INSURANCE
COMPULSORY INSURANCE OF SHIPOWNERS
Previously, there has been no strict legal requirement for shipowners to have insurance against third party liabilities. If a shipowner did not take out insurance, the third party would only recover damages if there were sufficient assets. This general rule was always subject to the ‘understanding’ that in respect of personal injury claims International Group clubs would not seek to rely on pay to be paid principles to avoid payment of damages claims.
EU DIRECTIVE
EU Directive 2009/20/EC requiring the compulsory insurance of ship owners should have been implemented by member states by 1 January 2012. The UK has not met this deadline. A draft Statutory Instrument was published on 16 March 2012 and the Department for Transport consultation period ended on 16 May 2012.
The Directive’s aims are to ensure better protection for victims and to help “eliminate substandard ships and make it possible to re-establish competition between operators”.
The Directive applies to ships of 300 gross tonnage or more but excludes “warships, auxiliary warships or other State owned or operated ships used for a non commercial public service”. In effect all commercially operated vessels over 300GT will now be subject to a requirement of compulsory insurance. This will include some larger workboats, tugs and supply vessels.
DRAFT STATUTORY INSTRUMENT Under the terms of the draft Statutory Instrument, a UK ship may not enter or leave a port in the UK or elsewhere unless it has insurance. In addition, a ship which is not a UK ship, may not enter or leave a UK port without insurance.
The International Group of P and I Clubs has already been working with member states to agree the format of the certificate and it appears that most member states will accept a certificate issued by International Group insurers as being compliant with the Directive.
Regulation 7 of the SI provides for criminal penalties for failure to comply. Shipowners are liable to a fine of up to £5000 in the Magistrates’ Court and an unlimited fine in the Crown Court. A Master faces a penalty of up to £5000 in the Magistrates’ Court.
SUMMARY
In conclusion, in many respects shipowners entered with International Group insurers will see little difference, but those operating smaller vessels, that have until now not been subject to compulsory insurance, will now have to make the necessary provisions to ensure they are compliant with the law.
Legal Update provided by... Andrew Jackson Solicitors
www.andrewjackson.co.uk
e = See enhanced entry online
Hull & Machinery and Protection and Indemnity insurance available with Henderson Insurance Brokers – full report available via the enhanced link below.
Henderson Insurance Brokers
www.hibl.co.uk
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