P&I: crew injury, unseaworthiness and the collision liability overlap
A bulk carrier insured for P&I (standard mutual cover) and H&M collides with a fishing vessel in fog. Two crew members are seriously injured; one later dies. The collision investigation finds the bulk carrier was proceeding at excessive speed in fog and that the vessel's radar was defective and unrepaired for three weeks, despite the master's written report. The fishing vessel is 40% to blame. The P&I club has received: (i) a crew injury claim of USD 1.2 million; (ii) a death claim of USD 900,000; (iii) the fishing vessel's collision damage claim of USD 2.5 million (of which the bulk carrier's 60% share is USD 1.5 million); and (iv) a wreck-removal demand for the fishing vessel of USD 600,000. The H&M policy has a collision liability clause (RDC) with a 3/4 limit.
1. Allocate each head of claim between H&M (RDC) and P&I, showing which policy responds and why.
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(i) Crew injury 1.2m and (ii) death 0.9m: these are P&I liabilities (crew injury/illness and death) - P&I responds in full subject to policy limits. (iii) Collision damage 2.5m: the bulk carrier's 60% share is 1.5m. Under the RDC the H&M insurer pays 3/4 of that liability (1.125m) and P&I pays the remaining 1/4 (0.375m). (iv) Wreck removal 0.6m: generally P&I (wreck removal/liability) unless the H&M policy includes a specific wreck-removal extension; under standard mutual cover P&I responds. Total P&I exposure: 1.2 + 0.9 + 0.375 + 0.6 = 3.075m; H&M RDC: 1.125m. Note the RDC limit and any single-claim deductible.
2. The club argues the unseaworthiness bars or reduces cover. Assess the strength of that defence and the underwriting implications.
Read the worked answer
Unseaworthiness is a defence only where the assured (usually the shipowner, with privity) knew or ought to have known of the defect and failed to act. Here the master's written report of the defective radar three weeks before the collision gives the owner constructive, arguably actual, knowledge. If the owner failed to repair, the club may argue breach of the seaworthiness warranty/condition and reduce or deny cover for the collision liabilities. However, P&I cover for crew injury is often subject to mandatory or statutory protections (e.g. MLC, national law) that may override contractual defences. The underwriter should: (a) request the master's report and repair records; (b) consider whether the failure was a systemic maintenance issue; (c) assess the owner's ISM/safety-management record; and (d) price or impose a warranty for radar maintenance going forward. The defence is strongest for the collision/wreck heads and weakest for statutory crew claims.