Archive for Marine
Antique and Classic Boats
Antique and classic boats are pleasure boats that are no longer manufactured in the standard or conventional way. Age is not a criteria as much as the type of materials used in the original construction. Most wooden boats and classic fiberglass models are eligible. A key element is that the boat must be considered a collectible. The boat must be seaworthy in order to qualify for coverage on a full marine basis. The coverages available include agreed value on the hull, liability, uninsured boaters, medical payments, personal effects, and trailers.
Boat dealers sell new and used watercraft. The dealers may be land or water based. Policies designed for boat dealers cover stocks of boats, accessories, and supplies held for sale. Property and marine coverage is usually written on an “all risks” type basis. Coverages are similar to open lot automobile coverage and garagekeepers legal liability.
Boat manufacturers’ most difficult exposure is products liability. This coverage is usually written on a claims-made basis and in a specialty market. The property exposure is also significant because of the types of materials used and the flammable adhesives and paints that are required in the manufacturing process. Coverage for the stock may need to cover boats while on sale at dealerships.
Boat rental may be for one hour, one day or for all summer. The potential for injury is significant because of the water exposure and inexperience of the operator. Many boat rentals are located in resort areas so that the liability exposure is limited to the summer months. The physical damage exposure is a year-round exposure because the boats must be serviced, repaired, and stored when they are not in use.
Boatyards or Boat Repair and Servicing Operations
Boatyards or Boat Repair and Servicing Operations”,”Boatyards work with their clients to repair and service their boats, haul them out of water in the fall, store them over the winter, and launch them in the spring. The general liability exposure is similar to that of an automobile repair operation with the added hazard of water-related activities. The storage and moorage exposure can be significant.
This is a special form of umbrella liability designed for marine accounts that operate vessels or use docks. It covers protection and indemnity, general average, collision, salvage charges, sue and labor, and all other legal and contractual liability. It also covers employers liability; liability under admiralty laws and the Longshore and Harbor Workers Compensation Act; automobile liability; and general liability.
Standard protection and indemnity coverage written in conjunction with small watercraft and boats hull insurance policies does not apply when a boat is hired or chartered to others. However, coverage is available for owners or operators of such vessels used to carry passengers for a fee for sightseeing, fishing, transportation, entertainment, or marine observation. Rates are based on the size of the vessel, its mooring location, navigation area, and number of passengers. Coverage is usually subject to a deductible. Liability exposures concern underwriters more than loss or damage to the hull.
Commercial Fishing Boats
Commercial fishing boats are subject to significant hazards. As a result, the market for them is quite limited. Protection and indemnity (P&I) exposures concern underwriters more than hull physical damage exposures. By far, the greatest hazard is crew coverage for employees who work on vessels. Employees who work on land also need coverage. orkers compensation, U.S. Longshore and Harbor Workers Compensation Act coverage, and Jones Act liability coverage must be coordinated to protect owners and operators against claims for injuries to all employees. Commercial general liability coverage for non-marine exposures is also required. Many specialty liability carriers refuse to insure the crew hazard.
The United States Customs Bureau requires that an importer secure a bond to guarantee that it will pay all duties on goods brought into the country. Shippers must secure open customs bonds that cover shipments on a continuous basis. Bonds for single shipments are equal to the value of the goods and include applicable duties and fees. Related to customs bonds, Non-Vessel Owners Common Carrier (NVOCC) bonds and freight forwarders bonds for importers and exporters are required by the Federal Maritime Commission and protect exporters for their cargoes while being shipped.
Customs Brokers and Freight Forwarders
Customs brokers and freight forwarders work with importers to ensure that their commodity shipments clear customs according to government guidelines and regulations. Customs brokers manage the paperwork on the import from the time it arrives at the port of entry. They also act as freight forwarders to deliver goods to the customer’s inland location, regardless of the distance. Customs brokers errors and omissions coverage protects them against suits that arise from their negligence in arranging for clearance and forwarding imports on the importer’s behalf.
Dredging contractors move dirt, sand, and accumulated debris from waterways (fresh and saltwater), primarily to redirect, clear, or establish new channels. Many dredging contracts involve coordination with the Army Corps of Engineers. Dredging equipment is usually on a barge that floats over the site.
