Answer
1. Insurance Certificates Onboard
Statutory Certificates of Financial Security (Flag State / State-Issued):
CLC Certificate: Oil pollution liability for ships carrying >2,000 tonnes of persistent oil in bulk (CLC 1992).
Bunker Convention Certificate (BCC): Bunker oil pollution liability for ships >1,000 GT (Bunker Convention 2001).
Nairobi Wreck Removal Certificate (WRC): Wreck marking, locating, and removal liabilities for ships >300 GT (Nairobi Convention 2007).
MLC Financial Security Certificates: Seafarer repatriation/abandonment (Reg 2.5) and contractual death/disability compensation (Reg 4.2) (MLC 2006).
PAL Certificate: Passenger death/injury liabilities (Athens Convention 2002).
Commercial Cover Certificates:
P&I Certificate of Entry: Proves cover for third-party liabilities (collision, cargo damage, crew injury, pollution).
Hull & Machinery (H&M) Certificate: Proves cover for physical damage to the ship’s hull, machinery, and equipment.
2. Is Insurance Compulsory?
Yes. Third-party liability insurance and environmental financial security are strict international statutory mandates. While Hull & Machinery (H&M) cover is commercially driven (mandated by lenders/mortgagors), carrying P&I and convention-backed financial security is mandatory to operate legally. Without valid certificates, a ship faces immediate Port State Control (PSC) detention, denial of port entry, or refusal of registry.
Exemption for State-Owned Vessels: Government-owned, non-commercial ships (e.g., naval auxiliaries, research vessels) are exempt from purchasing private commercial insurance. Instead, the Flag State issues statutory certificates based on an official State Undertaking/Declaration confirming that the government guarantees liability up to convention limits (CLC Art VII(12), Bunker Art 7(14), WRC Art 12(14), PAL Art 4bis(12)).
3. Why is Insurance Compulsory?
The main purpose is to make sure that adequate funds are available to meet the shipowner’s liability after a casualty.
It protects:
- pollution victims and coastal States,
- seafarers,
- passengers,
- cargo/interested parties where applicable,
- authorities undertaking wreck removal.
4. Where it is Mentioned (Statutory Framework)
The requirements are given mainly in:
International IMO/ILO Conventions:
CLC 1992: Article VII
Bunker Convention 2001: Article 7
Nairobi Wreck Removal Convention 2007: Article 12
MLC 2006 (2014 Amendments): Standards A2.5.2 & A4.2.1
SOLAS Chapter XI-1, Rule 5: Continuous Synopsis Record (CSR) tracking P&I details.
Indian National Legislation & Circulars:
Merchant Shipping Act, 2025: Incorporates compulsory financial security mandates into Indian law, making non-compliance grounds for detention.
MSN 05 of 2025 (DG Shipping): Explicitly mandates PSC verification of valid P&I certificates and statutory Blue Cards for vessels $\ge 300\text{ GT}$ entering Indian ports.