For those in the commercial casualty insurance industry, you may have come across the term “In Rem,” but may not be very familiar with it. Just what is In Rem, how did it come about, and what place does it have in certain insurance contracts?
An action “In Rem” has its foundation in Roman law and is closely related to maritime law. It is associated with the early days of shipping, where a suit was filed against the value of a ship and/or its cargo by an injured member of the crew pursuing recovery of damages (e.g., wages or personal injuries). In this type of action, the ship would be treated as a wrongdoer, not the owner. The loss, damage, or harm is considered to be caused by the maritime property itself, and the maritime property has to make good for the alleged loss or injury.
The In Rem action must identify the unseaworthiness of the ship or any of its functional parts or apparatus. This type of lawsuit is against an item of real or personal property, not against a person [In Personam]. In contrast, an In Personam proceeding would be against a person and not against the property of that person or organization.
When dealing with operations involving shipping, vessels, cargo, terminals and the like, the In Rem exposures are insured through a Protection and Indemnity Insurance Policy. These policies also cover bodily injury to a master or member of the crew of the vessel.
As far as the application of In Rem to commercial casualty insurance, we find it most prevalent in the Workers’ Compensation line of business. Unendorsed, the Workers’ Compensation and Employers Liability policy does not provide coverage for a master and member of a crew. While Protection and Indemnity Policies are the appropriate policy to provide coverage for masters or members of the crew of a vessel, many insured’s request the Maritime Coverage Endorsement be added to their Workers Compensation policy to respond to claims that may not be covered under the Protection and Indemnity policy. The Maritime Coverage Endorsement does exclude coverage under the Workers Compensation policy for any loss that is covered under a Protection and Indemnity policy.
When addressing Commercial General Liability (CGL), an In Rem coverage request is not as commonplace. Some might contend it is possible for a CGL policy endorsed for watercraft liability coverage to be the subject of an In Rem action against an Insured’s watercraft; however, it should be kept in mind that such an action is invariably filed by a crew member seeking to recover damages and not a non-crew member. At the request of their brokers or customers, some carriers have created manuscript In Rem endorsements for the CGL policy, specifically allowing for In Rem actions to be treated as if the action were In Personam against the insured.
Sources
- Edler de Roover, Florence. "Early Examples of Marine Insurance." Journal of Economic History 5, Issue 2 (1945): 172-200
- Garner, Bryan. “Black's Law Dictionary.” Eighth Edition. St. Paul, MN: Thompson/West, 2004.
- John, A. H. "The London Assurance Company and the Marine Insurance Market of the Eighteenth Century." Economica 25, No. 98 (1958): 126-141
- Insurance Services Office (ISO). https://products.iso.com/
- International Risk Management Institute (IRMI). https://www.irmi.com/
- National Council on Compensation Insurance (NCCI). https://www.ncci.com
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