Risk management

Marine protection and indemnity coverage

Clause

Contractor shall obtain, at Contractor’s expense, and keep in effect during the term of the Contract, Marine Protection and Indemnity Coverage.  Combined single limit per occurrence shall not be less than $ _______.  

When do they apply?

  • Use when contract services involve the use of a vessel on navigable waters.​

Notes

  • Coverage is provided for a wide range of liability exposures, most notably for: the liability of a vessel owner for damage to property struck by his ship (other than other vessels or property aboard those vessels) such as wharves, piers and other structures along waterways; damage to its cargo; injury or illness of its crew or passengers, and injuries to persons on board other vessels struck by the ship. Note: CGL coverage would still be necessary for shore side liability exposures, if applicable to contract services.
  • Marine Protection and Indemnity Coverage does not protect against physical damage to the hull of the owner´s vessel or for damage to other vessels and their cargoes as a result of a collision with their vessel. If you are concerned about this exposure, consider requiring hull insurance with collision liability coverage. It covers the cost of raising, destroying, or removing the wreck when a ship owner´s vessel sinks and constitutes a hazard to navigation but excludes most pollution exposures.
  • Marine Protection and Indemnity Coverage insurance is issued on a “claims made” basis. Require "Tail" Coverage for all "claims made" coverage. Jones Act coverage replaces Workers’ Compensation Coverage for seaman on American vessels "in navigation" status

Additional information

  • Hull insurance is mainly a property insurance covering loss of, or damage to a ship owner´s vessels and their equipment. Hull insurance often includes collision liability insurance as well, covering the ship owner´s liability for damage to other vessels and their cargoes resulting from a collision.
  • Vessel in navigation status - Since an individual must have an employment-related connection to a vessel or identifiable fleet of vessels in navigation to qualify as a Jones Act seaman, what qualifies as a "vessel in navigation" is a crucial issue. The term "vessel" has been broadly defined to include any kind of watercraft or equipment capable of being used for transportation on navigable waters. In addition to the usual craft found upon rivers, lakes, and oceans, the following have been found to be vessels even though they lack motive power: houseboats, rafts, dredging barges, floating cranes, floating derricks, drilling barges, jack-up drilling rigs, and submersible or semi-submersible rigs. The controlling factors in determining whether a craft is a "vessel" are the purpose for which it was constructed and the business in which it is engaged.
  • A vessel is considered to be "in navigation" when it is engaged as an instrument of commerce or in transportation on navigable waters. The term is construed liberally. Consequently, vessels which are in port or under repair are still considered "in navigation" as are certain vessels which are stationary, moored, or fixed in place. For example, a jack-up drilling rig on location is still considered to be "in navigation" even though it is not moving. However, a vessel which is under construction and still undergoing sea trials is not yet "in navigation" for Jones Act purposes

Setting limits

  • Assess the risks of the particular contract to determine appropriate insurance limits and risk control measures.
  • Ask questions such as, but not limited to: What types of property could be damaged if struck by the Contractor´s vessel during the performance of contractual activities? Are wharves, piers or any other structures located along the waterway where the activity will take place? What is the usual amount of vessel traffic in the area? What types of vessels will be in the area? What types of cargo are normally carried? Do any of these vessels carry passengers