A Guide Comparing Protection and Indemnity (P&I) Clubs’ Freight, Demurrage, and Defence Cover
Given the volume of maritime disputes, legal costs can quickly become significant for shipowners. The purchase of freight, demurrage, and defence (FD&D) cover can, however, make the rebuttal or pursuit of a claim far less onerous.
We have published a guide to FD&D cover, comparing the different offerings from or associated with the International Group (IG) protection and indemnity (P&I) clubs.
When deciding whether to take FD&D cover and, if so, whether to consider one of the limited number of options available, shipowners and charterers should take account of the following factors:
- The importance of FD&D to each club in terms of service levels.
- Available limits, deductible structure, and flexibility.
- Extent of discretion granted to the managers.
- Differences in policy style (narrow terms or an “all risks” approach).
- Potential impact of individual club exclusions (for example, disputes involving crew members or claims under management agreements).
- Support available for matters affecting their interests.
The clubs’ approach to FD&D cover, however, can be quite different. The degree to which discretion is exercised in a member’s favor is key to knowing the scope of the cover purchased. In a sense, the provision of cover for every FD&D claim that incurs a cost is discretionary.
If FD&D cover is important to a shipowner and they also want quick, authoritative advice, finding out as much as possible about the cover on offer and how matters are handled should be an important factor when deciding where to place their business. Some owners/charterers use their FD&D cover more than their P&I.
Contact your Marsh JLT Specialty representative for advice and assistance in making the right choice for your FD&D cover.