Charterer’s liability insurance: An evaluation of the charterer’s insurance options and recommendations

The charterer’s liability insurance as an insurance product is relatively new in practice, with the academic bibliography referring to it being considerably limited. Therefore, the primary aim of this work is to shed some light on the way this concept works and ascertain whether charterers are adeptly protected and represented within the insurance world, given their established liability exposure under time and voyage charters. In order for this aim to be achieved, firstly the charterer’s liabilities are identified and divided among those arising under time and voyage charters, either in contract, tort or statute. It follows an examination of the concept of charterer’s liability insurance protection and an evaluation of the three types of charterer’s insurance providers (i.e shipowners’ P&I Clubs, commercial mutual and fixed premium insurers). Also, a comparative analysis is carried out among twenty three different charterer’s liability covers and their scope is presented in-depth with practical examples of application provided through interviews by some charterers and their insurance representatives. The research finally concludes with the belief that charterers are sufficiently represented in the insurance world by the existing insurance providers, with a particular preference being shown over fixed premium insurers. It further establishes that even though the scope of charterer’s liability cover seems to protect charterers against the majority of risks they are exposed to, it does not suffice itself to answer to their overall liability, as it does not take into account certain main areas of their exposure. So, it is argued that charterer’s liability insurance can only work effectively when combined with additional layers of protection. Last, the evaluation of charterer’s cover concludes highlighting that the efficacy of charterer’s cover will be certainly challenged when new liabilities emerge in near future referring particularly to bunkers, cyber-security and “smart shipping”