A.4 Expansion of liabilities
Hull cover traditionally left Owners exposed to one quarter, or (as it is idiosyncratically expressed in the marine insurance sector) 1/4th, of their collision liability and also their liabilities in excess of the sum insured. Similarly, liability for personal injury and death of crew was not covered. To meet this exposure, Protection & Indemnity mutuals were developed.
In the early decades of P&I, with only limited regulation, it was easy enough for a carrier to exclude all liabilities. With increasing emigration to the US, Australia and New Zealand, and increasing global trade, came increased regulation. As regulation became more sophisticated, liabilities increased and the ability to exclude them diminished.
In 1846 the UK the Fatal Accident Act enabled dependants to claim for the death of relatives caused by the negligence of shipowners.
In 1870 it was held that the Owners of the “Westenhope”, which sank off South Africa, following a geographical deviation, were unable to rely on the contractual exceptions and limitations and, as a result, were liable for the full value of the cargo that had been lost with the ship.
In 1893 the US adopted the Harter Act regulating liability for cargo loss and damage, and, following peace in Europe in 1918, the International Maritime Committee (CMI) met at The Hague in 1922 and set out a framework for regulating cargo liabilities. These were adopted then as a convention in 1924 to become the Hague Rules. With the European empires still stretching around the globe, the Hague Rules applied almost universally.
International conventions and landmark cases in the U.S.A. dramatically increased the carrier’s liability for crew, passengers, longshoremen and others who board the ships.
Liability for oil pollution increased from virtually zero to such an extent as to become almost uninsurable. P&I cover had traditionally been unlimited but, in the light of this development, the International Group of P&I Clubs (the Group) introduced a limit of USD 1 billion (see comments under 6.2.2).