Liability and DTH Cover for Charterers & Traders

To Owners:

Arising from contractual responsibilities under a charterparty contract.

To Third Parties:

For liabilities which may arise in contract or in tort.

Cargo

It is common for a charterer to be responsible for loading and stowing cargo. If loss or damage occurs because of poor stowage, the charterer could be liable. In addition, the Inter-Club Agreement which is often contractually incorporated into the most frequently used dry cargo charter party form (NYPE) can apportion cargo liabilities to a charterer.

Cargo claims can also arise from incorrect or insufficient cargo tank or hold cleaning instructions given to owners, or the condition of the cargo pre shipment. Charterers are often exposed in both circumstances.

Traders can face similar, but also differing liabilities, stemming from their capacity as cargo owners. Again, the risks are extensive and the exposure can be significant.

Pollution

A Charterer may be required to indemnify an owner if pollution results from something for which the charterer is responsible, such as pollution following an unsafe port incident for example. Additionally, an increasing number of states, including Australia and some US coastal states, allow claims to be made directly against the owner of any oil that is spilled, as well as against the charterer of the ship from which the oil is spilled.

People

Charterers may be legally or financially responsible for loading, stowing and discharging cargo. As a result, in some circumstances, could be liable for death or injury of any person engaged in cargo handling whether this is the stevedore, ship’s crew or another person.

An indemnity claim against charterers could also arise in the event of poor stowage resulting in personal injury or death.

Fines

Fines can be imposed by a number of different authorities for many different reasons, including fines arising out of cargo shortage or damage claims, non-compliance with cargo related regulations and similarly in respect of pollution incidents. These can be issued directly to a charterer or form part of an indemnity claim by owners or sub-charterers.

General Averages & Salvage

Charterers may be required to contribute proportionally in general average (GA) and to salvage claims based on the value of their bunkers on board and freight at risk. On large ships, the value of bunkers can be considerable. Likewise, traders who own the cargo may face significant exposures in GA and salvage situations. Depending on the value of cargo involved, the contribution could exceed that of the owners.

Wreck Removal (DTH)

A charterer could be liable for the costs of removing a shipwreck as a result of instructing a ship to an unsafe port or berth in breach of their charterparty obligations.

Fixed & Floating Objects

If a ship damages a fixed or floating object such as a berth or buoy, the liability to rectify this damage will generally fall to owners in the first instance. However, if the damage resulted from a breach of a charterparty “safe port/berth” warranty, the owners may be able to bring a recovery claim against their charterers.

Costs

Significant costs and expenses can be incurred when investigating any incident or claim. Liability insurance for charterers and traders can cover these costs as well as costs incurred in defending claims or pursuing indemnities for covered risks, subject to the terms of entry and policy deductibles.