Asuransi Kapal

6 Things About Protection and Indemnity (P&I) Insurance that You Need to Know

Liga Asuransi – Awesome congregation of readers. A major maritime disaster just occurred at the end of March 2021 in Egypt. A giant cargo ship EVER GIVEN ran aground in the Suez Canal for six days, disrupting around a quarter of world trade. 

This accident proves that the risks in the shipping business are relatively high. Therefore as insurance broker and insurance consultants who focus on marine risks, we urge our clients to always insure their ships with maximum guarantees. 

One of the insurance guarantees required by the shipping industry (marines) is Protection and Indemnity insurance or abbreviated as P&I. A more complete explanation of P&I can be read in the following section.

If you are interested in this article, please share it with your colleagues so that they also understand like you. 

  1. What is P&I?

Protection and Indemnity (P&I) insurance is a type of insurance specifically designed to meet the insurance needs for special risks in the maritime industry. The guarantee covers almost all risks of legal responsibility (third party liability) in the maritime industry. Risks associated with owning and operating a ship, including risks to third parties for damage caused to the ship’s cargo (cargo) during transit, risks of environmental damage such as oil spills and pollution, war, and political risks.

  1. A brief history of P&I insurance

The history of P&I insurance began in the 19th century in London, England. At that time, ship owners and ship charterers looked for insurance for their ships because the cargo owner could already be guaranteed insurance by the insurance company. 

On the other hand, ship owners and ship charterers do not get guarantees from insurance companies. They are worried because they could make a mistake that causes damage and loss of goods and they are sued by the owner of the goods, therefore they are also looking for alternative insurance coverage that can compensate for the losses experienced by the owner of the goods. 

In the 19th century, insurance companies were reluctant to provide coverage for the risk of legal liability for cargo. To overcome this condition, the shipowners finally formed a shipowners’ association, known as the P&I Club. 

As shipping volumes continued to increase in the second half of the 19th century, so did the number of insurance claims, particularly those relating to collisions and claims resulting from claims from third parties. 

At that time, if there is a claim from the owner of the goods, the ship’s crew will request compensation from their employer, the ship owner. In addition, the rules of the Lord Campbell Act of 1846 appeared which allowed the heirs of the ship’s crew or the heirs of passengers who died on board to request responsibility from the ship’s owner. This is of course very burdensome for the ship owner.

To overcome the growing risks and inadequate insurance coverage, the first Protection and Indemnity Club (P&I) was formed in 1885, called the Shipowners’ Mutual Protection Society, which was later named P&I Club Britannia. 

The purpose of forming this club was to guarantee claims and responsibility for loss of life and personal injury, as well as collision risks which were not guaranteed or excluded from marine insurance policies (hull and cargo) at that time. After this first P&I Club ran successfully, several other clubs emerged. 20 years later, clubs began to provide extra compensation protection for ship owners, since then this association has been called the P&I Club.   

There is no P&I guarantee request form that is the same and generally accepted, the underwriter or guarantor will evaluate and adjust the coverage of each request based on the nature and character of the risk, and the amount of insurance desired.

  1. What does P&I insurance cover?

The main purpose of P&I insurance is to provide protection to policyholders against claims of personal injury, illness and death from crew members, passengers, and so on. P&I insurance also covers things like:

  • Lawsuits resulting from collisions
  • Shipwreck removal
  • Passenger care and repatriation
  • Damage or loss of ship cargo 
  • Damage to fixed or floating objects at sea (fixed and floating objects)
  • Obligations and responsibilities resulting from pollution or oil spills
  • Obligations based on towing the vessel in accordance with the contract 

The above guarantees do not include risks covered in workers’ compensation insurance policies or in marine hull insurance coverage due to collisions.

  1. P&I Club worldwide

P&I Club originally came from London, England, but now the concept has spread to various shipping areas throughout the world. Currently, many clubs are thriving in: England, Bermuda, China, Japan, Norway, Singapore, Sweden, United Arab Emirates, United States and South Korea.

  1. P&I Club International 

There are currently thirteen major P&I Clubs that have joined the P&I Club International Group. They join together to provide P&I insurance capacity for approximately 90% of vessels worldwide.  As members of the group, each member remains an independent, not-for-profit mutual insurance association, sharing the risk for large loss exposures, as well as sharing their respective knowledge and expertise regarding maritime legal responsibilities.

  1. How do I get a P&I guarantee in Indonesia?

In contrast to marine hull insurance coverage, P&I insurance is not marketed through insurance companies but P&I is marketed through P&I club offices or their representatives. Unfortunately the office is overseas. 

Especially in Indonesia, the best way to get P&I guarantees is to use company services insurance broker which has cooperation with P&I club. They have access to various P&I Clubs in the world 

One of the insurance brokers who is experienced in the field of P&I insurance is L&G Insurance Broker. To guarantee your ship’s P&I, contact L&G now!

For shipping insurance on your goods, contact L&G now!


24 JAM L&G HOTLINE: 0811-8507-773 (CALL – WHATSAPP – SMS)




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