more careful if held liable for one-fourth of the damages, this limitation, which came to be known as the British three-fourths running down clause, led to the formation of shipowners associations for the purpose of mutually insuring their exposure. These associations were known as Protection & Indemnity (P&I) clubs and as members, shipowners were able to pool their losses left uncovered by the hull policies. Over time these P&I clubs have grown to represent approximately 95 percent of the world’s maritime P&I insurance. In the USA however, most P&I is purchased from insurance companies.
Modern typical P&I policies provide for loss due to injury, illness and loss of life (normally defined broadly enough to provide damages required under maintenance and cure, Jones Act, and general maritime law) to which the Insured is legally obligated to pay. P&I also extends benefits for hospital and medical expenses incurred by the Insured beyond those he is legally obligated to pay as well as, repatriation and other medically necessary transportation expenses; damage to other vessels caused by collision or other non-collision losses such as the dropping of cargo on the deck of the vessel or forcing another vessel aground; damage to property other than vessels; wreckage removal; damage to cargo; fines and penalties; expenses related to the prosecution of mutiny or misconduct; quarantine expenses and defense costs.
Crew cover, loosely and informally explained is an extension of the P&I to cover the liability of a vessel owner/operator to the crew, similar to the way that Workers’ Compensation covers employees in non-marine environments. Specific wordings are in each policy to define the Insurer’s intent regarding the coverage of Captains and/or crew and should be consulted in all cases.