Although there is no legal obligation in the shipping industry to take out any kind of insurance, P & I insurance (Protection & Indemnity) is absolutely necessary for the vessels used in a professional capacity. This insurance provides cover against liability, for example for  injury to crew and third parties, water pollution and cargo damage, but this insurance also covers collision damage and wreck removal costs exceeding the insured value of the ship. This is especially important for vessels with a relative low insured value. The maximum cover under the P & I insurance varies for each type of vessel from 10 million euros to about 4 billion dollars (for example for tankers).

Example 1: You receive cargo from an oceangoing vessel. During the loading, you do not notice any particulars, so you do not make any comment. Upon unloading, however, you are held liable for contamination of the cargo. The P & I insurance handles this matter and - if necessary - compensates the loss.

Example 2: During stormy weather, your ship sinks on the IJsselmeer. The ship is so badly damaged that it must be considered a total loss. The clean-up costs are € 250,000, whereas your relatively small freighter was insured for € 175,000. The P & I insurance bears the covered clean-up costs above € 175,000.

Example 3: Upon unloading, one of the stevedor's employees falls int the hold because the ladder moves away, and sustains injury.