Nautical Term: Freight, demurrage, and defence
Definition of Freight, demurrage, and defence
Freight, demurrage, and defense refers to a specific class of insurance coverage offered by Protection and Indemnity (P&I) clubs. This insurance coverage is designed to help a shipowner manage the legal costs associated with various claims arising from the operation of the ship.
For example, consider a cargo ship carrying timber from South America to Europe. During the voyage, a sudden storm causes the ship to list, and as a result, some of the timber cargo shifts and causes damage to the ship’s structure.
Once the ship arrives at its destination, the shipowner may receive a claim from the cargo insurer for the value of the damaged timber cargo. Additionally, the shipowner may also face a claim from the port authorities for the cost of repairing any damage caused to the port infrastructure during the storm.
In this scenario, the shipowner would be able to call upon their Freight, demurrage, and defense insurance coverage to help manage the legal costs associated with both the cargo insurer’s claim and the port authorities’ claim. By providing this essential coverage, the Protection and Indemnity (P&I) club helps ensure that shipowners are
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