MARINE LIABILITY PRODUCTS www.prosightspecialty.com/marine Tim McAndrew tmcandrew@prosightspecialty.com 212-551-0618 Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 Robert Palmer rpalmer@prosightspecialty.com 212-551-0619
The ProSight Marine Group will look at any risk, no matter how arcane or unusual. Our experienced underwriters analyze and rate complex marine risks that other companies may not entertain, in addition to the usual and customary ones everyone considers. As marine underwriters with a combined experience of over 200 years, we are uniquely positioned to accommodate our customers specialized demands. And we can be counted on to be around for the long run. The underwriting members of the ProSight Specialty Insurance group of companies are rated A (Excellent) by A.M. Best. ProSight also operates Syndicate 1110 at Lloyd s, which is rated A (Excellent) by A.M. Best. MARINE LIABILITY PRODUCTS: Protection and Indemnity (P&I) Charterer s Legal Liability Ship Repairer s Legal Liability Stevedore s Legal Liability Wharfinger s or Landing Owner s Legal Liability Marine Terminal Operator s Legal Liability Marine Products Legal Liability Marine Contractor s Legal Liability Maritime Employer s Legal Liability Excess Liability Coverages 1 3 5 7 9 11 13 15 17 19 Coverage(s) described may not be available in all states and are subject to Underwriting and certain coverage(s) may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds.
PROTECTION AND INDEMNITY
PROTECTION AND INDEMNITY Marine Liability Products Protection and Indemnity insurance is the major form of liability insurance for vessels. It protects the assured against claims for bodily injury, property damage and specified pollution losses arising out of the operation of a vessel. While collision with another vessel is traditionally covered under the Hull and Machinery policy, excess P&I policies often provide limits in excess of those provided in the P&I and Hull. Typical assureds are shipowners and bareboat or demise charterers. Bareboat or demise charterers are those who take full control of a vessel during the charter. Coverage Loss of life, injury to and sickness of crew, passengers and third parties, except for liabilities under statutory compensation acts Cargo Legal Liability damage to cargo on the vessel (excluded on certain small craft forms) Damage to piers, docks, jetties and other fixed or floating objects Wreck removal costs Environmental damage and cleanup costs arising from fuel or cargo discharge Collision liability for amounts in excess of the vessel value Key Underwriting Considerations The assured s line of business and how the vessel will be used Size, age, condition and horsepower of the vessel The number of crew and passengers and other parties on board Cargo exposures Navigation limits Claims history Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 Robert Palmer rpalmer@prosightspecialty.com 212-551-0619 2 InSightful Tip Small craft primary P&I policies are often endorsed to restrict pollution coverage to bodily injury and cargo contamination. In such cases, coverage can be obtained through the Water Quality Insurance Syndicate (WQIS). ProSight generally focuses on risks requiring excess P&I limits over $1,000,000.
CHARTERER S LEGAL LIABILITY
CHARTERER S LEGAL LIABILITY Marine Liability Products Charterer s Legal Liability provides coverage for liabilities assumed under the terms of a vessel lease agreement called a charter party. The shipowner provides a fully manned and outfitted vessel for a single trip (voyage charter) or for a specified period of time (time charter). Typical assureds are shippers who charter a vessel or space on board a vessel to carry their own cargo or cargo of others or corporate entertainment, scientific research or offshore oil and gas exploration support vessels. Coverage Damage arising out of loading or unloading, unsafe berth or wharf conditions Where agreed, damage to the cargo of others Where agreed, pollution liability arising out of the charterer s negligence Key Underwriting Considerations Terms of the charter party Charterer s Legal Liability is primarily a contractual liability, so it is important to review the agreement to determine what liabilities the vessel owner is shifting to the charterer Size, age, flag and classification of the vessel Duration of the charter Cargo to be carried Destination, with special attention to ice or war-risk exposure Pollution liability potential and the P&I limits carried by the vessel owner Charterer s experience and loss history InSightful Tip Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 Robert Palmer rpalmer@prosightspecialty.com 212-551-0619 4 Many U.S. states have passed laws holding the cargo owner or even the cargo receiver liable for pollution under certain circumstances. A cargo owner s pollution liability endorsement can sometimes be added to the Charterer s Legal Liability policy to provide the needed protection in these instances.
