FD&D Insurance (Freight, Demurrage & Defence) is a specialized form of legal cost insurance for charterers and shipowners, designed to bridge gaps in traditional marine covers like P&I or Hull & Machinery (H&M). Since its mutual-class launch in the mid-1980s, FD&D has evolved into a cornerstone of marine legal cover, offering members expert guidance and funding for the FD&D claim process—from early advice through arbitration or litigation—without insuring the principal sum in dispute.
Why FD&D Insurance Matters
Maritime operations routinely spark contractual and commercial disputes—from unpaid hire and laytime conflicts to disagreements over vessel repairs or fuel supplies. Such issues can gravely affect cash flow and stakeholder relations. FD&D Insurance steps in to fund the legal and expert costs of pursuing or defending these disputes, ensuring members can enforce their rights without bearing the full burden of arbitration fees, lawyer fees, or expert opinions.
Scope of Cover
FD&D provides financial protection for legal expenses arising in a wide array of shipping-related disputes, including:
Charterparty disputes (laytime, demurrage, hire and off-hire claims)
Bills of lading and contracts of affreightment
Vessel building, sale, purchase, and repair conflicts
Towage, salvage, pilotage, and bunkering claims
Agent, stevedore, or supplier disagreements
Crew contracts and employment matters
General average recovery and salvage contributions
Customs or port authority disputes
Official investigations and inquests
By focusing on legal process funding rather than the disputed amount itself, FD&D ensures swift, cost-effective resolution of critical commercial disputes.
Claims Handling & Legal Support
Most FD&D insurers—typically P&I Clubs—operate in-house teams of maritime lawyers across jurisdictions (UK, Sweden, Hong Kong, Greece). This integrated model guarantees:
Proactive advice on charterparty clauses before a dispute
Oversight of external counsel when specialist expertise is required
Cost-efficient strategies emphasizing negotiation and mediation
Transparent case management to keep the FD&D claim process predictable
Such hands-on service not only accelerates outcomes but also preserves commercial relationships.
Deductibles, Limits & Club Discretion
As a secondary cover, FD&D activates only when P&I or H&M doesn’t apply. Clubs maintain a discretionary approach, typically requiring:
Notification within 6 months of the dispute
Merit assessment before approval
Initial deductible (e.g., first $12,000 by member)
Excess deductible (e.g., 25% on costs over $250,000)
Cover cap (commonly $5 million per dispute)
Thanks to in-house efficiency, most cases never reach external counsel or high expense levels.
FD&D vs. P&I vs. H&M: At a Glance
| Feature | FD&D Insurance | P&I Insurance | Hull & Machinery (H&M) |
|---|---|---|---|
| What’s Covered | Legal costs & expert fees for disputes outside P&I/H&M scope | Third-party liabilities (pollution, injury, cargo) | Physical damage to vessel & machinery |
| Disputed Sum | Not covered (only costs) | Indemnifies claims up to policy limits | Indemnifies repair/replacement costs |
| Primary Benefit | Legal cost insurance for charterers | Liability protection | Hull/engine risk protection |
| Claims Handling | In-house maritime lawyers; discretionary | In-house claims handlers; mutual calls | Surveyors & repair oversight |
| Deductibles | Fixed + percentage on high costs | Varies by club & region | Varies by vessel age & type |
| Typical Use Case | Charterparty & contract disputes | Crew injury, pollution, cargo damage | Groundings, collisions, machinery failure |
FD&D Insurance is a strategic layer of marine legal cover, empowering shipowners and charterers to manage commercial disputes confidently. By financing the FD&D claim process and providing expert legal support, it safeguards cash flow and preserves operational stability—even in complex, high-stakes disagreements.
Need Expert Support with FD&D Disputes?
At Arctic Pandi, we blend deep maritime expertise with cost-effective claim handling to protect your business interests.
Personalized legal guidance
Rapid, mediation-focused resolutions
Transparent, predictable cost structures
Global network of maritime law specialists
What does FD&D Insurance cover?
FD&D covers legal and expert costs in maritime disputes like charterparty conflicts or vessel repairs—not the actual disputed sums.
Is FD&D the same as P&I Insurance?
No. FD&D covers legal costs in disputes, while P&I covers third-party liabilities such as injury, pollution, or cargo damage.
Who needs FD&D Insurance?
Charterers and shipowners who want to defend or pursue legal claims without bearing full arbitration and lawyer fees.
