Freight Demurrage & Defence (FD&D)
The FD&D class was developed to meet an increasing need for legal assistance in disputes relating to a vessel but falling outside the scope of the traditional marine insurance classes.
The Swedish Club has offered FD&D cover since 1984 and like P&I, FD&D is a mutual class and is available to both Owners and Charterers. There has never been any supplementary call levied on the FD&D class.
FD&D cover is usually provided in conjunction with P&I insurance. It provides an important insurance supplement to the member in case of disputes. About half of the Club’s P&I members also have FD&D cover with the Club.
What is the value to FD&D members?
FD&D insurance provides cover for the legal and associated costs incurred in disputes arising in connection with the owning and operating of the entered vessel. The disputed sum itself is not insured.
The Club does not reimburse the amount in dispute but covers the costs incurred in recovering the amount in dispute from the defaulting party. Costs include legal fees but may also include, for example, surveyor’s and expert’s fees incurred either in bringing or defending a claim.
FD&D insurance is a secondary cover so FD&D provides assistance only if the dispute in question falls outside the scope of the other insurances in place, such as P&I or H&M.
A member enjoys access to legal support from the FD&D lawyers who work in the Club’s offices and are qualified in a number of jurisdictions including England and Wales, Hong Kong, Greece and Sweden. A member covered for FD&D has direct access to the Club’s FD&D lawyers for advice and assistance even if no dispute has arisen.
If external lawyers need to be instructed, the Club’s philosophy is to appoint individuals rather than firms, in order to obtain the particular expertise required. Even where external lawyers are instructed, the Club still manages the case.
Disputes under charterparties are the most common, but cover is provided also in relation to other types of dispute.
Deductibles and limits
The Club must be notified of any dispute within 6 months. Claims must merit support for cover to be provided. For that reason, the Club’s support remains discretionary throughout.
Costs are covered where the Club has agreed to them being incurred. An initial deductible of USD 12,000 applies to such costs. However, for costs incurred in excess of USD 250,000 a further deductible of 25% applies.
An upper limit of USD 5 million applies to the costs that can be incurred in any one dispute. In the 30+ years, the Club has provided FD&D cover, no case has ever come close to reaching this limit.
For more information please read the FD&D rules.