SHIP REPAIRER S LEGAL LIABILITY
SHIP REPAIRER S LEGAL LIABILITY Marine Liability Products Ship Repairer s Legal Liability provides protection for contractors repairing or altering a customer s vessel at their shipyard and other locations or at sea. Typical assureds are vessel repairers or contractors who work on ship components. Coverage Liability for damage to vessels and equipment on board during repairs or alterations or while on trial trips Damage to the property of others arising from the vessel under repair Key Underwriting Considerations Nature of the work performed Receipts, payroll and subcontracting costs Location of the yard and the extent of any off-premises repairs Security and fire protection Claims history Values of vessels being repaired InSightful Tip Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 There can be overlaps or gaps in coverage when separate CGL and SRLL policies are purchased. The Care, Custody, or Control and Watercraft exclusions of the CGL policies can sometimes be amended to provide both coverages. Robert Palmer rpalmer@prosightspecialty.com 212-551-0619 6
STEVEDORE S LEGAL LIABILITY
STEVEDORE S LEGAL LIABILITY Marine Liability Products Stevedore s Legal Liability protects against claims arising out of an assured s cargohandling operations. Typical assureds are independent contractors and terminal operators whose employees move cargo within terminal areas as well as on and off watercraft, trucks, railcars and other conveyances. Coverage Liability for loss or damage to the property of others arising from loading, unloading and movement of cargo within a terminal Covered property typically includes vessels, cargoes, wharves, piers and docks Many policy forms exclude coverage for bodily injury and completed operations. In such cases coverage can typically be obtained under a CGL policy. Key Underwriting Considerations Types of vessels and cargoes handled How the cargo is typically packaged (containers, pallets, or in bulk) Volume of stevedoring activity (includes the number of vessels and barges serviced as well as the number of containers, barrels and total metric tons handled) Equipment used in handling the cargo (container cranes, clamshell cranes, conveyors or ships gear) Description of location where the work is performed; in particular, whether the location is owned or leased by the assured Claims history InSightful Tip Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 Robert Palmer rpalmer@prosightspecialty.com 212-551-0619 8 Even if an assured has hired a subcontractor for stevedoring, it may still have a contingent liability exposure. The assured should confirm that the stevedoring company carries adequate insurance limits and should attempt to limit exposure against suits from the stevedore s employees.
WHARFINGER S OR LANDING OWNER S LEGAL LIABILITY
WHARFINGER S OR LANDING OWNER S LEGAL LIABILITY Marine Liability Products Wharfinger s Legal Liability protects commercial wharf owners against liability for damage to vessels, cargo, and other property while at their dock or wharf facilities. Typical assureds are anyone owning or leasing a dock where non-owned vessels receive or discharge cargo or passengers, take on fuel or supplies, or tie up for any period of time. Coverage Liability for loss or damage to vessels and their cargo while approaching, tied to, or leaving the dock Downstream damage that results from a breakaway Sue and Labor charges and wreck-removal expenses are also usually included, depending on the coverage Key Underwriting Considerations Location of the wharf and adjacent exposures Age, concentration and general conditions of the wharf, including water depth Types of vessels typically berthed and their cargo Number of vessels berthed in past years and the average number of days each type of vessel is berthed Reasons the vessel is using the wharf (loading, unloading, fueling, etc.) Services provided by the wharfinger (fleeting, fueling, stevedoring, warehousing, etc.) InSightful Tip Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 Wharfinger and stevedore liability exposures can be covered by endorsing the CGL policy to include the care, custody and control of non-owned watercraft and removal of wreck exposures. Robert Palmer rpalmer@prosightspecialty.com 212-551-0619 10
MARINE TERMINAL OPERATOR S LEGAL LIABILITY
Marine Terminal Operator s Legal Liability protects terminal operators against liability for damage to vessels, cargo and property of others while in their care, custody and control. Typical assureds are marine terminal operators who may have actual or contingent exposures arising out of the operation of wharves, piers, docks, stevedores, storage tanks or warehouses. Coverage The marine industry has never developed a universal definition of terminal operator s liability. Some forms simply combine wharfinger s and stevedore s liability coverages, while others include warehouseman s legal liability. Still other forms cover only warehousing. Each of these forms may or may not include CGL coverages. In all cases, a careful analysis of the proposed form will help to determine the extent of coverage. Key Underwriting Considerations The following address warehousing exposures: MARINE TERMINAL OPERATOR S LEGAL LIABILITY Marine Liability Products Description of facilities (number of tanks and storage buildings with attention to age, construction, and separation between structures) Types of cargo stored and estimates of value exposed Throughput or turnover of the cargo in the facility The quality of fire and theft protection Volume of truck, railcar and pipeline activity Existence of any container stuffing, cargo consolidation or freight forwarding Liabilities assumed or excluded in the terminal s warehouse receipt What operations are subcontracted to others? Do all subcontractors carry all necessary coverages from approved carriers? Are the subcontractors coverage limits adequate? Is the assured named as an additional assured in the subcontractors coverages? Claims history Environmental exposures, including flood and windstorm InSightful Tip Because a standard Terminal Operator s Legal Liability form does not exist, assureds should consult with their agent or broker to ensure that their program includes all necessary coverages. Assureds should also make sure that subcontractors carry all necessary coverages. Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 Robert Palmer rpalmer@prosightspecialty.com 212-551-0619 12
MARINE PRODUCTS LEGAL LIABILITY
MARINE PRODUCTS LEGAL LIABILITY Marine Liability Products Marine Products Legal Liability covers claims arising from marine products. Typical assureds are manufacturers, importers and distributors of watercraft and their component parts. Coverage Liability for property damage and bodily injury arising out of an actual or alleged defect in the assured s product. Key Underwriting Considerations Nature of the product. Is it intended for consumer or commercial markets? Is the product a component or part? If so, are there any installation exposures? What insurance or contractual protections do suppliers provide? (This is particularly important if the assured is primarily an importer or distributor.) How long has the product been sold by the assured? What is the receipts history? Are any foreign sales contemplated? Claims history, including any recalls or discontinued products InSightful Tip Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 Robert Palmer rpalmer@prosightspecialty.com 212-551-0619 14 Marine Products Liability is written on both claims-made and occurrence forms. Some occurrence forms may include a sunset clause, or date after which no further claims can be made against the policy. Assureds should review their policy to make sure that they are comfortable with any claims cutoff dates.
