sister ship clause

Answer

The Sister Ship Clause is a standard legal and underwriting provision found in marine insurance policies (such as the Institute Time Clauses - Hulls).

It is designed to protect the shipowner in situations where a collision or salvage operation occurs between two vessels that belong to, or are chartered by, the same owner.

Under general maritime law (tort law), you cannot sue yourself.

If Ship A collides with Ship B, and both are owned by Company X:

• Normally, the hull underwriter paying for Ship B’s collision damage would attempt to recover funds from the "at-fault" vessel (Ship A) under third-party collision liability (the Running Down Clause / RDC).

• However, because both vessels are legally owned by the same entity, no legal action or liability claim can exist between them.

• Without a Sister Ship Clause, the insurer could deny coverage under the Running Down Clause (RDC) or Salvage clauses on the grounds that no legal liability between separate entities exists.

“So, the Sister Ship Clause is a marine insurance provision applicable when two ships involved in a collision or salvage operation are owned wholly or partly by the same owner. Since an owner cannot normally claim against himself, the clause provides that liability and compensation will be determined as if the vessels were separately owned. This enables the insured to recover under the relevant hull and collision liability cover.”