Commercial marine insurance packages to protect your business exposures
Working closely with marine insurance specialty underwriters, Novamar Insurance Group has been crafting insurance packages to protect a variety of marine businesses since 1987 by tying the necessary coverages together into single, cost effective policies.
Marine Artisans and Boatyards
Insurance protection for Marine Artisans and businesses engaged in the service or repair of yachts, commercial vessels, and shore side marine related exposures. The owners of these businesses need three different types of liability commercial marine insurance to cover their exposures.
- General Liabilityprotection which covers them if someone is injured provides products and completed operations coverage which covers them for damages that occur as a result of the work.
- Ship Repairers Legal Liability which covers damage that occurs to a customer’s vessel while it’s in their care, custody, and control for which they are legally liable.
- Protection and Indemnity Liability which covers them if they are operating customer’s vessel for sea trials or delivery for repair.
Novamar Insurance offers a variety of programs that combine numerous exposures into a single policy to give our customers a stress-free experience. We also offer optional insurance policies to cover tools, equipment, inventory, coverage and pollution liability.
Coverage Offerings
Commercial General Liability
Marine Artisans Liability (Shiprepairer’s Legal Liability)
Owned and Non-Owned Watercraft Liability
Boatyard/Shipyard exposures including haul and launch, blocking of vessels
Equipment, Tools, and Inventory
Pollution Coverage
Virtually all businesses in the repair or service of vessels are eligible for coverage. Activities include:
- Hull repair
- Marine carpentry
- Topside and Underwater hull cleaning
- Rigging and mast/spar building
- Painting
- Welding
- Engine sales, repair, re-power
- Shrink wrapping and winterization
- Marine electronics sales, installation, and repair
- Dock and mooring service and repair
YACHT DEALERS/BROKERS
Commercial marine insurance protection for Yacht dealers and Brokers is important. Customers can be injured while on your premises or during vessel sea trials and demo rides. A Yacht Broker can also be held responsible for damage to a non-owned brokered boat while in the Yacht Broker’s care, custody, and control or while operating the boat on a sea trial or demonstration. A Yacht Dealer also has auto liability exposures, employment liability exposures, and pollution exposures.
In many cases inventory is a Yacht Dealership’s biggest asset and must be protected from a loss. Because inventory values can fluctuate greatly, they can be covered on a monthly or quarterly reporting form, which means premiums are paid based on the reported inventory value.
A Yacht Dealer/Broker may also need to cover owned or rented buildings, contents, docks, vehicles, inventory vessels, vessels in the care custody and control of the Yacht Dealer/Broker, and various tools and equipment.
Available Coverages include:
- Commercial General Liability
- Dealer's Inventory
- Bailee Coverage
- Commercial Property
- Commercial Auto
- Piers, Wharves, and Docks
- Marina Operators Legal Liability
- Longshore and Harbor Workers
- Jones Act Crew Liability Coverage
- Owned vessel coverage
- Owned and non-owned Protection & Indemnity Liability
- Bumbershoot (excess liability) Coverage
MARINA PACKAGES
Marina owners have a variety of exposures that need to be recognized and addressed. Among these are a potential for loss or damage to docks, piers, bulkheads, buildings and contents from a variety of hazards including weather, theft, vandalism, and fire. In addition, liability exposures, such as liability from injury to customers and visitors and cyber security risks.
The marina also has a duty and responsibility to provide a safe and secure mooring and may be held responsible for damage to customers’ boats. As yacht values have increased so has the aggregate exposure of yachts that moor in marinas. Total exposures can easily run into tens of millions of dollars. In addition, marinas typically need to cover commercial autos/work trucks, owned vessels (workboats), employer’s liability, and pollution liability exposures.
While exposures are numerous, many insurance companies offer marina package policies which will tie all the necessary coverages together in a single, cost effective policy including the following coverages:
- Commercial General Liability
- Commercial Property
- Commercial Auto
- Piers, Wharves, and Docks
- Marina Operators Legal Liability
- Longshore and Harbor Workers
- Owned vessel coverage
- Protection & Indemnity
- Bumbershoot (excess liability Coverage)
- Cyber Security
YACHT/BOAT BUILDERS
A boat or yacht builder faces numerous significant exposures. The first is Builders Risk Insurance, which covers a vessel from the start of construction through the final acceptance by the customer. A buyer’s financial interest in his new vessel can also be protected by this type of policy during the construction period.
A Yacht/Boatbuilder Package Policy should also include coverage for launching as well as Collision Liability and Protection and Indemnity Liability during sea trials.
In addition to Builders’ Risk insurance, a boatbuilder will need General Liability, Products Liability, Commercial Auto coverage, Pollution coverage, and Employers’ liability coverage. Plus various property coverages to cover molds, tooling, equipment, parts and inventory.
