Which type of marine insurance would cover oil spill liabilities?

• A. P & I Insurance
• B. Hull Insurance
• C. Cargo Insurance
• D. War Risk Insurance

Answer: (A)

Oil spill liabilities are a third-party liability arising from ship operations, including environmental cleanup costs, fines, and claims from those affected. Protection and Indemnity (P&I) insurance is specifically designed to cover these kinds of liabilities for ship operators, functioning as the mutual coverage that handles pollution claims and related costs, as well as other third-party liabilities and defense costs.

Hull insurance covers damage to the vessel itself, not third-party liabilities. Cargo insurance covers loss or damage to goods aboard the ship. War risk insurance covers damage from acts of war or piracy, not routine environmental spills. Therefore, P&I insurance is the coverage that would handle oil spill liabilities.