Marine Insurance and Liability Claims Under Indonesias Maritime Law: A Comprehensive Guide

Indonesia, as the worlds largest archipelagic nation, has a vast and complex maritime industry. Given the high volume of maritime trade and shipping activities, marine insurance plays a crucial role in protecting shipowners, cargo owners, and other stakeholders from financial risks arising from accidents, natural disasters, or legal disputes. Understanding marine liability claims under Indonesias Maritime Law (Law No. 17 of 2008 on Shipping) is essential for mitigating losses and ensuring compliance with legal requirements.

This article provides a detailed overview of marine insurance and liability claims under Indonesian law, covering key aspects such as regulations, claim procedures, and legal responsibilities.

Marine insurance in Indonesia is primarily regulated under the following legal frameworks:

• Law No. 40 of 2014 on Insurance Governs general insurance, including marine insurance policies.

• Law No. 17 of 2008 on Shipping Covers liability aspects, including damages and compensation.

• Indonesian Commercial Code (KUHD) Provides fundamental regulations on insurance contracts.

• OJK (Financial Services Authority) Regulations Oversee insurance companies operating in Indonesia.

Under these laws, marine insurance policies must be registered with licensed Indonesian insurers and comply with local regulatory requirements.

Marine insurance covers various risks associated with maritime operations. The most common types include:

a. Hull and Machinery (H&M) Insurance
Protects shipowners against damage or loss of the vessels structure and machinery due to accidents, natural disasters, or collisions.

b. Protection and Indemnity (P&I) Insurance
Covers third-party liabilities, including crew injuries, pollution, and damage to cargo or other vessels. Indonesian shipping companies often obtain P&I coverage from P&I clubs or local insurers.

c. Cargo Insurance
Provides financial protection for goods transported via sea against loss or damage caused by external factors such as storms, theft, or accidents.

d. Freight Insurance
Covers the loss of expected freight revenue if the cargo is lost or damaged before reaching its destination.

e. War and Strike Insurance
Protects against risks arising from war, piracy, and labor strikes that could disrupt shipping activities.

a. Shipowners' Liability
Under Article 193 of Law No. 17 of 2008, shipowners are liable for damages arising from:

• Collisions with other vessels

• Oil spills and environmental damage

• Passenger and crew injuries

• Cargo loss due to negligence

b. Cargo Owners' Liability
Cargo owners may also be held responsible if they fail to declare hazardous goods, resulting in accidents or damages.

c. Carriers Liability
Shipping carriers are liable for damages to cargo unless they can prove force majeure (unforeseen natural events) or the fault of the cargo owner.

d. Liability Limits Under Indonesian Law
Indonesia applies the "limitation of liability" principle, allowing shipowners to cap their liability under specific conditions, as stated in Articles 331-332 of the Commercial Code and international maritime conventions Indonesia has ratified.

Filing a marine insurance claim involves several steps:

Step 1: Notification of Loss
Immediately report the incident to the insurance company and relevant authorities (e.g., the Indonesian Directorate General of Sea Transportation).

Step 2: Documentation and Evidence Submission
Prepare and submit supporting documents, including:

• Insurance policy details

• Bill of lading and cargo manifest

• Surveyors report

• Photos or videos of damages

• Witness statements

Step 3: Investigation and Claim Assessment
The insurer will conduct an investigation to verify the cause and extent of the loss. Independent marine surveyors may be appointed for damage assessment.

Step 4: Compensation Settlement
If the claim is approved, compensation will be disbursed based on the policy terms. If disputes arise, parties may opt for arbitration or court proceedings under Indonesian maritime law.

Some of the most frequent disputes in marine insurance cases in Indonesia include:

• Delayed claims processing by insurers

• Cargo damage responsibility disputes between carriers and cargo owners

• Non-disclosure of risks by policyholders leading to claim rejection

• Disagreements over liability caps in case of oil spills or collisions

Many of these disputes are resolved through mediation, arbitration, or litigation, depending on the severity and legal complexities involved.

To avoid financial losses and legal complications, consider the following best practices:

• Ensure comprehensive insurance coverage that meets industry standards

• Work with licensed and reputable insurers in Indonesia

• Maintain accurate shipping records and declare cargo details properly

• Regularly inspect vessels and cargo to minimize risks

• Consult legal experts on marine insurance policies and claims

Marine insurance and liability claims are essential aspects of Indonesias growing maritime industry. Understanding your legal rights and obligations under Indonesian maritime law can help shipowners, cargo owners, and insurers mitigate risks and ensure smooth operations.

For expert legal assistance in marine insurance claims and liability disputes, contact Prayogo Advocaten Law Firm your trusted partner in Indonesian maritime law.