P&I insurance aspects of
contagious disease outbreak
or vessel quarantine
Like the outbreak of SARS (Severe Acute Respiratory
Syndrome) in March 2003, the recent escalation
of alert status by the World Health Organisation
following outbreaks of A/H1N1 swine influenza
in April 2009 has caused many vessel operators to
re-visit the age old issues of ships and disease.
This note briefly summarises many of the P&I
issues which may arise.
Loss Prevention and information
As always, prevention is better than facing claims.
Contagious diseases which lead to vessel quarantine
often spread so quickly that owners are best advised
to seek advice directly from current sources.
Globally, the most important source of information is
the World Health Organisation (WHO)www.who.int.
The WHO provides extensive information and
research about infectious outbreaks, as well as about
tropical and other diseases.
Also, and in North America in particular, the US
Centers for Disease Control provide valuable
information and links, www.cdc.gov. Other national
links of note are the UK Department of Health,
www.doh.gov.uk, the Japanese Ministry of Health,
Labour and Welfare www.mhlw.go.jp/english.
For the majority of Members, however, local port
agents must provide current advice, and owners must
appreciate that conditions may change on a daily basis
during a contagious disease outbreak or pandemic.
Owners should always follow health guidelines to
prevent the spread of illness and not recklessly
expose crew or spread disease.
APRIL 2009
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 treatment of sewage or waste water
or even require cancellation of port calls.
Potential losses of an owner
A list of potential losses includes:
• Liability for illness or death of crew;
• Cost of repatriating or substituting crew;
• Liability for illness or death of passengers;
• Vessel deviation costs;
• Additional running cost during prevention or
under actual quarantine;
• Fines;
• Delay or contamination related cargo claims;
• Loss of time or profit;
• Loss of a commercial fixture or other
consequential loss.
In an actual claim, Members will need to refer to
the Club’s Rules. However, in less technical terms,
the general position in respect of P&I cover for
each loss type follows.
Death or illness of crew
When crew become ill, or suspect they may be ill,
Members should seek medical advice. If treatment
is required, such as medicine or hospitalisation,
P&I cover responds.
Sadly, seamen may die aboard ship or ashore
following contraction of an infectious disease,
despite due care.
In these unfortunate circumstances, owners will
often have obligations under crew contracts or
possibly under common law to provide death
compensation. P&I insurance covers this liability.
Crew repatriation and
substitution costs
If crew need medical treatment, the Club will
indemnify necessary repatriation and substitution
costs. Repatriation costs may include additional
medical treatment at sea or on land, including the
costs of quarantine ashore before crew can return
home or join a vessel.
P&I will also cover the expense of medically qualified
transport escorts, such as a traveling nurses or doctors
where required.
Once again, the Club’s network of correspondents
is valuable in providing local assistance during crew
movements.
Passengers
P&I cover will respond to indemnify medical charges
incurred by passengers on board including precaution-
ary examinations, hospitalisation or medicine.
Passengers may additionally seek compensation from
the owner in some countries, claiming damages as
a result of illness suffered on board a ship, or in the
worse case there may be claims by the relative for
death of a passenger on board a ship. P&I cover
will respond to these legal liabilities of an owner.
Cruise and ferry operators are generally aware of
disease issues, and have in place routines for
contacting not only passengers on board a vessel,
but also those who may recently have been aboard,
or are scheduled to go aboard.
However, if a vessel is quarantined or cruises
cancelled, P&I cover does not extend to cover
prospective commercial losses. P&I cover generally
responds to liabilities to passengers on board the
vessel, or who have been on board.
Vessel deviation
A vessel may be forced to deviate from its intended
voyage in order to provide medical care to a crewman,
passenger or other person on board. The Club will
indemnify an owner’s net loss over and above
expenses that would otherwise have been incurred,
but limited to the cost of fuel, insurance, wages,
stores, provision and other necessary port charges.
As noted above, P&I does not cover commercial
losses arising from deviation, or where a port is
cancelled. Some cargo or passenger forwarding
costs, though, may fall within the scope of P&I.
Extra running costs – during
prevention or actual quarantine
Owners may incur additional running costs as a
result of a quarantine order or the need to carry
out disinfection following an outbreak of disease
on board. This is addressed by a specific Rule:
Quarantine expenses
Additional expenses incurred by the
Owner of an entered ship 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. [Rule 2, Section 16]
Where owners make commercial decisions to call
at a port which the owner knows will quarantine
the vessel, the costs may be viewed as routine
operation costs. Similarly, an owner may incur
additional running costs while taking routine
precautions. For example, an owner might delay a
ship one day to permit the crew to disinfect the
ship. This is generally a routine cost of operations.
Quarantine fines
It is theoretically possible for authorities to fine an
owner or individual crew for bringing a disease to
a port, or failing to comply with certain health
obligations in force in the port. P&I cover will
generally respond to these fines, absent recklessness
by the owner or intentional illegal calls at a
quarantined port.
SARS epidemic curve 2003, source WHO
Cargo related losses
Cargo related losses are less likely as a result of
quarantine. However, it is conceivable that an
owner faces 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 ship’s quarantine or closure of a
port.
Generally, under bill of lading terms and the
international bill of lading conventions such as the
Hague Visby rules, the owner has full defences to
delay claims. The rapid spread of disease leading
to quarantine would generally be a force majeure
event. It is an event beyond the owner’s control
and the owner should not be liable. However, in
an unusual event where an owner was held liable
for delay-related cargo losses, P&I cover will respond.
P&I however would not respond where the owner
intentionally breached quarantine or port closure
orders.
Depending on the type of cargo and type of
disease, cargo may be destroyed or be reduced 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.
In an extreme scenario where a port is totally closed
and cargo must be trans-shipped, P&I cover may
respond to the extent an owner is legally liable to
do so. Owners should immediately consult the
Club in these situations.
Loss of time or commercial
losses - limitation of P&I cover
P&I cover generally does not indemnify an owner
for loss of time or loss of hire. For example, P&I
cover does not indemnify an owner for lost hire
while a vessel is detained at a quarantine
anchorage, though P&I cover does respond to
additional running costs as outlined above.
Similarly, P&I cover does not indemnify owners
for commercial losses. For example, if a vessel is
detained due to quarantine and misses a lay/can
date for its next fixture, P&I does not indemnify
an owner for loss of profit or other commercial
losses.
Defence cover issuesrs
As a result of quarantine or closure of a port,
various commercial issues may arise. Owners
may wish to consult the Defence Club
www.ukdefence.com.
Some issues, for example, might arise about
whether a port is safe, or the rights of owners or
charterers to decide to cancel calling at a port.
Conclusion
If you have further questions about P&I cover,
please contact your Area Group, the Club’s People
Claims Department in London or your Regional
office.