MARINE CONTRACTOR S LEGAL LIABILITY
MARINE CONTRACTOR S LEGAL LIABILITY Marine Liability Products In addition to stevedores, boat builders and ship repairers, a large number of contractors are involved in shoreside contracting activities such as dock and pier construction, piling and foundation work, dredging and diving activities. What s more, drilling contractors, engineering and logging services, as well as caterers, janitorial services and roustabouts all provide services for the offshore oil and gas exploration and production industry. In doing so, such firms are faced with marine liability exposures. Typical assureds are any firm that would normally purchase a CGL policy but is seeking the underwriting and claim-handling expertise of a marine market. Coverage Generally those exposures picked up by a non-marine CGL form, plus additional coverages tailored to meet the special contractual, chartering and coverage territory needs of the assured. Key Underwriting Considerations Work performed, receipts history, payroll, subcontracting costs, loss history, etc. Description of any ongoing projects, as well as the firm s five most recently completed projects Watercraft exposures? Does the assured own or charter any vessels? Will employees of the assured be transported or working on vessels owned or chartered by third parties? Additional assureds and hold-harmless requirements InSightful Tip Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 Robert Palmer rpalmer@prosightspecialty.com 212-551-0619 16 By amending the watercraft exclusion and including wreckremoval coverage, a CGL can provide coverage for most contractors P&I exposures other than injury to employees. Coverage for employee crew claims is discussed in the following section.
MARINE EMPLOYER S LEGAL LIABILITY
MARINE EMPLOYER S LEGAL LIABILITY Marine Liability Products Under federal law (the Jones Act), masters and members of the crew are not restricted to statutory compensation acts and may bring a negligence action against their employers for injuries sustained in the course of employment. Crew claims are ordinarily covered under a P&I policy, so vessel owners do not usually need separate Marine Employer s Liability (MEL) coverage. However, any assured whose employees are traveling on or working from vessels has a contingent MEL exposure. Key considerations will be the length of time the employee is dedicated to a particular fleet of vessels and the type of work performed. Coverage A MEL policy covers an employer s potential liability under the Jones Act in excess of a deductible or retention. A $25,000 sublimit is often available from the assured s workers compensation carrier, and MEL policies can attach excess of this amount. Key Underwriting Considerations Total over-water payroll, together with payroll estimates for Longshore and Harbor Workers Compensation Act and Jones Act exposures Location, duration, and nature of work being performed Average and maximum number of employees exposed at any one time Claims history Particular attention paid to the number of divers, if any InSightful Tip Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 Robert Palmer rpalmer@prosightspecialty.com 212-551-0619 18 Some P&I carriers limit Jones Act coverage to specified crew. The intent is to limit coverage to employees performing traditional crew functions and to exclude coverage for contracting personnel working from vessels. In such cases, vessel owners should consider MEL coverage.
EXCESS LIABILITY COVERAGES
EXCESS LIABILITY COVERAGES Marine Liability Products The three basic types of excess liability policies: Following Form: Unless endorsed otherwise, this form provides additional limits insurance on the same terms and conditions as the primary policy. Coverage is provided in excess of one or more scheduled primary marine liability policies. Bumbershoot: A marine umbrella form that also provides excess non-marine liability coverage on a following-form basis. Umbrella: A non-marine liability umbrella form that may also provide marine liability coverage on a following-form basis. Typical assureds are any assured who desires or is contractually required to purchase additional limits in excess of primary amounts. Coverage Losses exceeding the occurrence or aggregate limits of primary policies. Under certain circumstances, Bumbershoots and Umbrella forms also cover gaps in the primary insurance program. Key Underwriting Considerations Description of foreign and domestic operations Receipts, payroll, vehicles and loss history Primary coverages and premiums With respect to marine liability coverages, the same information that would be considered by a primary underwriter InSightful Tip Tom Zdrojeski tzdrojeski@prosightspecialty.com 212-551-0623 Robert Palmer rpalmer@prosightspecialty.com 212-551-0619 20 There has been a proliferation of excess liability forms in recent years. Many coverages are now written on a claims-made basis, and some occurrence forms include claims sunset clauses. Assureds should be aware of exactly what coverage is being offered, with particular attention to retroactive dates, sunset clauses and restrictive endorsements.
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