Definition:Running down clause (RDC)
⛵ Running down clause (RDC) is a standard provision within hull and machinery insurance policies that extends coverage to include the shipowner's liability for damage caused to another vessel — or that vessel's cargo and freight — when the insured ship is involved in a collision. Without this clause, a hull policy would respond only to physical damage sustained by the insured vessel itself, leaving the owner personally exposed to potentially enormous third-party claims. The RDC has been a fixture of marine insurance practice since the nineteenth century, codified in London-market wordings through the Institute Time Clauses — Hulls and analogous forms used in Scandinavian, Asian, and other markets.
🔧 In operation, the RDC typically indemnifies the insured shipowner for a proportion — historically three-fourths — of the liability established against them following a collision with another ship. This three-fourths convention arose because the remaining one-fourth was traditionally covered by the shipowner's protection and indemnity (P&I) club, creating a dovetailing arrangement between hull underwriters and P&I mutuals. Some modern wordings, particularly in the Nordic Plan and certain Asian markets, offer four-fourths collision liability within the hull policy itself, eliminating the split. The clause responds only to ship-on-ship collisions; contact with fixed or floating objects such as quays, buoys, or offshore platforms falls outside the RDC and is instead addressed by separate fixed and floating objects provisions or P&I cover. Liability is usually apportioned based on the degree of fault assigned to each vessel, often determined through arbitration or court proceedings governed by the applicable collision regulations.
💡 The running down clause matters because collision liabilities in the maritime world can be staggering — a fully laden tanker or container vessel striking another ship may generate damage claims running into hundreds of millions of dollars, encompassing hull repair costs, cargo loss, pollution response, and consequential losses. The RDC ensures that hull underwriters share the burden alongside P&I clubs, which is critical for the financial stability of both the shipowner and the broader marine insurance market. For brokers and risk managers, verifying the scope and limit of the RDC relative to the vessel's P&I entry is a routine but essential part of structuring a marine programme, because any mismatch between the two layers of cover can leave a dangerous gap in the owner's protection.
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