Page 36 - Insurance Times July 2021

provide a Salvage Guarantee before the goods and average expenses upto the discharge of the goods from
other interests are released and uninsured cargo- Ever Given.
owners would have to provide a Cash Deposit.
Y What are the insurance details of Ever Given?
Y What is a Salvage Guarantee and why is it The Ever Given is said to be insured in the Japanese
required? market for USD 137.7 million against hull and machinery
The law of salvage is a principle of maritime law damage. However, as of now Hull & Machinery damage
whereby any person who helps recover another person's of Ever Green appears uncertain. The cost of the
ship or cargo in peril at sea is entitled to a reward salvage operation is being borne by the hull and
commensurate with the value of the property salved, machinery and P & I Club insurer. But now that GA has
awarded by an Arbitrator appointed by Lloyd's. been declared the salvage expenses would have to be
shared by the cargo interests too.
Procedures following major maritime casualties are set
out in internationally recognized law and practices. The UK P&I Club - is the Protection and Indemnity
insurer for the Ever Given. The UK P&I Club is one of
A salvage guarantee can be provided by cargo and hull
insurers (like a General Average Guarantee). It the oldest P & I Clubs in the world. It provides P&I
insurance in respect of third party liabilities and
represents an amount which, under the terms of a
expenses, arising from owning ships or operating ships
salvage agreement, must be paid by each owner of the
as principals.
salved property to the satisfaction of the salvage
contractor or salvor. It is often arranged by an average The UK P&I Club will be required to cover all third - party
adjuster (in tandem with general average security and risks for damage caused to cargo during transit, risks of
is lodged with Lloyd's Salvage Department). Lloyds Open environmental damage and injuries.
Form (LOF) remains the most commonly used form of So far, there have been no reports of pollution, injuries,
salvage contract. or damage to the Ever Given's cargo.

Y What impact will the arrest have on General Y What are P & I Clubs?
Average procedures and the release of cargo? A Protection and Indemnity Club or P&I club is a non-
The Ever Given is a massive container ship. One governmental, non-profitable mutual or cooperative
possibility is that if, SCA were to give up some of its association of ship owners, operators, charterers and
leverage and releases the cargo but not the vessel, the seafarers under the member companies. It also provides
cargo insurers collectively can initiate a plan to compensation for any loss of life, environment and
discharge the Ever Given cargo at the nearest port, that property.
is, Port Said. A ship owner can face substantial monetary losses if his/
As the enormity of the volume of cargo stowed aboard her ship meets with an accident and there is damage
to the environment, cargo or to the vessel. Also, there
the Ever Given, will make the Port Said terminal
are risks to the lives of seafarers. Ship owners need to
insufficient, the discharging and trans loading of the
insure for all these third party claims. These claims could
cargo will have to be staggered. These expenses can
also be damage to the jetty, pollution from the ship or
be treated as General Average expenditure.
even the fines to the ship from authorities. P&I clubs
If the Ever Given cargo is transferred to another provide insurance to the ship owners for all these claims.
conveyance to complete the voyage the cargo interests Thus P & I insurance is a significant aspect of sailing.
have to execute a Non-Separation Agreement to the
P & I Insurance is taken in addition to Hull and
General Average Adjuster.
Machinery Insurance by vessels as they cover many risks
However, it is also possible that the goods are which are not covered by Hull & Machinery Insurance.
transferred to another vessel at the cost and expense
of the consignor/consignee and a fresh voyage is Y What is the Omnibus Rule under P & I Cover?
undertaken to the destination. This will help save on Experts have opined that it is likely that some liabilities
some portion of general average expenses as the arising out of the Suez Canal blockage may trigger the
consignor/consignee will only be liable for general Omnibus Rule under P & I Cover.

36 The Insurance Times, July 2021