Definition:Collision liability clause
⚓ Collision liability clause is a provision within a marine hull insurance policy that extends coverage to the shipowner's legal liability arising from a collision between the insured vessel and another vessel. Often referred to as the "Running Down Clause" (RDC) in traditional London market terminology, this clause bridges hull insurance and liability insurance by covering the insured's obligation to compensate the owner of the other vessel for physical damage sustained in the collision. Without this clause, a standard hull policy would only respond to damage to the insured's own ship, leaving the shipowner exposed to potentially catastrophic third-party claims.
🔧 Under most standard hull policy forms — including the Institute Time Clauses (Hulls) used widely in the London and international markets — the collision liability clause typically covers three-quarters of the insured's liability to the other vessel, with the remaining one-quarter traditionally covered by the shipowner's protection and indemnity (P&I) club. This three-quarters / one-quarter split is a long-standing market convention, though some policies can be negotiated to provide four-fourths collision liability coverage, eliminating the need for the P&I club to respond. The clause usually applies only to vessel-to-vessel collisions and typically excludes liability for cargo on the other vessel, personal injury, pollution, and damage to fixed or floating objects such as piers and buoys — those exposures fall within the domain of P&I coverage. Disputes over collision liability often involve complex questions of maritime law, apportionment of fault, and cross-liabilities, particularly in multi-vessel incidents.
🌊 The collision liability clause is one of the oldest and most structurally important features of marine insurance, reflecting the historical reality that vessel collisions generate both first-party damage and significant third-party exposure. Its continued relevance in modern marine underwriting highlights the distinctive way hull and liability risks interrelate in the maritime sector — a structure quite different from, say, property and casualty insurance on land, where first-party and third-party coverages are typically written on separate policies. For underwriters, the clause requires careful coordination with P&I clubs to avoid gaps or overlaps in coverage, and for shipowners, understanding the interplay between hull collision liability and P&I protection is essential to ensuring a seamless insurance program. As vessel sizes and values continue to grow, particularly in the container and LNG carrier segments, the financial stakes of collision incidents — and thus the importance of this clause — have escalated correspondingly.
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