Issue link: https://jocdigital.uberflip.com/i/1203273
Februar y 2020 | The Journal of Commerce 21 www.joc.com Breakbulk & Project Cargo Commentary charter may be scant. There may be additional challenges associated with a crew that may or may not be well trained on the vessel, with the ships' gear, or in handling project or other specialized cargoes. Modern ships are complex, and the crew may not have experience with or even be familiar with the ship's loading equipment, fire suppression equipment, etc. In some cases, the crew does not share a common lan- guage. For the insurer and the cargo owner or forwarder, the challenge is understanding how this might affect the venture, particularly regarding loading and unloading. The market lacks a source for tracking these gaps in information. Being able to do so would be of great help in making reasonable estimates of exposure to the risks associated with specific owners, vessel charterers, or ships. Charterer's insurance is a sleep- better-at-night cover to allow the project or the client to have funding to continue the adventure (best CHARTERERS' LEGAL LIABILITY insur- ance is extremely important from a project forwarder's perspective. What does it cover? Its intent is to cover the potential legal liabilities and costs of defending or reimbursing a ship's owner, cargo owner, or other damaged party for incidents during the charter period. While it can be purchased on an annual basis, the specifics of each charter contract entered into during that year will need to be declared to the policy and are normally reviewed by the under- writer, the attorney, or others with specific knowledge and experience regarding the engagement. Modern charter parties — the term used for contracts between vessel operators and cargo interests for shipping project or breakbulk cargo but also, confusingly, used for contracts between vessel operators who charter, or "rent," ships and the vessel owners — are complex documents. Both the original wording and the changes incorporated may be complex enough to require a legal degree to truly grasp, and these complexities of contract language are just the beginning. Normally, the contract is best protected by a proactive risk management plan — i.e., engineer- ing surveys, etc. — especially as it pertains to project cargoes. Addi- tionally, the insurance coverage can close gaps in other coverage that can be purchased for freight, demur- rage, defense, etc., to protect the charterer, whether the charterer is the forwarder, the client — i.e., the cargo owner — or another party. Although very important, uncovering any meaningful loss history related to the ship or the carrier is often a challenge. The ves- sel owner may not be forthcoming. With vessels frequently changing hands, historical information for the vessel operator in terms of management, ownership, and/or case), or to defend or seek indem- nification or fight a battle with the other parties due to an incident (worst case). Often, the charter legal liability provider can and will make recommendations, which when implemented can make the charter more balanced or encourage proactive risk management, adding a further layer of protection. Best case, it's a small cost to protect the business. Worst case, it saves the business by providing a backstop in the event the adventure falls apart. l Steven Weiss is senior vice president and chief underwriting officer at Munich Re Specialty Group. Contact him at Steven.Weiss@munichre.com. Insuring project cargo for chartering liability Steven Weiss Munich Re, Roanoke Insurance Group Shutterstock.com Although very important, uncovering any meaningful loss history related to a ship or carrier is oen a challenge.