Excess Marine Liability
Excess limits over primary marine liability limits is needed because of the trend toward larger suits and higher settlements. Marine employers’ liability and commercial general liability limits on policies for marine businesses, such as boat builders and repairers, marine contractors, dredgers, and other vessel services, can be extended by using specialty markets that write excess marine liability limits. Liability coverages for marina operators, stevedores, charterers, wharfingers, and terminal operators are written as excess over self-insured retention (SIR) programs or over primary policies.
Excess Maritime Employers Liability
Employers liability for maritime risks usually falls under the jurisdiction of either the United States Longshore and Harbor Workers Compensation Act (USL&HWCA) or admiralty jurisdiction via the Jones Act. Coverage for workers involved in offshore oil drilling, marine diving or dredging, employed on fishing vessels, or serving as crew members on tugs, barges, ferries, scows, work boats, and pleasure yachts can be difficult to place because the work they perform is dangerous. Certain specialists well acquainted with maritime exposures provide excess maritime employers liability.
Bridges are not cost effective or possible in certain locales. In some of those locales ferry operators transport people, cargo, and/or vehicles across the body of water. They usually operate on lakes, bays, and rivers on a fixed schedule. Smaller ones may operate only during fixed seasons. Some ferries may also provide tourist cruises. Ocean marine hull coverage and protection and indemnity (P&I) coverage is needed for the vessel and liability exposures. General liability, property, and workers compensation coverages are needed for the pier and onshore operations. Inland marine coverage may also be needed for mobile property that may be on land or on the ferry.
Food Rejection Insurance
This coverage insures against government actions regarding food that include arbitrary rejection or detention, or miscarriage of administrative food-safety determination. This ocean marine coverage is written at the shipper’s port of debarkation and protects against the risk that governmental authorities will reject the cargo at the port of entry. Meat and fish are two common examples of food products that may be rejected due to contamination by impurities, packing cartons, or other cargo. The premium for this insurance is substantial due to consumer attitudes about tainted food and strict federal government regulations.
High Performance Boats
Insurance on this class of business is written on broad form marine policies and covers both personal and business-owned vessels capable of attaining speeds of 100 miles per hour or more. Hull and liability coverage is available, including medical payments, personal effects, and uninsured boaters coverage. These policies are issued at agreed value with named operator warranties. Extended land transit coverage and transit and storage coverage options are available, as are extended navigation areas. Boats with either single or multi-hulls are eligible.
Insurance underwriters categorize houseboats and yachts in the same way. This results in correspondingly similar rates, insuring conditions, and coverages. The yacht coverage form or policy is used to write hull and protection and indemnity liability coverages for houseboats. The main differences between houseboats and yachts are that houseboats are more difficult to navigate, are less seaworthy in rough water, and are more unwieldy than yachts because of the way they are constructed. Single or twin inboard or outboard drive engines with up to 400 horsepower usually power houseboats. These policies are underwritten based on the owner’s or pilot’s experience, the vessel’s use, operating season, and the rates for the operating area. Coverages provided include hull, boat equipment, personal effects, liability, medical payments, and uninsured boaters coverage and are usually subject to deductibles.
Marinas are important to yacht and pleasure boat owners. They provide these boat owners with mooring facilities, repair, alteration, maintenance, storage, fueling and many other services. Coverage under a marina package policy includes property, commercial general liability, marina operators’ legal liability, and protection and indemnity insurance, along with coverage on piers, wharves, and docks. The marina operators’ legal liability policy covers the marina operatorâ€™s legal liability for loss of or damage to private pleasure boats while in its care, custody, or control. This policy closes the gap left by the “”care, custody, and control”” exclusion in the commercial general liability policy. Water sports’ rental insurance is available for marinas that rent out personal watercraft, pleasure boats, kayaks, water skis, and wind surfers. Insurance can be arranged on operations such as parasailing and boat charters.
Marine Cargo Insurance
The open cargo policy is the most common cargo policy. It covers all shipments the insured makes on a continuous basis until coverage is cancelled. The only thing the insured must do is report the shipment being made and its destination. The policy is customized to meet the insuredâ€™s special requirements but is written subject to average clauses that determine the extent to which losses are paid.
