Charterers Liability Cover / DTH Cover

The point of issue in the court case of “OCEAN VICTORY” is whether the charterers were in breach of the safe port warranty stipulated as one of their obligations in a charter party.

In the court findings of the above case there was no breach by the charterers of the warranty, however, it can be said that charterers are always exposed to those risks of contractual liability as per a charter party, a contract of affreightment, etc. in addition to the same risks as are usually insured by owners. The scope of charterers liabilities encompasses a broad range of loss or damages to cargo, property, pollution, hull and the like, and which may results in considerable compensation sometimes.

In preparation for such wide risks for charterers as above a Special Cover for Charterers (“Charterers Liability Cover”), which provides a cover for P&I risks, a cover for Damage to Hull (“DTH Cover”), etc., is available.

Cases of “Charterers Liability Cover” and “DTH Cover”

- on P&I risks -

1. Owners, having indemnified cargo interests for their damages, may take a recourse action against charterers in accordance with the terms of standard charter party. As a result charterers assume some degree of responsibility for the loss or damage to cargo.

2. Owners made compensation to shipper due to a claim thought to be unreasonable for damage to cargo when discharged at a port designated by charterers. As a result of an arbitration between the two parties concerned the charterers were adjudicated to indemnify the owners in respect of their expenditure for compensation on the ground that the cargo damage/compensation therefor were caused by allocation of the owners vessel to the port designated.

   - on Damage to Hull risks -

3. The bottom of a vessel was partly damaged by contact to the sea bed of the berth designated to use by charterers and repair costs were incurred to her owners. Since the cause of the damage was due to insufficient dredging of the sea bed. The charterers compensated the repair costs.
4. Some cargo dropped into the vessel’s hold, causing a damage to the hold through rough handling of the cargo during cargo operation made by stevedores who were arranged by charterers. The charterers compensated the costs for repair to the damaged hold.

In the light of those risks as illustrated above and different varieties of likely cases any of which may well questions the liability of charterers members are respectfully advised to take out the Charterers Liability Cover, providing a P&I risks cover and a DTH cover.