P&I insurance: what it covers and how it relates to marine liability and H&M

Last reviewed: 2 September 2026

Protection and Indemnity (P&I) insurance covers specified liabilities, costs and expenses arising from the operation of a vessel. Its primary purpose is not to insure physical damage to the vessel itself: that is the role of Hull & Machinery (H&M). Nor is P&I interchangeable with every form of marine liability policy. The three covers can work together, but the boundary depends on the assured, the operation, the entered vessel, the cause of loss and the agreed wording.

P&I, marine liability and H&M compared

Cover	Main interest	Examples that may fall within it	Decisive question
P&I	Liabilities connected with operating the entered vessel	Crew, passengers, cargo, pollution, wreck removal and certain collision or third-party property liabilities	Is the claim included in the rules or terms of entry and does it arise in the insured capacity?
H&M	Physical value of the insured hull, machinery and equipment	Fire, grounding, collision, contact, machinery damage or total loss, subject to the wording	Did insured physical damage arise from a covered peril and are warranties, maintenance, value and deductible satisfied?
Marine liability	Liability of a particular business or operator	Marinas, shipyards, repairers, terminals, contractors or service providers	Are the activity, contract, property in custody and event declared and insured?

This is a guide, not a coverage determination. A policy label alone does not decide whether a claim is recoverable.

What P&I insurance actually is

P&I is marine liability insurance. It has traditionally been arranged through mutual clubs, where shipowner and charterer members share risks and receive claims, loss-prevention and legal support. Commercial fixed-premium P&I solutions are also available.

The International Group of P&I Clubs currently comprises twelve mutual clubs and covers a substantial share of the world’s ocean-going tonnage. Club entry—or a policy carrying the P&I name—does not cover every liability. The club rules or policy wording, certificate of entry, limits, deductibles, exclusions and extensions define the protection.

The Skuld P&I Rules 2026, for example, state that only agreed risks arising directly from operating the entered vessel in the declared capacity are covered. P&I should therefore not be described as “all-risks liability insurance”.

What P&I may cover

Depending on the agreed terms, P&I may respond to liabilities, costs or expenses involving:

• injury, illness or death of crew;

• passengers and other persons carried on board;

• cargo loss, damage, shortage or certain cargo responsibilities;

• oil or other pollution;

• compulsory wreck removal where covered;

• damage to docks, cranes and other fixed or floating objects;

• collision liability not allocated to H&M;

• life salvage, repatriation or crew substitution in defined circumstances;

• insurable fines expressly included;

• defence and legal costs linked to a covered claim and handled in accordance with the terms.

These heads of cover are not automatic or identical in every entry. Contractual liabilities, undeclared trades, particular cargoes, fines, war risks or deliberate conduct may be excluded or require prior approval or additional insurance.

How P&I differs from Hull & Machinery

A useful starting point is to separate the asset from the liability:

• H&M looks first to the vessel itself: hull, engines, auxiliary machinery and insured equipment.

• P&I looks first to liabilities owed to other people or interests: crew, passengers, cargo interests, authorities, the environment or other property owners.

The division is not absolute. One collision can engage both policies. Damage to the entered vessel may fall under H&M; liability for the other vessel may be divided between H&M and P&I under the hull clauses; pollution, crew injury or wreck removal may be considered under P&I.

There is no universal split. Certain Institute Time Clauses place a proportion of collision liability in H&M and leave the balance to P&I, while other hull wordings take a different approach. Gard’s analysis of the H&M–P&I interface explains why a claims handler must read both contracts.

How P&I differs from general or specialist marine liability

“Marine liability” describes a broad class of covers, not one standard wording. It may protect a marina for liabilities arising from its facilities, a shipyard for specified work, a repairer for consequential damage, or a contractor for its services.

P&I usually centres on liabilities arising from the operation of the entered vessel by an owner, operator or charterer in the insured capacity. A company operating a vessel while also running a terminal, repairing third-party vessels or providing shoreside services may need P&I for the ship and separate marine liability insurance for its land-based operations.

Our guide to marina, shipyard and repairer liabilities illustrates how custody, defective work, lifting, subcontractors and pollution can require a programme distinct from the shipowner’s P&I.

