P&I Clubs Explained: How Marine Insurance Claims Work

Marine insurance is built on layers, and the P&I club sits at the heart of an owner's liability protection. Understanding how a club works — and how it differs from property cover — is essential before you ever need to file a marine insurance claim. This article explains the structure clearly and shows how claims actually move through the system.

What Is a P&I Club?

A protection and indemnity club is a mutual association of shipowners and charterers who pool their resources to cover third-party liabilities. Unlike a commercial insurer that seeks profit, a club is owned by its members and funded through "calls" — contributions set according to each member's tonnage, trade, and claims record. Most of the world's ocean-going tonnage is entered with clubs belonging to the International Group, which shares large losses through a pooling and reinsurance arrangement.

A P&I club typically covers liabilities that property insurance does not, including:

—Cargo loss and damage claims brought by cargo interests.

—Personal injury, illness, and death of crew or passengers.

—Collision liability not covered by the hull policy, plus wreck removal.

—Pollution, fines, stowaways, and quarantine expenses.

P&I vs Hull and Machinery

It helps to think of two distinct policies. Hull and machinery (H&M) insurance protects the owner's own asset — the ship itself — against physical damage from perils such as grounding, fire, or heavy weather. P&I, by contrast, protects the owner against legal liabilities to others. In a collision, the H&M policy pays for damage to your own vessel while the P&I club responds to claims from the other ship and any cargo or injury liabilities, so the two covers work together to leave no gap. Our advisers regularly help members coordinate both policies and obtain expert when an incident triggers cover under each.