Marine Hull Insurance
Marine hull insurance on seagoing vessels has been written since Lloyd’s of London commenced operations. The major market in the United States is the American Hull Insurance Syndicate, a pool of major domestic underwriters that can provide large capacity on any one vessel. The policy protects the owner’s investment in the vessel and its machinery and equipment. Coverage is usually written on a broad named perils basis and insures against contact with land or any conveyance, as well as negligence of the master, charterer, or pilot. Hull insurance is also written on many different types of commercial craft that operate on rivers, harbors, and other inland waterways.
Marine War Risk
Ocean marine underwriters place war exclusions on policies based on the anticipated routes traveled. Some underwriters are willing to remove those exclusions and accept the war risk exposure for a significant premium and subject to prescribed safety protocols.
Marine-related Professional Liability and E&O Coverage
Businesses that design yachts, pleasure craft, and commercial vessels, as well as marine surveyors, port and harbor managers, and other miscellaneous marine-related risks all have professional and/or errors and omissions liability exposures.
Maritime Employers Liability
This coverage is called Protection and Indemnity (P&I) insurance. It applies to liability incurred by businesses that work on or engage in activities associated with ships, piers, and seagoing enterprises. Ship repairers, charterers, and stevedoring activities, as well as oil well drilling, exploration, and diving firms are eligible for this specialty coverage.
Clients eligible for this unique coverage include producers of films, movies, television programs, and commercials that are filmed on the water. Coverages provided include ocean marine hull and machinery, liability (P&I plus Jones Act), charterers’ legal liability, towers, and wharfingers liability. Items that can be covered include owned equipment and rental equipment. The coverage provided is for the actual boats where filming takes place plus barges, platforms, marinas, docks, wharves, and piers.
There is increasing undersea research activity conducted by commercial corporations or the United States and other governments as each attempts to discover resources that might be used to meet the increasing demands of growing world populations. Submarines and sea laboratories, platforms, and surface equipment used to service underwater vessels are just some of the types of vessels involved in oceanographic ventures. Hull and liability insurance coverage on this and other oceanographic equipment is needed. In order to properly underwrite an individual or joint oceanography risk, marine underwriters need information on the insured’s background in undersea projects, a detailed list and description of equipment, the nature of the project, operating depths and geographical area, details on support vessels, means of communication, and previous loss experience. This is an extremely specialized and technical field.
This class of watercraft encompasses a wide range of single engine inboard-powered vessels that use water-jet pumps as their primary source of propulsion. This watercraft can accommodate as many as three persons and small amounts of cargo. Operators/passengers can stand up, sit on (motorcycle style), or sit in the watercraft, depending on the manufacturer. Exposures include high performance and handling characteristics coupled with minimal operator and passenger protection. Water-skiing and other activities that involve towing people have become additional exposures as the power of these units has increased. Units are valued based on their actual cash value. Additional exposures are trailers and water-skiing liability.
Pier and Dock Contractors
The water exposure is significant so these contractors must carry both land-based and ocean-based coverages. Coverage for injuries to employees is especially difficult because the employer may be required to satisfy state workers compensation laws as well as federal laws such as the Jones Act and the Longshore and Harbor Workers Compensation Act. These contractors have significant general liability exposures but may also have protection and indemnity (P&I) exposures when they work on the water. In addition, many of them own watercraft from which they perform operations.D687
Pollution Cleanup Indemnity: Marine Operations
This coverage protects an insured vessel owner and operator for legal liability that arises from the Federal Water Pollution Control Act and its amendments. The original federal legislation that dealt with water pollution was the Water Quality Improvement Act of 1970. It imposed liability on vessel owners for cleanup of oil spills. The Federal Water Pollution Control Act of 1972 broadened the scope of the original legislation to also include liability for cleanup of discharges of hazardous substances as well as oil or petroleum products.
Protection and Indemnity Insurance (Marine)
Protection and Indemnity (P&I) insurance covers the insuredâ€™s liability for injury to both the public and the crew in addition to its liability for damage to the cargo and other property. On land-based risks, this same coverage requires issuing a commercial general liability policy for the bodily injury and property damage, a workers compensation policy to cover the master and crew, and a motor truck cargo carrier’s legal liability policy for the cargo.
River and Harbor Craft
Special marine hull coverage forms are used to insure vessels that operate on rivers or in harbors. Such vessels include barges, car floats and ferryboats, dredges, and floating dry docks. River and harbor congestion and the special type of work that these vessels do require a careful underwriting of each case.
