Marine industry liability – what to look for
For anybody operating a business in the marine industry, having the right liability insurance protection against claims for damage or faulty workmanship is essential. Ray Park from Lewis Insurance Services looks at what’s involved.
In many ways, marine liabilities are no different from other liabilities. Put simply, when a company is involved in the marine industry, whether it be boat building, repairing, painting and so on, they are exposed to liability risks just as much as any other business.
Marinas are particularly exposed, as potentially they have millions of dollars’ worth of boats in their care, custody and control. It only takes a fire to break out on one vessel which then spreads to a dozen or more vessels, and if the marina is found legally liable in some way, a multi-million dollar claim can result.
Boat builders’ products liability
One particular problem for boat builders is products liability insurance. You may be OK if you’re building or working on boats under eight metres as, depending on the policy wordings, cover may be provided under a standard public & products liability insurance policy. However, once you start moving into the larger boats, you could be left in ‘perilous straits’.
Your builder’s risk insurance will not help you once the vessel is delivered to the customer. If there is a loss to your customer’s watercraft, their hull insurer may respond initially to pay the claim for your customer. However, the hull insurer may in turn then seek recovery from the person responsible for the loss, such as yourself, if they believe the reason for the calamity is as a result of a defect found to be caused by some faulty workmanship or error on the part of the boat builder or repairer.
Boat builders’ products liability is a very specialised insurance policy and, as such, is not low cost. However, if you haven’t got such cover and a claim is made against you, your whole business is threatened. You don’t want to be realising, when such a claim occurs, that you have inadequate insurance cover, or the wrong policy for the work you are carrying out.
Ship repairers’ liability
Ship repairers’ liability is always an interesting subject. This type of insurance has gradually evolved over the years in the Australian market, moving from a very rigid old-fashioned type of cover to a more comprehensive modern form of insurance with plain English wordings etc.
It was not that long ago that ‘discovery periods’ were included in the wordings, starting with six months then extending to 12 months. Most policies today have no such limitations, which, in my opinion, is a good thing. For example, there can be ‘latent’ faults that may not raise their ugly heads for longer than such periods and, consequently, the insured can be left with the repair bill as a result of not having a comprehensive ship repairers’ liability policy tailored to their particular needs.
In my experience, as soon as something goes wrong, boat owners can be quick to fault the last contractor who worked on the vessel. They then approach this party requesting they pay for the loss or damage the boat owner has incurred and the contractor is left to defend themselves. With ship repairers’ liability insurance, if indemnity has been granted under the policy, the insurer can take over the legal defence, as these costs are usually covered.
This article first appeared in the April-May 2016 issue of Marine Business magazine. For more information, contact Ray Park on 0421 88 325 or (07) 3217 9015.