An unprecedented challenge

Covid-19 was declared as a global pandemic by the World Health Organisation on 11th March 2020, with nations all over the world taking extreme measures to contain or delay the spread of the virus.

The Club is in close contact with its local correspondents on how the above measures are affecting shipping and is monitoring the situation as it develops. Any updates received will be published in the feed below. This is an incredibly fast-changing situation and Members are advised to check local current advice in the first instance. Conditions change on a daily basis during a contagious disease outbreak.

Owners should always follow health guidelines to prevent the spread of illness and not expose crew or spread disease. Loss prevention measures will vary by disease and may involve preventive vaccinations, vessel disinfections, limitations on crew or passenger shore leave, ability to obtain ship supplies, restrictions on the treatment of sewage or wastewater or even require cancellation of port calls. 

We have prepared the following FAQs to help guide Members on the most common questions asked regarding the impact of COVID-19 and the operation of Club cover.

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P&I cover responds to a Member's liability to pay damages or compensation for illness and death resulting from illness of any seaman including hospital, medical, funeral or other expenses necessarily incurred in relation to such illness or such death. Such liability will typically fall under the terms of an approved contract of employment or possibly under common law. If a serving crewmember falls ill or dies due to coronavirus, this would be treated in the same way as any other crew illness or death claim.

Members may have strict contractual obligations to crew which apply during service on board as well as travelling directly to and from the ship, during which crew may be exposed to COVID-19. The medical advice and governmental travel guidance will be relevant but the Club is generally sympathetic to reimbursement of a recently signed off crewmembers’ medical costs and sick wages for confirmed cases of COVID-19. Once repatriated, crewmembers should follow generally accepted WHO guidance on self-isolation or their national guidance in force at the time.

If none of the discharging crew are sick or exhibiting any symptoms and the requirement for quarantine of the crew either in a hotel or in a special facility is purely precautionary, the associated costs of keeping the crew in 'quarantine' - i.e. accommodation, travel and subsistence costs, crew wages, etc. would be considered as operational costs and not covered by P&I.

However, where a crewmember who is effectively in quarantine awaiting repatriation is taken ill or is injured or dies awaiting repatriation, it is likely that the crew contract and/or Collective Bargaining Agreement (CBA) will dictate that the Member is liable for the claim. In such circumstances, P&I cover will respond to that claim.

In the absence of an outbreak of infectious disease on board the entered ship, cover under the quarantine rule is not triggered. Consequently, the additional expenses incurred due to crewmembers being placed into quarantine on a precautionary basis are not recoverable.

However, in circumstances where healthy crew are required to be quarantined having disembarked from an infected ship, cover in respect of quarantine expenses under Rule 2 Section 16 would be available.

Regardless of the nature of the illness, it may be necessary for a ship to deviate from its intended voyage in order to obtain appropriate medical care for a sick crewmember on board. The net costs of the diversion in respect of fuel, insurance, wages, stores, provisions and port charges are covered under Rule 2 Section 7 to the extent that such costs exceed what would have been incurred regardless of the diversion.

Given the rapidly changing situation around the world, Members should contact the Managers in the first instance to obtain up to date information regarding possible restrictions at the intended port of disembarkation as port restrictions could affect the ability to disembark the crewmember and alternative arrangements may need to be made.

Under Rule 2 Section 16, the Club will indemnify the owner of an entered ship for the additional expenses incurred as a direct consequence of an outbreak of infectious disease on that ship, including quarantine and disinfection expenses and the net loss to the owner (over and above such expenses as would have been incurred but for the outbreak) in respect of the cost of fuel, insurance, wages, stores, provisions and port charges. Note that there has to be an outbreak on the ship in question in order for cover to apply.

If a ship is delayed off a port because of a suspicion of infection, or as a result of a routine restriction on ships arriving from certain ports, then cover is not triggered.

The Club will also reimburse quarantine and disinfection expenses when a vessel is required to comply with a quarantine order given by local or national authorities - but again, only if there is an outbreak of disease on the ship in question.

Claims for loss of time or loss of hire fall outside the scope of Club cover. If a vessel is detained due to a quarantine order and misses a laycan date for its next fixture, P&I will not indemnify an owner for loss of profit or other commercial losses.

No, provided safe manning levels for the ship are maintained in accordance with flag state requirements.

P&I cover will continue to respond to the Member’s legal liabilities towards crewmembers remaining on board with expired contracts in the usual manner until such time as they are off the ship and have been repatriated.

The Club covers Members’ legal liabilities to third parties only arising from or in connection with the operation of an entered ship. Superintendents or other office based personnel are not employed by the ship and would be considered as supernumeraries on board. Liability would only arise is if the ship was negligent in some way in causing their illness. If the ship was negligent in causing their illness, then Club cover would respond to that claim. However, provided all sensible precautions are taken it is unlikely the ship would be found responsible and any liabilities would therefore arise under their contracts of employment and would be covered by the employer/shoreside insurer of the personnel involved. 

Cargo related losses due to quarantine are unlikely. However, an owner could face a claim related to (i) delay in delivery or loading, (ii) loss of or reduction in value of cargo as a result of a quarantine order by competent authorities, or (iii) inability to deliver to a named port because of a vessel’s quarantine or closure of a port.

Generally, under bill of lading terms and international bill of lading conventions such as the Hague Visby rules, the owner has full defences to delay claims. An outbreak of an infectious disease leading to quarantine would generally be a force majeure event. It is an event beyond the owner’s control and therefore the owner should not be liable, but in the event of a ‘rogue’ decision, cover will respond.

Depending on the type of cargo and type of disease, cargo may be destroyed or may reduce in value. As with delay, an owner should have full defences to this type of claim. However, if the owner is found legally liable, P&I cover will respond.

Claims for loss of time or loss of hire fall outside the scope of Club cover. If a vessel is detained due to a quarantine order and misses a laycan date for its next fixture, P&I will not indemnify an owner for loss of profit or other commercial losses.