River Boat Gambling Casinos
Marine insurers write insurance on this class of business on combined hull and protection and indemnity (P&I) forms. P&I covers liability for injuries to both passengers and crew along with damages alleged by others. Only a few underwriters are willing to assume liability on boats that can carry as many as 1,500 passengers. Tricky navigation in shallow and crowded waters such as the Ohio and Mississippi Rivers and the liquor liability exposure make this class difficult to underwrite.
Ship Charterers Legal Liability
This coverage protects the party that charters a vessel against liability incurred for loss of or damage to that hired vessel. Liability is usually limited to damage caused by loading, unloading, or failure to provide a safe berth. Coverage may be written on an open basis with a flat premium charged for each voyage or it may be written one voyage at a time.
Ship Repairers Legal Liability
This coverage protects an individual ship repairer, marina, or boat yard operator for its legal liability to the vessel’s owner due to damage to the vessel being repaired. This “care, custody, or control” coverage applies to only property damage liability to the vessel being repaired. In addition, coverage may be extended to include the insured’s legal liability if a vessel that is in for repair damages other property, such as during a test run.
Sport Fishing Boats
Sport fishing boats are available for hire to parties who go deep sea fishing for game fish such as tuna, marlin, swordfish, or sharks. Property and liability insurance is needed for the hull, passengers, and the crew. Insurance carriers that specialize in marine insurance coverages provide such protection. Coverage is available in warm water areas such as off the coasts of Mexico, Hawaii, the West Indies, the Bahamas, as well as off the Atlantic and Pacific coasts of the U.S. and the Gulf of Mexico.
Stevedore Legal Liability
This coverage protects stevedoring operations against claims for loss or damage to vessels or their cargo that arise out of loading or unloading operations. The coverage provided is usually limited to legal liability, as opposed to contractual liability.
United States Longshore and Harbor Workers Compensation Act
Federal workers compensation law applies to maritime employees who work on or over navigable waters that are in or adjacent to the United States. The Act specifically excludes sailors, seamen, masters, and crews of any ship, vessel, or watercraft because they are eligible for coverage under the Jones Act and the Merchant Marine Act. The workers subject to these Acts are also not eligible for state workers compensation benefits because they work on or over navigable waters. The USL&HWC fills this gap.
Pollution caused by vessels, such as the Exxon Valdez incident in Prince William Sound in Alaska, can lead to extremely large losses. The vessel pollution coverage pays damages for leaks and spills of crude refined oil and other chemicals by ocean-going vessels that harm the environment. The United States Coast Guard (USCG) must approve any insurer that provides this coverage before coverage is placed with it. If an incident does occur, all clean-up must be conducted according to the Oil Pollution Act of 1990 and any subsequent revisions.
Water Ski Schools Liability
Water ski schools provide instruction for water skiing, wave boarding, tubing, barefoot water skiing, and other types of propelled water-related activities. Instruction is usually conducted in less hazardous water areas relatively free of other watercraft. Bodily injury and property damage liability coverage is available.
Water Sport Rentals
Renting watercraft is a popular alternative to ownership. The types of watercraft rented range from personal watercraft such as jet skis to houseboats. The coverage provided is for the benefit of the rental unit’s owner, not the renter. Hull damage, water sports liability, and other liability coverages are available. Underwriters require a written rental agreement that contains appropriate hold harmless language.
Wharfingers Legal Liability
This coverage is also known as wharfkeepers legal liability or landing dock bailee liability insurance. It covers the insured’s legal liability for loss or damage to vessels while in the insured’s care, custody, or control. Coverage is also provided for the insured’s legal liability for loss or damage to other property that is caused by such vessels. This liability coverage is usually purchased by insureds that have vessels, watercraft, or other equipment moored on their premises. The coverage may be included in the general coverage for a marina operator where a combined policy covers ship repairers’ legal liability, wharfingers liability, and liability to vessels stored.
Yachts and Pleasure Boats
Package-type policies are available for most types of power and sailing vessels. Property coverage is usually provided on an “all risks” type basis for physical damage (hull) coverage. Liability is provided under protection and indemnity type coverage. Passenger, water skiing liability and property coverage on equipment and trailers are optional coverages that are available. Coverage for boat trailers, personal effects, medical payments, and uninsured boaters are other important available options. Watercraft more than 25 years of age is usually written under separate antique and classic boat programs.