What is a 3/4th Collision Liability?
- Wednesday, June 2, 2010, 22:07
- Hull & Machinery, Hull & Machinery (H&M), Protection & Indemnity (P&I)
- 10 comments
Assume that both vessels in an example collision are insured for 3/4th collision liability with their hull underwriters and for 1/4th with their P&I Clubs. In the example vessel A is 75% to blame for the collision and vessel B is 25% to blame. Vessel A suffers damage costing $100,000 and vessel B damage costing $200,000. The payments by each underwriter are illustrated below.
In most maritime jurisdictions, the question of responsibility for collisions is determined with reference to the International Regulations for the Prevention of Collisions at Sea, which codify how vessels should conduct themselves in order to avoid collisions. The apportionment of liability between the vessels is normally based on the causative importance of any breaches of these regulations.
|Vessel A||Vessel B|
|Percent to blame||75%||25%|
|Liability to other vessel||$150,000(75%x$200,000)||$25,000(25%x$100,000)|
|Net settlement||$125,000 paid to B|
|U/Ws pay||$112,500(3/4x$150,000||$18,750(3/4x $25,000)|
|P&I pays||$37,500(1/4x $150.000)||6,250(1/4x $25,000)|
Thus each collision liability underwriter reimburses its share of each vessels gross liability to the other vessel.
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