Protection of Shipowners’ Liability Under United States Law and Marine Insurance Practice

Shipowners are exposed to a variety of risks that are, to a large extent, unique to maritime business. Because of factors like the recent increase in the size and value of ships, increase in marine traffic, enactment of legislation imposing new liabilities, and the tendency of courts to make huge awards to personal injury and death claims, shipowners are exposed to potential losses or claims worth millions of dollars in the event of disaster. These heavy risks led to the establishment of the marine insurance industry, as well as the enactment of legislation that limits shipowners’ liability. This legislation was designed not only to preserve the shipping industry for its valuable role in international commerce and trade, but also to encourage investment in and expansion of a strong merchant marine. This paper seeks to find the justification, if any, for the continued existence of this legislation limiting shipowners’ liability. This paper also seeks to resolve the confusion created by the courts’ inconsistent reasoning in their attempts to ensure adequate compensation for personal injury and death claimants, and to analyze the role that marine liability insurance plays in the protection of both shipowners and third party claimants