Marina Insurance Programs and Contractor Oversight: Coverage Gaps in Maintenance Season

Spring maintenance season is one of the busiest times of year for marinas and their contractors. Operators may be preoccupied with hiring contractors to deal with dock repairs, electrical upgrades, fueling system overhauls, and structural inspections — and that surge of contractor activity also brings a surge in exposure.

For insurance agents advising marina clients, this is precisely when marina insurance programs need the closest scrutiny — because contractor oversight is where some of the most significant and least expected coverage gaps tend to emerge.

Contractor Risks in Marina Insurance

Third-party contractors — electricians, dock builders, marine service vendors, fuel system technicians — increase the likelihood of mishaps at marinas. In fact, research estimates that 75% to 96% of accidents on the water are due to human error.

It makes sense that contractors would introduce risk to a marina. Each individual brings their own equipment, methods, and potential to cause damage to property or vessels on the premises.

Within marina insurance programs, coverages like general liability (GL), marina operators legal liability, and products and completed operations all become relevant when contractors are on site. The complication is that these policies are typically written around the marina’s own operations. So, when a contractor damages a dock section or a berthed vessel, the question of whose insurance policy should respond first — and who is ultimately responsible — isn’t always clear.

Even without accidents, contractor activity at marinas is fairly frequent. Agents should ensure that liability ownership is clearly defined in contracts before any work begins, not after a claim is filed.

Risk-Transfer Gaps Agents Miss

Risk-transfer failures in marina contractor situations aren’t always dramatic — they can be administrative. For instance, a contractor is hired without a certificate of insurance (COI). Or perhaps a COI lists the marina as an additional insured but doesn’t specify the right policy or scope. Maybe the issue is a hold-harmless agreement buried in a service contract that hasn’t been reviewed in years. Each of these gaps may leave the marina more exposed than anyone realizes.

Agents should verify that every contractor working on a marina client’s property carries adequate limits, names the marina as an additional insured, and signs a hold harmless agreement that’s been reviewed by an expert in marine exposures. 

These documents are the foundation of risk transfer. Without them, the marina’s own policy becomes the default.

Why Risk Transfer Breaks Down

Even when contractors carry insurance, their coverage may not respond to marina-specific losses. A general contractor’s policy with a water-related work exclusion is a common example: The contractor damages a dock or submerged structure and files a claim with their GL carrier, and the claim is denied. The marina’s policy then becomes the path of least resistance for the vessel owner or the marina itself to recover.

Agents should verify not only that a contractor has insurance but also that their policy actually covers the type of marine work being performed and the environment in which it occurs.

Property and Pollution Exposure Risks

Contractor activity around docks, fueling systems, and mechanical infrastructure can create concentrated property and environmental exposure. A lot can go wrong when you combine property, pollution, and contractors. To wit:

• A spilled fuel line during system maintenance
• Structural damage from a misplaced lift
• A fire caused by electrical work.

All of those scenarios can result in losses spanning multiple coverage lines — and potentially reveal other gaps in each line. That’s why bumbershoot or umbrella coverage can come in handy.

Marina insurance programs should address these exposures across real and personal property, piers, wharves and docks, equipment and lifts, and business income. Pollution liability deserves particular attention during maintenance season, when fueling systems are being serviced and hazardous materials are more likely to be handled. In fact, a contractor-caused spill can generate cleanup costs, regulatory penalties, and third-party claims simultaneously.

All of which is to say that agents should confirm that pollution liability limits are sufficient and that the policy responds to contractor-caused events, not just marina-operated ones.

Strong Oversight Closes Coverage Gaps

Maintenance season losses involving contractors aren’t necessarily due to a lack of coverage. Problems pop up when coverage is not in harmony: The marina’s policies cover one thing, the contractor’s policies cover something else, and it’s as if the insurance contracts are both at the same karaoke bar but belting out completely different songs. Proactive contractor oversight, properly structured risk transfer, and a thorough policy review before the season begins are the most effective tools agents have for closing those gaps. 

As a managing general agent specializing in marina insurance, Merrimac Marine Insurance brings deep expertise in tailored programs for marine-related facilities, docks, and yacht clubs. Our flexible underwriting and strong carrier relationships allow us to build programs that reflect how marinas actually operate — including the contractor activity that comes with every maintenance season.

About Merrimac Marine Insurance

At Merrimac Marine, we are dedicated to providing insurance for the marine industry to protect your clients’ business and assets. For more information about our products and programs, contact our specialists today at (800) 681-1998.