* Had relied on sovereign insurance scheme
* Japan had been hardest hit by insurance limitations
* Iran crude imports expected to stay steady (Adds further insurer comment, detail)
TOKYO, Jan 21 (Reuters) - Japan's main private ship insurer, the Japan P&I Club, said it has resumed normal coverage for tankers carrying Iranian oil, a step in easing imports in line with U.S. and EU moves as relations with Tehran thaw.
Japan oil buyers were the hardest hit by the shipping insurance limits in Western sanctions because they chose to continue to use Japanese tankers for deliveries.
India, South Korea, and China, at least partially, all began relying on Iranian shippers and insurance providers for their oil deliveries from Tehran.
The international P&I club, of which JPI is a member, resumed normal coverage of $7.6 billion per ship, including $1 billion for oil spills, on Monday as European Union reinsurance became available again for the first time since mid-2012, a JPI official said.
That means Japanese buyers of Iranian oil will not have to rely on Tokyo's sovereign scheme to provide the same level of liability coverage for tankers carrying the crude.
"The resumption of cover is very much restricted to that which is expressly permitted under the implementing EU and U.S. measures," Andrew Bardot, executive officer of the International Group of P&I clubs, said separately.
"It does not fully open up the trade or the insurance of the trade. It is restricted to current importers based on their import quotas and it is for six months only."
Specialist Protection & Indemnity insurers, mutually owned by shipping lines, dominate the market for insuring ocean-going vessels against pollution and injury claims, the biggest costs when a tanker sinks.
Japan temporarily halted its Iranian imports in July 2012 to avoid running afoul of the shipping and insurance sanctions, waiting for the government's $7.6 billion sovereign liability guarantee per tanker to keep oil trade with Tehran going.
Buyers in India and South Korea said they are still waiting for further information from insurers and their governments before making any changes to how they have been receiving Iranian oil under the sanctions regime.
SOVEREIGN SCHEME TO STAY FOR NOW
Japan's sovereign scheme will stay in place for the time being, but will no longer be liable for insurance payments now that buyers can obtain JPI coverage, a government official said.
The government is not ready to scrap the sovereign scheme just yet, as the sanctions relief is regarded as temporary, the official said.
Japan's parliament would have to authorise any extension of the scheme past the fiscal year ending March 31.
The easing in U.S. sanctions will allow Iran's six current customers - China, India, Japan, South Korea, Taiwan and Turkey - to maintain their purchases at the current reduced levels for the six-month duration of the interim nuclear deal between Iran and world powers, the U.S. Treasury Department said.
Japan's Iran crude imports will likely stay steady in the short term following the easing of sanctions and the switch in insurance providers, Yasushi Kimura, president of the Petroleum Association of Japan told reporters on Monday.
Japan's imports of Iranian oil in January-November 2013 fell by 4.6 percent from a year earlier to 178,539 barrels per day (bpd), trade ministry data showed last month.
Japan's Iranian crude imports in 2011, before the tough sanctions were put in place were 313,480 bpd. Japan cut its Iran imports by nearly 40 percent in 2012.
(Reporting by Osamu Tsukimori, additional reporting by Jonathan Saul in London; Editing by William Hardy)