Section 11.44 Limitation Fund

• Library: Tort Law 2016

F. (§11.44) Limitation Fund

The liability of an owner of a vessel entitled to limitation "shall not exceed the value of the vessel and pending freight." 46 U.S.C. § 30505(a). This amount is the limitation fund. The value of the vessel is calculated after the cause of the loss has taken place. Thus, in the instance of a vessel that has been damaged or sunk as a result of a tort, its value may be equal to its salvage value. If the vessel is a total loss, the limitation fund may be nothing. The proceeds of a policy of hull insurance, i.e., insurance that indemnifies the vessel owner for loss or damage to the vessel, payable to the owner of a vessel, is not included in the value of the vessel. Place v.Norwich & N.Y. Transp. Co., 118 U.S. 468 (1886). An owner of a vessel at fault may be reimbursed by the hull insurers for the value of the vessel destroyed in the tort occurrence, with the recovery of injured parties limited to a fund equal to the salvage value of the vessel, if any.

In the instance of a towboat with a tow of barges, separate vessels lashed...