Differentiate between third party liability and contractual liability. When may the ship seek to limit his liability? List the persons entitled to limit liability and claims entrusted?
An insurance policy is a contract. The insured is referred as first party to the contract. The insurer i.e. the insurance company is who issues the contract is the second party. A stranger to the contract who makes a claim against the insured is known as third party. Third party liabilities: It is obligation to compensate another person harmed or injured or suffered a loss due to negligence or mistake or wrongful act of first party. Third-party liabilities are those liabilities which are caused to any other persons or his property not included in any contract. Contract takes place between two parties hence any third person not a member of this contract is a third party or person. When the insured – first party causes a loss then the second party assumes the insured liability up to the policy limit. Examples of third party liabilities are collision, third party injury or death claim, oil pollution liability, cargo claim, crew claim, unrecoverable general average contribution