Legal Definitions - running-down clause

A running-down clause is a provision in marine insurance that requires the insurer of a ship's hull to pay a portion of the damages sustained by another vessel in a collision.

Suppose a ship collides with another vessel, causing damage to both ships. If the ship that caused the collision is insured with a running-down clause, its insurer will pay a portion of the damages sustained by the other vessel.

For instance, if the total damages amount to $100,000 and the running-down clause specifies that the insurer will pay 50% of the damages, the insurer will pay $50,000 to the other vessel's insurer.

This clause is important because it helps to ensure that both parties are compensated for their losses in the event of a collision.