Understanding Boat Builders’ Insurance

Jan 20, 2022

From performing hot works at heights, to handling fibreglass, building a vessel involves a number of complex risks. It is, therefore, important that the insurance coverage you choose, comprehensively protects each Builder for the exposures presented.

Traditionally, a Boat Builder would have the following main insurance products in place:


1: Ship Builders’ Risk Insurance

This policy covers accidental loss or damage (fire, storm, earthquake, etc.) to the vessel whilst under construction.

The coverage is structured on an indemnity basis. This means that the Insurer will return you substantially back to the same position as you were prior to the loss. As an example, if you have completed 40% of the build, the Insurer will pay to reinstate the build to 40% completion.

The policy can also cover post completion exposures, such as sea trials and delivery.


2: Ship Repairers Liability Insurance

Also known as Marine Combined Liability, this policy covers the liabilities incurred following bodily injury or property damage caused by the Boat Builder. It is important that all contractors who enter the ship yard, also have this same insurance cover in place.


What level of insurance coverage is required?

For a standard Boat Builder, the most common Ship Repairers’ Liability limit requirement is $20,000,000. For large Ship Builders, we would recommend limits up to $50,000,000.

With regards to insuring Ship Builders’ Risk Insurance, a policy limit should be set based on the maximum value of any one vessel being built in the policy period. For example, if the majority of the boats are worth $250,000, a policy limit of $300,000 should be arranged.


How much does Boat Builders’ Insurance cost?

For a small boat builder requiring Ship Repairers’ Liability Insurance, the premiums commence from $2,500 plus GST & SD. Ship Builders’ Risk Insurance is calculated based on the value of boats built throughout the year. Policies commence from $5,000 plus GST & SD.


What are some tips to look out for?

The Ship Repairers’ Liability policy should also include an extension called ‘Property in Your Care, Custody or Control.’ This is important for finished vessels returning to the builder’s yard for a repair or service, as the builder is then is deemed responsible to protect the vessel whilst in their control.


Property in Physical & Legal Control:

Most Public Liability policies usually include a standard sub limit of $250,000 for goods that are in the physical control of a repairer, such as a boat. Given the high valued nature of most vessels, under a Marine Liability policy, the standard $250,000 limit is increased to the full policy limit, e.g. $20,000,000.

This is particularly important as certain Pleasurecraft insurance policies may not respond to out-of-water repair works being conducted. An example of a claim here could be a vessel catching fire due to the work the Boat Repairer may be performing. It is likely that the Boat Repairer would be held liable for the loss, if proven negligent.


What are some examples of Boat Builders’ insurance claims?

Insurers quite often see damage occur from Sub-Contractors working on vessels who do not follow the same safety procedures that the Boat Builder requires. In addition, there are also many accidents that occur during the launch phase and sea trials.


How can I obtain an Insurance Quote?

Contact one of our Marine Insurance Consultants today to obtain a competitive quote for your Ship Builders’ Insurance.


Feel free to reach out to our insurance expert today for more information.