Ever Given owner facing more than $3bn in liability claims
The recently re-floated Ever Given could well exceed its liability insurance limits - with claims likely to exceed the $3bn of cover already in place.
The vessel’s liability insurance is part of a traditional arrangement with the International Group of P&I Clubs which give liability coverage for an estimated 90% of the world’s at-sea shipping operations.
Considering costs per day to the shipping and business community globally have been estimated as exceeding $9bn for every day delays have continued, additional claims for massive losses are fully expected.
Losses are likely to be claimed by more than 200 ships that were delayed in the canal as a result of the week-long crisis. This is on top to the claims that will need to be settled by the cargo owners.
In a recent statement, the U.K. P&I Club that insured the owner of Ever Given for certain claims, said that the vessel itself, along with the cargo, are insured separately. “While the UK Club is unable to comment on any confidential insurance or potential claim details, all valid claims will be considered by the vessel owner, the UK Club and its legal advisers in due course. Currently, the UK Club’s focus is to work with all relevant parties to facilitate a safe conclusion to this incident.”
Industry executives also said that plaintiffs’ attorneys for other ships and their cargo are expected to seek coverage wherever possible.
According to recent reports, cargo issues look set to increase the claims significantly because they result in delayed manufacturing, loss of retailer stock, spoiled goods that have a limited shelf life and spring merchandise not reaching stores in time.
Future cargo trips are also impacted as delayed ships miss their deadlines for unloading, reloading and embarking on their next voyage. Indeed, some ships may even end up filing claims with both Ever Given’s insurance and their own insurers as well as Shoei Kisen Kaisha LTD - the stricken ship’s owners.
Reports suggest that most of the insured cargos that are delayed, consist of commodities, including steel, coal, grains and rice which were held up on their journey from South East Asia. The crisis has caused additional suffering to businesses already badly hurt from the COVID-19 pandemic.
Further claims could also be made through policies taken out by cargo owners and other ship owners, as under industry practice, cargo owners can purchase their own coverage to protect their interests rather than relying on the ship owner to provide it.
As it stands, a standard cargo policy only pays out for damage or loss of goods, not delay costs, and a large number of cargo owners don’t provide their own insurances to cover delays.
Ever Given policies
Current reports suggest that there is $3.1bn in liability in place for the Ever Given. This is a pooling arrangement spread across 13 P&I Clubs which cover claims of up to $100m.
Above and beyond that reinsurance becomes active, and an additional $1bn covers environmental crises such as oil and pollution accidents. An estimated 20 of the 25 biggest global reinsurer companies support the Ever Given coverage.
According to John Miklus, president of the American Institute of Marine Underwriters, a trade association of U.S. marine insurers, “There will be a lot of litigation.”
He said, “I can’t predict how successful they would be, but it isn’t much different from many liability situations: You try to recover from the party that is at fault, the party that caused the incident.”