Page 24: of Marine News Magazine (July 2012)

INSURANCEchoice when purchasing insurance. In addition to this basic hull, cargo and P&I coverage, many insurers have specialty policies for stevedore liability, wharÞ nger (wharf owner) liability, terminal operatorÕs liability, ship repairerÕs liability, ship builderÕs liability, chartererÕs liability, etc. and cover different exposures speciÞ cally related to the nature of each industry. In addition to these traditional marine policies, many insurers are beginning to offer what is called a ÒMarine General LiabilityÓ policy. This policy combines a traditional ÒCommercial General LiabilityÓ policy with other coverage speciÞ c to the marine industry, such as P & I coverage, or different legal liability coverage. While these policies address the unique needs of vessel operators, it is important to watch out for insurers limiting the policy coverage which you would normally expect from a Commercial General Liability policy. So, while a Marine General Liability may look and feel like it is providing typical Commercial General Liability coverage, it may in fact have many limitations on the insurerÕs possible exposure to liability. THE LAWYER ÕS PERSPECTIVE As the Courts have been slowly opening the door to awards of punitive damages in certain admiralty cases, you may want to look at the possibility of purchasing liability insurance coverage that does not exclude coverage for punitive damage awards. Almost all standard for insurance contracts exclude coverage for punitive damage awards. However, some insurers, for a price, will Òbuy backÓ the punitive damage exclusion of coverage. This buy back may be expensive, but if your operation puts you in a position where such an award may be more likely Ð such as operations that may be offensive to the non-maritime public Ð it may make Þ nancial sense for your company. For the prudent vessel owner, many insurers provide excess and umbrella insurance policies. Although both policies provide additional coverage, Excess Policies provide coverage over the limits of a speciÞ c policy and Umbrella policies provide excess coverage over several underlying policies. In the marine market, an excess policy may also be referred to as a ÒBumbershoot Policy.Ó These policies provide higher limits for primary liability coverage, such as general liability, P&I, legal liability, etc. Once the primary coverage is exhausted, the excess insurance policy steps in and provides coverage. Offshore construction contractors should talk to their insurance broker about the possibility of obtaining a builderÕs risk policy for any signiÞ cant projects that it works on. BuilderÕs risk policies provide coverage for the structure being built and include coverage for the materials to be used in the construction of the project once they are in route to the construction location. This type of insurance is purchased on a project by project basis. It is also important to note that a builderÕs risk policy does not provide any liability coverage. AN OUNCE OF PREVENTION While this article is by no means an exhaustive explanation of the intricacies of marine insurance, it aims to inform offshore contractors, dredging companies and vessel owners about some of the common policies available, and what to be aware of when obtaining insurance. Due to the increasing cost of insurance and the payment of claims, this is an area where a little knowledge can go a long way towards maintaining the proÞ tability of your company. Mr. DeMarcay is a partner in the law  rm of Fowler Rodriguez Valdes-Fauli. His areas of practice include Commercial Litigation, Admiralty, Personal Injury, Transportation, Real Estate, Construction and Corporate Law. www.frvf-law.com 24 MNJuly 2012