Maritime Glossary
P&I Club
Also known as: Protection and Indemnity Club, P&I
A P&I Club is a Protection and Indemnity Club, a mutual insurance association owned by its shipowner members that covers third-party liabilities not handled by ordinary hull insurance — such as injury to crew, cargo claims, pollution and collision liability.
Full Definition
A Protection and Indemnity Club is a mutual insurer that covers the wide range of third-party liabilities a shipowner or operator can incur, which fall outside the scope of the hull and machinery insurance that protects the ship itself. Where hull insurance pays for damage to the owner's own vessel, P&I cover responds when the ship's operation causes loss or harm to others. The clubs are not commercial insurance companies but mutual associations owned by their shipowner members, who are both the insured and, collectively, the insurers: members contribute calls to a common fund from which claims are paid, and if claims are heavy in a year further calls may be levied.
The liabilities a P&I Club covers are broad and central to the risks of running ships. They include injury, illness and death of crew, passengers and other people; loss of or damage to cargo carried; pollution from oil or other substances, which can involve enormous sums; liabilities arising from collisions and damage to docks, buoys and other property; wreck removal; fines; and the costs of stowaways, diversion and repatriation. Because these exposures can be very large, particularly for pollution, the clubs share the biggest claims among themselves through the International Group of P&I Clubs, a pooling and reinsurance arrangement that gives members access to very high limits of cover.
P&I cover is effectively essential to trade: ports, charterers and regulators commonly require evidence of it, and certificates of insurance issued by the clubs are needed to satisfy international liability conventions, for example on oil pollution and on liability for wreck removal and bunker spills. Beyond paying claims, the clubs provide their members with expert advice, loss-prevention guidance and support in handling incidents around the world through networks of correspondents. The mutual, member-owned structure aligns the interests of the clubs and their members in avoiding claims, making P&I an important pillar of the financial and legal framework within which ships operate.