Maritime and Admiralty Limited Liability

Under maritime law, the liability of the shipowner or agent is hypothecary* in nature and covers only the following:

1.) Collision

2.) Liabilities for injuries to 3rd parties

3.) Acts of the captain

*The liability is co-extensive with the shipowner's/agent's interest in the vessel so that if the vessel suffers a total loss, the liability disappears. Ergo, there is no liability if there is no vessel.

There are exceptions, however. Even if there is a loss, there will still be liability in any of the following:

1.) If the vessel is insured

2.) Claims for workmen's compensation

3.) Death/injury of a passenger is due either to the shipowner and captain's concurring negligence or the shipowner's fault

Because of the exceptions, there are cases where a ship is lost at sea through the owner's fault (such as ignoring a storm warning and venturing out -with the ship getting sunk as a result) and the owner can be held liable for the deaths of its passengers but not for the loss of its cargo.