New York’s extensive coastline, vital waterways, and bustling ports mean that marine construction projects are a constant and crucial part of the state’s infrastructure.

From building and repairing docks, piers, and bulkheads to dredging operations and underwater structural work, marine contractors face a unique set of risks that demand specialized insurance coverage. Unlike land-based construction, working on or near the water introduces complexities that a standard commercial policy simply won’t address.

This article delves into the specific insurance needs of marine contractors in New York and highlights potential pitfalls to avoid, ensuring your business stays afloat even when the unexpected strikes.

The Unique Risks of Marine Construction

Marine construction is inherently riskier than its land-based counterpart. The dynamic environment of water, exposure to natural elements, specialized equipment, and unique legal frameworks (like admiralty law) all contribute to a heightened risk profile. Consider the following:

Vessel Operations: Your commercial watercraft are the backbone of your business. Collisions, groundings, severe weather, and mechanical failures can lead to significant damage to your own vessels and those of others.

Environmental Impact: Working in aquatic environments carries a significant risk of pollution. Fuel spills, chemical leaks, or accidental discharge of materials can lead to catastrophic environmental damage and hefty liability claims.

Worker Safety: The combination of heavy equipment, unstable platforms, and the unpredictable nature of water increases the likelihood of workplace injuries.

Property Damage: Damage to existing marine structures, third-party vessels, or even land-based property due to marine operations is a constant concern.

Contractual Obligations: Many marine projects involve complex contracts that require specific insurance coverages and can transfer significant risk to the contractor.

Essential Insurance Coverages for New York Marine Contractors

To effectively mitigate these risks, marine contractors in New York should consider a comprehensive insurance portfolio that goes beyond typical general liability. Here are some key coverages:

Marine General Liability (MGL): This is distinct from standard general liability. MGL is specifically designed for marine operations and covers bodily injury and property damage to third parties arising from your work on or near the water. It accounts for operations performed from your watercraft and potential damages to others’ property.

Hull and Protection & Indemnity (P&I) Insurance: This is crucial for protecting your vessels.

Hull coverage protects your commercial watercraft (hull, equipment, machinery) against physical damage from collisions, accidents, or extreme weather.

Protection & Indemnity (P&I) insurance covers liabilities arising from the operation of your vessels, including bodily injury to crew and passengers, damage to other vessels or property, and pollution.

Workers’ Compensation: Mandated by New York law for most businesses with employees, workers’ compensation covers medical expenses and lost wages for employees injured on the job. Given the dangerous nature of marine construction, this is an indispensable coverage.

Builder’s Risk Insurance: This policy protects construction materials, labor costs, and temporary structures during a project. For marine construction, it would cover the marine structure being built (e.g., a new pier) from perils like fire, flood, or theft during the construction phase.

Inland Marine Insurance: Despite its name, inland marine insurance covers property that is mobile or in transit over land, or temporarily stored off-site. For marine contractors, this is vital for protecting tools, equipment, and materials as they are transported to and from job sites, or while stored at locations other than your primary premises.

Environmental/Pollution Liability: Given the high risk of environmental incidents, specific environmental liability coverage is essential. This can protect your business from the costs associated with accidental pollution, contamination, and clean-up.

Commercial Auto Insurance: If your business uses vehicles to transport equipment or personnel to marine sites, commercial auto insurance is necessary to cover liabilities arising from vehicle accidents.

Commercial Umbrella/Bumbershoot Liability: This provides an additional layer of protection above and beyond the limits of your primary liability policies (MGL, commercial auto, etc.). In the event of a catastrophic claim that exceeds your underlying policy limits, an umbrella policy can prevent significant out-of-pocket expenses.

Contractor’s Equipment with Waterborne Coverage: This extends coverage for your valuable construction equipment when it is being used or transported on water.

Business Interruption Insurance: If a covered peril forces a halt to your marine construction operations, this insurance can help cover lost profits and ongoing expenses, helping your business weather the interruption.

Potential Pitfalls for Marine Contractors

Even with a robust insurance program, marine contractors in New York need to be aware of potential pitfalls:

Inadequate Contractual Risk Transfer: Marine construction contracts are often highly customized. Contractors must thoroughly review contract terms and conditions regarding insurance requirements, indemnification, and liability. Vague language or failure to ensure subcontractors have adequate coverage can leave you exposed. “Hard hammer” clauses in general liability policies can leave a contractor fully liable if a subcontractor’s insurance is insufficient.

Unverified Employment Qualifications: Hiring unqualified or improperly trained workers increases the risk of accidents and liability claims. Thorough pre-employment screening and ongoing safety training are paramount.

Job Site Hazards: Marine construction sites are dynamic and can present numerous hazards. Slippery surfaces, moving equipment, and boating traffic all contribute to risk. Implementing stringent safety protocols and ensuring proper lighting, especially during night operations, is critical.

Heavy Weather Preparedness: While you can’t control the weather, failure to take precautions during adverse conditions (e.g., securing loose objects, having emergency supplies, training staff for severe weather events) can lead to increased liability if injuries or damage occur.

Policy Exclusions and Limitations: Always read your policy carefully. Standard policies may exclude “acts of war” or specific types of cargo, and some may have restrictions based on the vessel’s age or condition. Understand what is not covered to avoid unexpected gaps.

Failure to Report Losses Promptly: Most insurance policies have strict time limits for reporting a loss. Delaying notification can jeopardize your claim.

Assuming Primary Contractor’s Coverage: If you are a subcontractor, do not assume the primary contractor’s insurance covers you. Always have your liability coverage.

For marine contractors in New York, a proactive and comprehensive approach to insurance is not merely a compliance issue, but a fundamental aspect of risk management and business longevity. The unique environment and operational complexities of marine construction demand specialized policies that go beyond standard land-based coverage. By understanding your specific insurance needs, carefully reviewing policy terms, and actively mitigating potential pitfalls, you can navigate the complex waters of marine construction with greater confidence, ensuring your projects – and your business – remain secure.

John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608-1346.

Resources:

• Commonwealth Insurance Services: Marine Contractor Insurance
• General Marine Inc.: New York, New York Builders Risk Insurance
• Contractors Liability: Buy New York Construction Insurance
• JAF Marine Insurance: Marine Insurance in Rockville Centre, New York
• Nusbaum Insurance Agency: Marine Contractor Insurance
• The Hartford: Inland Marine Insurance
• BGES Group: 10 Essential Contractor Insurance Requirements in New York; Demystifying New York Contractors Insurance
• Travelers Insurance: 6 Key Liability Risks for Marine Contractors
• G. Bowman: New York Ocean Marine Insurance
• Hofmann & Schweitzer: Maritime Insurance Risks | New York Maritime Injury Lawyer
• New York State Department of Financial Services: Information for Small Businesses
• New York State Office of General Services: Appendix G – Contractor Insurance Requirements
• Joyce Insurance: New York Inland Marine Insurance