WHY P&I? by Marty Hamblen
Posted on 06/20/2012 at 12:00 am by EC Moran Insurance Company
Viewed 5,606 times
By Marty Hamblen
International Special Risks, Inc & Maine Lobsterman’s Insurance Group
Insurance agents & fishermen alike often ask me what P&I is and why should they have it? P&I stands for Protection and Indemnity. The initial idea of P&I is to protect the ship owner’s interests against claims from third parties and to indemnify him in case the ship owner is liable to compensate for third party losses. P&I coverage offers you as owner/captain protection for property damage and bodily injury that you become liable for.
What the heck does that mean? I think the best way to illustrate what P&I does for you as a lobsterboat owner is to give some examples of real claims and the resulting costs. I’ve changed these a little due to the confidentially, but here are some really GOOD reasons to make sure that you have P&I coverage on your lobsterboat insurance policy. Your insurance agent can help you to figure out what the best coverage is for your unique situation. You can have P&I coverage on just your boat; your boat and crew; your boat, crew and even yourself as captain. There are different limits available from $100,000 to $500,000. In some instances we’ve written $1,000,000 in coverage. There are deductibles involved as well, which your agent can inform you of.
#1 Sternman reaches for the mooring line with the gaff, it snaps back & hits him in the face knocking out his two front teeth. Is that all it did? No, not really. He hit himself so hard he cracked his upper teeth above the gum line and broke his upper jaw. Total cost in medical bills - $35,000+.
#2 Captain has never had P&I but receives a letter from a lawyer who is representing a former sternman claiming that he suffered a back injury while in the captain’s employ. The captain needs to retain a lawyer who is well versed in admiralty law simply to defend him. Since there aren’t very many of them they are quite expensive. If the captain had had P&I coverage when the alleged injury occurred his defense costs would have been covered up to the limit of his P&I coverage. Total legal costs to the captain are unknown at this time.
#3 Many people on Vinalhaven get sick from handling bait that is tainted with MRSA. Total cost to the fishermen in medical bills is unknown.
#4 Boat breaks loose from her mooring during a storm and lands under a dock in the harbor damaging numerous pilings, decking, railings, ramps and a float. P&I would have paid for the damages to the dock (up to the P&I limit on the policy) with the captain only being responsible for the $1000 property damage deductible.
#5 Sternman is unloading for the day on the lobster car and slips, breaking his leg in 3 places. Total in medical bills - $16,000+.
#6 A lobsterboat steaming into the harbor runs up on top of a lobster car, damaging the car and many traps, all of which belonged to someone else. Total in damages is over $20,000
#7 Sternman fell overboard. He was held overnight in the hospital for observation where he contracted pneumonia. Total in medical bills was approximately $6500
Accidents happen. That is why we have insurance. You need to protect your assets and P&I is one of the least expensive ways to do that. Don’t put your boat, home, family land, savings, kid’s college funds and your retirement funds at risk for the sake of a low annual premium. This is yet another way to protect our traditional way of life – insure it!