Example: one collision, several policies

Suppose a vessel hits another ship while manoeuvring, suffers its own damage, releases fuel and injures a crew member.

1. Damage to the entered vessel: review H&M, including causation, deductible, value, warranties and exclusions.

2. Damage to the other vessel: check how collision liability is allocated between H&M and P&I.

3. Damage to the berth: this may fall to P&I or H&M depending on the fixed and floating object wording.

4. Pollution and clean-up: consider P&I alongside the relevant law and certificates.

5. Crew injury: review P&I, the employment contract, applicable law and compulsory regimes.

6. Loss of income: this is not automatically H&M or P&I and may require Loss of Hire insurance.

Notifying only one insurer can delay coordination. Where covers may overlap, notify the broker and relevant markets promptly, preserve evidence and avoid admitting liability before the facts are assessed.

Mutual club or fixed-premium P&I?

Point	Mutual club	Fixed premium
Structure	Member association governed by club rules	Contract with a commercial insurer
Cost	May use calls and other mutual mechanisms	Agreed premium for the period, subject to policy terms
Service	Extensive correspondent, claims, prevention and legal networks	Service and network depend on insurer and product
Limits and scope	Terms of entry, pooling and reinsurance where applicable	Express limits and conditions in the policy
Suitability	Depends on vessel type, trade, tonnage, contracts and exposure	Depends on appetite, required limits and risk profile

Neither structure is always superior. A proper comparison considers financial strength, rules, limits, potential supplementary calls, deductibles, casualty network, required financial guarantees and compatibility with H&M.

Spanish and European framework

Spain’s Maritime Navigation Act 14/2014 addresses maritime liabilities, limitation and marine insurance. At EU level, Directive 2009/20/EC requires shipowners of relevant vessels of 300 gross tonnage or more to maintain insurance for maritime claims up to the applicable LLMC 1996 limits.

That does not make any P&I entry sufficient for every compulsory requirement. Pollution, passengers, wreck removal and other operations may be subject to separate conventions, certificates or financial-security rules. Flag, tonnage, trade, ports of call and activity must be checked.

Information needed for an accurate quotation

Prepare the following before seeking P&I terms:

• the assured’s identity and capacity: owner, manager, operator or charterer;

• vessel particulars, flag, tonnage, class, age and certificates;

• operation, trading areas, ports, cargoes and contracts of carriage;

• crew numbers, nationalities and employment terms;

• required liability limits and certificates;

• at least five years of claims experience;

• H&M policy, insured value and collision-liability clause;

• material contracts, indemnities and ancillary activities;

• safety, maintenance and operational-management arrangements.

Consistency between this information, the P&I entry and H&M placement matters as much as price.

Frequently asked questions

Does P&I cover damage to the insured vessel?

Generally, that is not its primary role. Physical damage to the vessel is considered under H&M. The same casualty may generate separate costs or liabilities that fall for consideration under P&I.

Are P&I and marine liability the same thing?

P&I is specialist liability cover associated with vessel operations. Marine liability is broader and can also cover marinas, shipyards, repairers, terminals and contractors.

Do I need P&I if I already have H&M?

H&M primarily protects the physical asset and only responds to specified liabilities where the wording provides. A commercial shipowner commonly coordinates it with P&I for operational liabilities outside H&M.

Does P&I always cover pollution, cargo and crew?

Never assume it does. Agreed risks, limits, exclusions, contracts, certificates and notification requirements must be reviewed.

Can a charterer buy P&I?

Yes. Charterers’ liability covers exist, but the charterer’s exposures and wording are not identical to an owner’s entry.

Building a programme without gaps or duplication

An effective marine programme is not three policies purchased in isolation. The vessel, insured interest, operator’s capacity, contracts, limits and liability-allocation clauses must align.

Nautilux Marine Broker can compare your P&I insurance, Hull & Machinery cover and marine liability insurance. If an incident has already occurred, see our marine claims service.

*General information only. It is not legal advice and does not confirm cover. Liability and recovery depend on the facts, applicable law and complete terms of each contract.*