Insurance for marine service providers in California

Where ordinary liability falls short

Commercial general liability (CGL) covers injury and property damage to third parties from your operations and completed work. The California Department of Insurance lists its major exclusions, and two of them matter for boat work:^[1]

• Watercraft. Liability arising from watercraft can be excluded.
• Care, custody and control. Damage to property in your care, such as the customer's boat while you work on it, can be excluded.

Marine trades programs fill these gaps. One national small-marine-trades program, Great American's Marine Craftmaster, offers ship repairer's legal liability for customers' boats in your care, bailee coverage for customer property ashore, tools and equipment coverage, and optional pollution coverage. It lists underwater hull cleaning by divers as an eligible trade.^[2]

The coverages, and who needs them

Sources for the table: ship repairer's legal liability, bailee, tools and pollution are described from the Craftmaster program^[2]; P&I from a wholesale broker's overview^[3]; auto from the Department of Insurance^[4][1]; workers' comp from DIR.^[5]

Workers' comp and the longshore act

With employees, California workers' comp is required.^[5] The federal longshore act (USL&H) excludes people employed to repair recreational boats when they have state workers' comp coverage.^[6] It doesn't exclude work on boats regularly carrying passengers for hire or in commercial service.^[7] If you work on charter or commercial boats, or in a boatyard, ask your broker about a USL&H endorsement.

Divers

Policies written for dive instructors or dive shops are aimed at teaching, not working dives. If you clean hulls, confirm with your broker that the policy doesn't exclude commercial or working dives.

What California harbors ask for

• Ventura Harbor: $1,000,000 combined single limit general liability on an occurrence basis, with additional insured on both the liability and auto policies, and the endorsement attached; workers' comp if you have employees.^[8]
• Santa Barbara: $2,000,000 for major repair (engine, hull, canvas) and commercial diving; $500,000 for minor maintenance.^[12]
• Santa Cruz boatyard: general liability, $1,000,000 ship repairer's legal liability, workers' comp with USL&H, and auto.^[9]
• KKMI boatyard: its sample certificate shows general liability with ship repairer's legal liability, auto, workers' comp with USL&H, and P&I.^[10]
• San Mateo County Harbor District: hull, machinery and P&I (including towing) if you operate a vessel.^[11]

The vendor requirements table has every harbor we've researched. The insurance coverage check compares your policy with their published minimums.

Certificates and additional-insured endorsements

A certificate of insurance (usually the ACORD 25 form) is a one-page summary your broker issues. The form itself says it is issued as a matter of information only and confers no rights on the certificate holder.^[13]

Being additional insured is different. It gives the harbor coverage under your policy, and it only exists if your policy has an endorsement that adds them. A certificate that says "additional insured" without the endorsement behind it doesn't make it so.^[14] That's why harbors such as Ventura want the endorsement page attached.^[8]

When you ask your broker for a certificate for a harbor, give them:

• The certificate holder name and address exactly as the harbor gives it. South Beach Harbor, for one, names a specific holder and a long-form additional-insured wording.^[15]
• The additional-insured wording, word for word. Santa Barbara's is "City of Santa Barbara, its officers, employees, and agents."^[12] Clipper Yacht Harbor's is Clipper Yacht Co. LLC.^[16]
• The limits the harbor requires, and which policies need the endorsement.
• Any extras the harbor names, such as a waiver of subrogation or notice of cancellation.

The COI request letter fills these in from the harbor's published rules.

Working with a broker

• Use a broker who writes marine trades business, not only personal boat policies.
• Check their license with the California Department of Insurance.^[1]
• Describe every kind of work you do, including diving, moving boats, sea trials and work on charter or commercial boats. Ask what is excluded.
• Ask how quickly they can issue a certificate and endorsement for a new harbor.