Protection and Indemnity Insurance is a very unique type of insurance offered to ship owners. It has certain characteristics that are not found in any insurance policies in the market today.

Protection and Indemnity Insurance Clubs (PI Clubs)

All insurance policies are offered by insurance companies in every country – except for PI Insurance. Protection and Indemnity Insurance is offered by PI Clubs which is basically an association of ship owners. For decades, this setting has been accepted by ship owners and has become a global standard for this type of insurance.

As a club or association, certain policies are not created to control the policy holder. PI Clubs limited terms and conditions but this is to the advantage of the policy holder. Most of the insurance company’s look for loopholes to deny claim while PI limits their laws so that members who needs assistance could apply for claim as soon as possible.

The downside of this is the abuse of some of its members. Since it has no limitations, club members could ask for financial assistance even for any reason. However the PI Club administrators still have the right to deny based on the moral conditions and conflicts with other insurance claims.

State Laws as Basis for PI Clubs

Even thought PI Clubs doesn’t have any strong terms and conditions, PI Clubs will still deny claim to policy holders if they transgress state laws. PI Clubs are made of ship owners and they don’t want to create laws that could be bias for those who are in the higher position. To prevent biases from happening, PI Clubs based their laws and provisions on the state where the accident happens.

These state laws complement the simple terms and conditions of PI Clubs. Whenever something happens and a claim is made, the PI Club review the state laws to determine if the policy holder has the right to claim. This eases up the responsibility of the PI Clubs in creating terms and conditions for the policy holders. This will also hasten the release of funds to the policy holder or deny its claim whenever a discrepancy is made.

Insurance Broker Not Recommended

An insurance broker is very ideal in most insurance policies. The insurance broker will recommend what company to work with and what type of insurance to take. The insurance broker will also help in reviewing the terms and conditions of the insurance policy so that enough coverage would be taken.

However, selecting the right Protection and Indemnity Insurance is very easy. PI Clubs are present in every country and they are usually separated based on the type of cargo or service the boat offers. Ship owners are practically joining an association which is also an insurance provider.

The insurance broker may not be able to help in some ways since there are no insurance providers to select in the first place. Instead ship owners are grouped based on their business so the ship owner knows which group he will belong even before applying for club membership. The insurance broker may help review the terms and conditions and nothing else.