Q. With reference to the Protection and Indemnity (P&I) club in the maritime industry, consider the following statements:
1.The primary function of a Protection and Indemnity (P&I) club is to offer liability coverage to shipowners and operators.
2.Engine breakdowns and mechanical failures of ships are covered by Protection and Indemnity (P&I) club.
3.International Group of P&I Clubs oversees and regulates Protection and Indemnity (P&I) clubs in the maritime sector.
Which of the statements given above are correct?
Explanation –
Statements 1 and 3 are correct. P&I clubs are mutual insurance associations owned and controlled by their members, who are typically shipowners and operators. P&I clubs provide an important source of protection and risk management for the shipping industry, covering risks that are not typically covered by standard insurance policies. P&I clubs provide liability insurance to shipowners and operators against risks such as damage to third parties, property damage, and pollution. The International Group of P&I Clubs is a collective of 13 P&I clubs that provides oversight and regulation to the sector.
Statement 2 is incorrect. P&I clubs typically do not cover engine breakdowns and mechanical failures of ships. Coverage under P&I insurance usually extends to third-party liabilities such as bodily injury, pollution, collision damage, and crew-related claims, but not to the physical damage or loss of the ship.
Recently, India is planning to create its own protection and indemnity (P&I) entity, the India Club, to provide insurance for ships in Indian waters thereby reducing reliance on global firms.
Source: Forum IAS
