INSURANCE LAW Coursework Example | Topics and Well Written Essays - 5000 words

INSURANCE LAW - Coursework Example ..... ts pursuant to which shares are proportioned among members to provide coverage of the management’s expenses and contemplated claims that will likely arise. Pagonis explains: In theory, the clubs pass back to the shipowners the benefit of a good underwriting year through reduced or returned premiums. In practice, the shipowners are usually asked to pay â€Å"back calls† in order to cover expenses and claims that were not foreseen in the budget.12 The primary purpose of P&I Clubs is to provide indemnity insurance as opposed to liability insurance. Even so, shipowners join P&I Clubs primarily to provide insurance in a variety of risks that are not provided for by virtue of H&M insurance policies.13 Shipowners join P&I clubs based on the â€Å"principle of mutuality – the joint, shared or reciprocal protection against losses.†14 Since P&I Clubs are by their nature not conventional insurance providers, but rather indemnity and protection organizations, there is some doubt as to whether or not maritime insurance actions can be applied against P&I Clubs. In The Alloborgia, the House of Lords ruled that P&I Clubs can be applied to the Third Parties Act but could only be applied in terms of indemnity relative to risks covered.15 P&I Clubs function under their own regulatory framework which governs the members’ relationships and the relationship between the club and the members and are generally viewed as a core part of the applicable insurance policy. For this reason, direct actions against P&I Clubs are prescribed by reference to specific statutory terms.16 Moreover, direct action against P&I Clubs are subject to the tortfeasor’s â€Å"status† as â€Å"member of the Club† and the Club’s rules as well as the clauses contained in the insurance policy.17 P&I Clubs will