CHARTER VESSELS
A charter boat, or other vessel carrying passengers for hire has special liability exposures. Maritime law places extraordinary burdens of responsibility on the master of a vessel carrying fare paying passengers.
Hull and Machinery Vessel Policy Coverage
Hull and Machinery policies are written either on All Risk or Named Perils forms. All Risk is more inclusive and I the preferred policy wording providing more comprehensive protection for the vessel owner. With a Named Perils policy, the owner can recover only for losses resulting from a limited list of covered perils listed in the policy.
Hull and Machinery covers not only the entire vessel in the case of collision, fire, or sinking, but also individual components like electronics, and engines. Normal wear, and damage due to improper maintenance, usually are not covered, nor is loss of revenue due to engine breakdown.
Protection and Indemnity (P&I) Liability Coverage
P&I Liability indemnifies (pays) someone for personal injury or property damage caused by an insured vessel. It also pays to defend against lawsuits due to the operation of the vessel. Defense costs and judgments can be significant. An insurance company and insurance broker experienced in the placement of this type of coverage is critical. An experienced maritime attorney going to bat to protect the assets of a vessel owner when in a dispute with a third party claimant is critical.
Some P&I Considerations
Coverage limit
Coverage limit.How much P&I coverage do I need? The standard commercial marine insurance industry answer is—all you can get. Or, more specifically, what is the value of your business and personal property that would be jeopardized in a major claim?
Typically, marine P&I policies provide coverage limits of $500,000 or $1,000,000. This is per incident, not per person. Excess P&I Liability Coverage is also available and can be “layered” to obtain adequate total coverage limits.
Pollution
Liability policies usually cover accidental discharge of pollutants, such as fuel or oil, resulting from an accident. Pollution cleanup in a sensitive marine environment location can be very expensive, and the vessel owner is liable. Pollution insurance does not cover intentional discharges, nor does it pay fines or penalties imposed by the government.
Crew coverage
If there is a paid captain and/or crew hired aboard the boat, they must be specifically covered in the P&I policy to cover them against injury. Various federal acts like the Jones Act or Death on the High Seas Act provide benefits to an injured captain or crew.
Passenger medical payments
Charter boat policies often include passenger personal injury coverage, as a “damage control” measure. The limit is relatively low—between $500 and $10,000 and typically with a very small deductible. The injured passenger doesn’t have to sue to receive this coverage benefit. This coverage protects both the vessel owner and the underwriter against claimants who have suffered minor injuries but decide to litigate if they aren’t treated to their satisfaction immediately after the injury occurs.
Personal effects
Some charter policies cover incidental personal effects belonging to crew and passengers. The assumption in the insurance industry is that most people have homeowner’s policies that cover cameras, binoculars, fishing rods, clothing, etc. Personal effects coverage is another good “damage control” measure to ensure that no one leaves the boat unhappy.
Business Interruption
Insurance coverage that replaces business income lost as a result of an insured event that interrupts the operations of the business, such as fire or a natural disaster. Business interruption insurance is normally either added to or included in a comprehensive package policy.
Assumption of Risk Forms and Liability Waivers
Assumption of risk is a form that the client reads and signs, signifying that the client understands the boat trip they are about to embark upon is an inherently dangerous activity. Some marine insurers say that the assumption of risk form may, in litigation, contribute to the perception that the operator is cautious and prudent, which may result in a final settlement lower than would otherwise be the case. The liability waiver is a form signed by the vessel passenger agreeing not to sue if an incident occurs.
Passenger Vessel Insurance Checklist
Deciding on a policy
- Choose a U.S. domestic company, with an “A” rating or better.
- Get a Hull and Machinery policy that pays on Agreed Value not Actual Cash Value.
- Determine whether Hull and Machinery coverage is all risk (other than specified exclusions) or named perils. The former is more inclusive and usually a better value.
- Check deductibles. The higher the deductible the lower the premium, but in the case of minor damage you may end up paying most or all of the claim.
- Check operating limits, and mandatory lay-up ashore. Five months is a typical lay-up period if operating in cold climates.
- Try to check the underwriting company’s claims payment history with other vessel operators.
- Remember that policy terms are flexible and negotiable.
selecting p&I coverage
- Assess your own exposure, and what
assets you have to lose to decide your
risk tolerance. Unless you have little in
business and personal assets, go for the
highest P&I available. Inquire about
excess coverage. Consider $1 million
minimum or more. - Purchase passenger personal medical
on top of the full liability coverage. - Be sure to get pollution coverage.
- If passengers will leave the boat during
the trip, get shore excursion coverage. - Don’t forget crew coverage for any
employees working aboard the boat.
