07.12.2018

Certificate of insurance on board does not guarantee payments

The payment or recovery of insurance compensation  in connection with crew member's accidental or injury death on board the vessel may be denied  if the vessel  does not have a collective agreement providing for such compensations, and also if the individual contract of employment does not reflect the related obligation of the employer.  The courts decision on the suit of  Mrs. Vidanova, the wife of the seafarer who died on board the  Sea Champion (Russian-flagged), leads to the above mentioned conclusions.

Her husband died from carbon monoxide poisoning on board the vessel The Vladivostok-based insurance company Soglasie, the underwriter of the shipowner's civil liability towards seafarers, denied Mrs Vidanova to pay the insured amount. Considering it illegal, the woman went to court. The Court acknowledged her demands and awarded to recover RUR 1,905,900 from the  insurance company Soglasie.

Representatives of the insurance company did not agree with this decision  and filed the appeal. They referred to the fact that the terms of the contract provide for the civil liability of the shipowner towards the crew members in case of injury or death as a result of the injury, and not their life and health, which already applies to personal insurance. That is, the contract allegedly does not provide for insurance payments in case of gas poisoning.

After reviewing the case papers and analyzing the terms of the insurance policy, the court reversed the decision.  Article 60 of the Merchant Shipping Code does oblige the shipowner to insure the life and health of crew members, nevertheless the court decided this fact was not relevant to the case in point, since the defendant is an insurance company and the claim for payment is based on the certificate of  insurance which had been concluded earlier.

There were no evidence that the seafarers'  life and health insurance contract between the company "Soglasie", the shipowner  "TRANCO-DV" or the charterer "Grand Shipping" had been concluded. In fact, the existing contract provides  for payments in case of injury death only.

The court also found no evidence that in such case the owner or the charterer are obliged to pay compensation to heirs. n board the vessel there was no collective agreement  that provided for it. As for the seaman's contract of employment, there were no provision concerning the payment of death compensation to heirs in it:  the exact amounts  of insurance payments were not stipulated there.

Also, the Court of Appeal acknowledged as wrong the conclusions that the liability of the shipowner towards the crew members is mandatory, and Mrs. Vidanova has the right to claim for compensation payment from the insurer itself.

Clause 4 , Article 3 of Law of the Russian Federation of November 27, 1992 On the Organization of Insurance in the Russian Federation establishes that the terms  and procedures for the compulsory insurance are determined by federal laws.  In the Russian Federation there is no such law that establishes the obligation to insure liability of shipowners towards crew members and stipulates minimum rates of insurance  payments.

This case makes it clear, that the rights of seafarers working on vessels without a collective agreement are not protected, and insurance certificates without a specific amount specified in them do not provide payments to the heirs of dead  seamen, says Nikolai Sukhanov,  Chairman of the SUR FETO.  Nevertheless, with the assistance of our lawyer, we secured through the court action  the seafarer's  wife with the compensation for moral harm in the amount of RUR 3,000,000.


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