What risks are covered by protection and indemnity insurance?

Protection and indemnity (P&I) insurance is a form of liability insurance designed to protect shipowners against legal liabilities arising from the operation of their vessels that are not covered by standard hull insurance policies.12

These insurance policies typically cover the following risks:

• Cargo damage: Liability for loss or damage to goods being transported.12
• Personal injury: Liability for injuries sustained by passengers or crew members.12
• Fixed objects: Damage caused to piers, bridges, and other stationary structures.1
• Collision liability: Coverage for the portion of liability for damage to other vessels that is often excluded from basic hull policies (historically 25 percent).1

P&I insurance originated in the 19th century when shipowners formed mutual associations, known as "P. and I. Clubs," to collectively insure against these expanding operational risks. Today, this coverage is essential for the shipping industry, as it provides a necessary safety net for liabilities that might otherwise discourage carriers from engaging in trade.1