Primary Elements of a Charterers’ Liability Insurance Contract

charterer's liability contract

Marine transport remains one of the lowest cost and safest means of transportation. However, this does not mean that this transport means is risk-free. There are different perils your cargo and the vessel you charter will be exposed to, which necessitate a charterers’ liability insurance cover. This insurance will meet the costs of anything untoward which might affect your voyage. The coverage is also a legal requirement for all charterers.

However, this does not mean signing just any contract a charterers’ liability insurance provider gives you and assuming everything that you need is covered. You need to assess your contract and understand what is precisely covered. This will require an understanding of the primary elements that will influence how much and what you can get in case of a loss. The following tidbits will help you understand the most critical elements of your charterers’ insurance cover contract:

Proposal and Acceptance

Your cover is based on a basic concept of proposal and acceptance. The coverage of your insurance will start on the acceptance date proposed by your insurer. If, for instance, the date proposed is the day you are to begin your voyage but then something happens to the ship at the dock before this date, then you will not get compensated. Signing the contract after understanding is the acceptance of the insurer’s proposal. The date of your contract’s start also marks the date your cover’s first premiums payment is effected.


discussing a contract with a lawyer

Your charterers’ liability cover is considered a contract of indemnity. This means that the insurer will compensate you only to the extent of the actual loss you suffer. If, for instance, you insure something for $100 but then suffer a $50 loss, your insurer will only pay you $50. A few elements might be covered for far less than they are worth in your charterers’ insurance. The prudent alternative, in this case, is to get an extension on your primary cover to guarantee that you will be compensated for something’s full amount in case it is lost or damaged.

Utmost Good Faith

Like all covers, marine insurance operates on a principle of maximum good faith. This means that you must disclose the details of all the goods you will be transporting accurately to the insurer when taking out a cover. Misrepresentation, misdescription, or non-disclosure of facts concerning your vessel or cargo, even if unintentional, will void your claim if anything happens during your voyage.

Subrogation Principle

Marine insurance policies work on the rule of subrogation. This arises if the insurer compensates you for any issues that have been caused by a third party. You can sue the party liable for your loss, but your insurer will recover the money that they have paid you from the settlement you get. This principle guarantees that you are not paid twice for the same loss.

There are more elements included in your charterers’ insurance contract which affect how you will benefit. However, the ones mentioned above have a significant impact on the outcome of your claim. Some insurers now have customised policies for charterers to cover specific issues, and you can get this for optimal coverage.

About Eleanor Sharp
Eleanor Sharp is the author of AGSE Law. As a paralegal, she has worked with attorneys in many fields to ensure their clients get the best advice and representation. She is passionate about helping people understand the complexities of the legal system so they can make better decisions for themselves. Eleanor loves reading, travel, and spending time with her family. She hopes her articles will help others navigate life’s legal intricacies with confidence.