Protection and Indemnity insurance, or as it is more commonly known - ‘P&I’, is the policy ship owners purchase to protect them against liability claims from crew, passengers and third parties. Liability claims include those such as collision, property damage, pollution, environmental damage and removal of wrecks.
The name dates back to the 1800s when ‘Protection Clubs’ were formed in order to cater for the liabilities imposed on ship owners by the British Merchant Shipping Act of 1854. The first Club to respond to these liabilities was the Shipowners’ Mutual Protection Society, conceived in 1855 (latterly the Britannia Steam Ship Insurance Association). For a period, separate Indemnity Clubs existed alongside Protection Clubs, offering insurance against the then novel risk of liability to cargo. However, in 1874 it was decided that the two would merge to create the form we recognise today.
The cover provided by Mutual P&I Clubs is continually evolving. From its origins as protection against collision liability, it now caters for a wide variety of people-related marine exposures and provides the deep pockets needed to ensure ships can trade in an environmentally sensitive world, where pollution and wreck removal are top of the agenda.
Seafarers today enjoy a standard of living unthinkable to previous generations, thanks to the willingness of P&I insurers to embrace the legislative changes brought about by the Maritime Labour Convention. The industry continues to evolve, with mutual P&I Clubs recently combining to provide security against the risk of unpaid crew wages. Those same minds are now engaged in deciding how best to protect club members against cyber risks.
Throughout time, one thing has remained constant: Insurance is provided on a mutual basis.
Next week we’ll delve further into what it means to be a mutual insurer.
FAQs
What is Principal and Interest (P&I)? The Principal and Interest (P&I) is combined which represents the total scheduled loan payment amount. Principal (P) is the amount of the original loan still owed to the financial institution along with the interest (I) that is being applied to that loan on a monthly basis.
What does P&I stand for? ›
In the mortgage world, P&I (principal and interest) means the payment required to repay a home loan in accordance with its terms. Together, P&I makes up the majority of your monthly mortgage payments early in the loan term.
What is the P&I insurance? ›
Protection and Indemnity (P&I) is a type of insurance that shipowners purchase to cover the potentially huge costs of any harm they accidentally cause to people, property and the environment.
Is P&I insurance mandatory? ›
P&I insurance is mandatory for all shipowners who use their vessel for commercial or transportation purposes and when carrying passengers, workers, or cargo across international waters.
What does P&I mean in marine insurance? ›
Protection and indemnity (P&I) insurance is liability insurance for practically all maritime liability risks associated with the operation of a vessel, other than that covered under a workers compensation policy and under the collision clause in a hull policy.
What is P&I in financial terms? ›
What is Principal and Interest (P&I)? The Principal and Interest (P&I) is combined which represents the total scheduled loan payment amount. Principal (P) is the amount of the original loan still owed to the financial institution along with the interest (I) that is being applied to that loan on a monthly basis.
What is a P&I payment example? ›
For example, if you borrow $100,000 at an APR of 5%, you'd pay a total of $5,000 per year in interest. At the beginning of your loan (when your principal is high), most of your monthly payment goes toward paying off interest.
What is not covered by P&I insurance? ›
Moral hazard: Liabilities due to the fraudulent non-delivery of cargo, especially deliveries of cargo that do not require an original bill of lading, are usually not covered by P&I insurance.
What is current P&I payment? ›
Basic Info
US Monthly P&I Payment is at a current level of 2291.00, up from 2204.00 last month and up from 2032.00 one year ago. This is a change of 3.95% from last month and 12.75% from one year ago. Report. Monthly Report on Housing Affordability.
What does annual P&I mean? ›
Principal + Interest payments
In a principal + interest loan, the principal (original amount borrowed) is divided into equal monthly amounts, and the interest (fee charged for borrowing) is calculated on the outstanding principal balance each month.
The current annual premium for P&I coverages: (1) Vessel Only - $250 with $25,000 deductible and $350 with $5,000 deductible, (2) Passengers - $50 per Passenger, and (3) Crew - $400 per crewperson with $25,000 deductible and $650 per crewperson with $5,000 deductible.
What happens if you can't get PI insurance? ›
What this means is that if you don't have professional indemnity insurance, the number of projects that you're able to work on is a lot more limited. If you're required to have professional indemnity insurance due to a contractual requirement, the contract will usually specify the minimum indemnity limit.
What is owner's P&I insurance? ›
Protection and Indemnity insurance, or as it is more commonly known - 'P&I', is the policy ship owners purchase to protect them against liability claims from crew, passengers and third parties. Liability claims include those such as collision, property damage, pollution, environmental damage and removal of wrecks.
What are the two main types of marine insurance? ›
The two types of marine insurance are marine cargo insurance and hull insurance.
Is PMI the same as P&I? ›
Borrower-paid PMI: The most common approach to private mortgage insurance is borrower-paid PMI, which simply bundles the insurance premium into your monthly payment. So, in addition to paying the cost of your P&I payment, along with homeowners insurance and property taxes, you'll include the PMI every month too.
What does protection and indemnity insurance cover liability for? ›
The most significant and costly exposure covered by P&I insurance is liability for loss of life, injury or illness, particularly the injury or death of crewmembers. P&I insurers cover their Assureds with very high limits of liability.
What is P and I in banking terms? ›
When you make a principal and interest (P&I) repayment, your repayment goes towards paying off your loan (otherwise known as the principal) as well as the interest on your loan. P&I repayments are calculated so you won't have an outstanding loan balance at the end of your loan term.
What is P&I in engineering? ›
A piping and instrumentation diagram, or P&ID, shows the piping and related components of a physical process flow. It's most commonly used in the engineering field.
What is the P&I of a term loan? ›
Principal & Interest
This refers to how your repayments are made; specifically, that over the term of the loan, repayments of the interest plus the reduction of the actual loan (principal) are made. Therefore over time, the loan is reduced to zero.
