Obligation for a Marine Insurance in Europe

Written by Daphne Smaling

Since January 1st 2012 some European countries (including the Netherlands, Malta, Denmark and Spain) have enforced the European directive on the insurance of shipowners for maritime claims. This European directive obliges ships sailing under a flag of one of the Member States of the European Union, or ships entering a port under the jurisdiction of one of the Member States of the European Union, to carry a certificate of insurance on board the ship. Based on this directive, Member States may choose to also apply this directive to ships operating in their territorial waters (however: the Netherlands did not choose to, in the Netherlands ships are only obliged having a certificate of insurance when entering a port).

The obligation of ships to have an insurance, and to carry a certificate of insurance on board,  serves three purposes; to protect victims of maritime activities, to eliminate substandard ships and to re-establish the competition between operators. Having a certificate of insurance on board when entering a Member States’ port is obligatory to ships of 300 gross tonnage or more. However, warships, auxiliary warships or other State owned or operated ships used for a non commercial public service are excluded from this obligation.

According to the Dutch legislator compliance to this directive will not bring much costs. Usually ships of 300 gross tonnage or more already have an insurance for maritime claims and in case of inspection, the certificate of insurance is not the only document which needs to be shown. Therefore, if the certificate of insurance is kept with the other documents, the shipowner will not be facing extra costs.

There are a few requirements the insurance must at least meet. The insurance has to cover, for each ship per incident, the maximum amount for maritime claims subject to limitation under the Convention on Limitation of Liability for Maritime Claims of 1976 as amended in 1996 (LLMC). The maximum amount differs per ship (e.g. the tonnage of the ship) and per incident (e.g. loss of life). The certificate of insurance must be issued in one of the three languages; English, French or Spanish. If the certificate of insurance is issued in another language, the certificate must be translated in one of these three languages. Furthermore, it is required that the certificate of insurance provides information on the ship, on the shipowner, on the insurance and on the insurance company.

Not complying to the obligation of having an insurance certificate on board may have serious consequences. The directive obliges the Member States to check the insurance when inspecting the ship. In case the certificate of insurance is not carried on board, the Member State may detain the vessel if safety issues are at stake or the competent authority of a Member State may issue an expulsion order to the ship. This shall be notified to the European Commission, to the other Member States and the flag State concerned. The ship will then be refused entry to any of the ports of the European Union Member States until the shipowner gives notice of the certificate of insurance.

Finally, if your ship flies an EU Member States’ flag, it might be that this Member State has taken additional measures to make sure your ship has the required insurance certificate. The individual Member State is free in choosing penalties for non-compliance, provided that the penalty shall be effective, proportionate and dissuasive.

If you would like more information or if you need advice concerning the European directive on the insurance of shipowners for maritime claims BANNING can assist you. You can contact Daphne Smaling at BANNING advocaten (d.smaling@banning.nl).