Type of Charterers

We compile tailor-made insurance packages for the following type of Charterers:

  • Companies operating a liner service

  • Companies transporting their own cargoes

  • Companies operating as freight contractor or ship operator

  • Companies offering a number of integrated services

Companies operating a liner service

Bookings are normally based on the shipping line’s own Bill of Lading and on a Liner Booking Note. In most cases, the contract used is a Time Charter Party.

What kind of liabilities do you face?

Since a liner company typically issues its own Bills of Lading, it takes on the role of carrier and, with it, certain responsibilities for the safe transport of the cargo. As a result, it is required to deal with all cargo claims, even if the claims may actually have been caused by an error in navigation or a fault with the vessel. In the case of a Time Charter Party, the company also takes responsibility for appointing stevedores and providing fuel, which exposes it to further irregularities. These include liability for damage to the vessel caused by fuel, for damage to the vessel or cargo caused by stevedores, and for any damage caused by an unsafe port or berth.

Example of a claim

Situation: A fully laden container ship with containers on deck ran into problems within port limits. The vessel capsized, leading to an extremely expensive salvage operation to rescue ship and cargo. Both the shipowner and the owner of the cargo decided to press claims against the time charterer for loss of the vessel, salvage expenses and cargo claims.

Outcome: The ship may have been damaged because it was berthed in an unsafe port. Most Charter Parties have a safe port or berth warranty, and if the ship was docked in an unsafe port in breach of that warranty, the charterer would be responsible for any resulting damage.

Companies transporting their own cargoes

Companies transporting their own cargoes typically include commodity traders and manufacturers who either deliver their commodities or goods to, or order their supplies from, overseas. In this case, it is quite possible that shipping is not the company’s main business and, while they may be aware of the need for marine cargo insurance that covers the loss of, or damage to, cargo, they may not be familiar with the liabilities they face by taking on the role of charterer. It is therefore extremely important that they receive advice from expert liability insurers before arranging cover through a Charterers’ Liability insurance.

What kind of liabilities do you face?

The main area of liability that a company transporting its own cargo is likely to face involves damage to the chartered vessel. This could be caused by stevedores during the loading or unloading of the cargo, by the cargo itself during transit, or by an unsafe berth or port. It is worth noting that under certain Charter Parties, a company will be liable for loss or damage caused by its own cargo, even if separate cargo has been taken out. Our Charterers’ Liability Insurance will cover these eventualities, ensuring you remain covered whatever role you play in the process of shipping and transportation.

Companies operating as freight contractor or ship operator

Freight contractors, ship operators and forwarding agents typically sell expertise in transport and logistics. Although they own neither the vessel nor the cargo, they have the skill to draw the two together. Typically, two shipping contracts will be drawn up, with the contractor or operator appearing as principal:

  • If Charter Parties or Booking Notes include a contracted CIF seller or an FOB buyer, the contractor or operator will be named as the disponent owner (i.e., as having control of the vessel without owning it)

  • On time charters and voyage charters, the contractor or operator will be named as the charterer

What kind of liabilities do you face?

Contractors or operators who work as charterers for a third party are inevitably exposed to a number of different liabilities, both to the shipowner, as the main charterer in a Charter Party, and to sub-charterers (CIF sellers and FOB buyers) as disponent owner. In most cases, these liabilities are not back-to-back. These liabilities are covered under a Charterers’ Liability Insurance.

Example of a claim

Situation: A general cargo vessel was loaded with Direct Reduced Iron (DRI), and the containers were not properly sealed. The DRI was exposed to seawater, which caused it to heat and led to the production of hydrogen gas. As a result, when the ship was out on the high seas, the hydrogen exploded and the ship sank.

Outcome: The shipowner brought a claim worth USD 20m against the voyage charterer for loss of the ship.

Companies offering a number of integrated services

What kind of liabilities do you face?

Because it is difficult to categorise companies that offer a range of different services, the risks and liabilities to which the company is exposed have to be assessed on an individual basis. Our Charterers’ Liability Insurance will be tailored to provide the company with comprehensive cover for all eventualities – even if the charterer is an NVOCC (non-vessel-owning common carrier) operator.

Example of a claim

Situation: A fully laden container ship sank on the high seas following a heavy explosion and fire.

Outcome: The shipowner believed that the explosion occurred in one of the storage containers, and claimed for the total value of the ship, worth USD 10m. The cargo owners also claimed for the total value of their cargo, worth USD 6m. Both these claims were brought against the NVOCC operator.