In the maritime industry, disputes over contracts, freight payments, or charterparty agreements are common. These disputes can lead to costly litigation and operational delays, making Freight, Demurrage & Defense (FD&D) Insurance essential for shipowners and operators. FD&D coverage, often referred to as “legal expenses insurance,” provides shipowners with financial protection for legal costs arising from disputes related to their operations.
This blog explores FD&D insurance, its benefits, and why it is indispensable for modern shipping operations.
What is FD&D Insurance?
FD&D insurance offers coverage for legal costs and professional fees associated with disputes involving the ownership or operation of vessels. It is designed to cover claims that fall outside traditional marine policies like Hull & Machinery (H&M) or Protection & Indemnity (P&I) insurance.
The focus of FD&D is not to compensate for physical damages or third-party liabilities but to help shipowners and charterers resolve complex disputes without bearing the financial burden of legal proceedings.
What Does FD&D Insurance Cover?
1. Freight Disputes
- Disagreements over freight rates, non-payment, or incorrect invoicing.
- Short deliveries or disputes over cargo weight and quantity.
2. Charterparty Disputes
- Claims involving breach of contract between shipowners and charterers.
- Issues over early termination of charter agreements.
3. Demurrage and Detention Claims
- Disputes related to vessel delays in loading or unloading beyond agreed time limits.
- Claims involving demurrage (delays at port) and detention fees for delayed cargo release.
4. Bunker Supply and Service Disputes
- Legal conflicts over bunker fuel quality, non-delivery, or pricing.
- Issues with third-party service contracts for repairs or supplies.
5. Cargo Claims Defense
- Support with defending cargo loss or damage claims filed against the shipowner.
6. Breach of Regulatory Compliance
- Assistance with legal costs related to non-compliance with maritime laws and international regulations.