Marine General Liability Insurance: What Agents Should Know About Subcontractor Exposures

A marine contractor rebuilding a commercial pier brings in a dive company to inspect and repair submerged pilings. The task requires skills and equipment the contractor doesn’t have in-house. That’s a common scenario on marine projects, but it raises questions that every agent should clarify when evaluating the contractor’s marine general liability insurance: What exactly is the subcontractor doing, and how could that work affect the contractor’s own liability exposure?

Answering those questions takes more than collecting a certificate of insurance. Agents should understand the work, where it takes place, what the contract requires, what insurance the subcontractor actually carries, and who is responsible for the project.

That said, it’s important to understand that using subcontractors doesn’t automatically create a coverage gap and that the contractor’s marine general liability (MGL) policy won’t automatically respond to every claim connected to subcontracted work. The details make those determinations.

What Work Is Being Subcontracted?

The marine construction services industry is a $20 billion market and is expected to be at $30 billion by 2025. That’s a lot of work for subcontractors.

Marine contractors may hire specialized subcontractors for work that requires expertise their own crews don’t have. Commercial diving is one example.

During a pier reconstruction project, a contractor might hire a self-employed diver to inspect or repair underwater structures. The diver could be working beneath the pier, near moored vessels and other waterfront property. These conditions introduce risks that differ from those faced by crews working above the waterline, including potential damage to nearby property and injuries associated with underwater operations.

Agents should examine the subcontractor’s specific responsibilities and work location, whether aboard a vessel, underwater, at a dock, or elsewhere on the project site. They should also identify nearby third-party property that could be affected by the subcontractor’s operations. These details help agents assess liability exposures and determine which policy provisions need closer review.

What Do the Contract and Insurance Show?

Next, look at the paperwork. Examine the subcontractor’s insurance requirements, indemnity provisions, and additional insured obligations, as well as any requirements flowing down from the project owner’s contract with the contractor.

Agents should then verify the subcontractor’s insurance information, including which policies apply, what coverage they provide, and what limits they carry where relevant. A certificate of insurance shows reported coverage as of a point in time. It doesn’t amend the policy or guarantee that a particular claim will be covered.

Contract language works the same way. Indemnity provisions and additional insured status can shift some risk, but neither automatically transfers every liability to the subcontractor or its insurer. Whether something is covered depends on the specific wording, the applicable policies, and the law that governs the contract. 

Who Is Responsible for the Work?

Finally, determine who performs, supervises, coordinates, and contractually takes responsibility for the subcontracted task. A contractor who directs the dive team’s schedule, controls site access, or supervises the work may face a different exposure than one who hands a job to an independent specialist.

If a third party alleges bodily injury or property damage arising from the work, the contractor’s own role can shape its potential liability. Contractual responsibility, legal liability, and insurance coverage are related, but they remain separate questions. Agents should assess the contractor’s potential exposure alongside the subcontractor’s insurance arrangements and the wording of the contractor’s MGL policy.

Look Beyond the Certificate

Evaluating subcontractor exposure comes down to five account-review factors: the work performed, the work location, the contractual requirements, the insurance documentation, and responsibility for the work. You’ll get the clearest view when you and your client consider these details together, rather than relying on a certificate or a single contract clause.

Reach out to Merrimac Marine Insurance to evaluate marine contractor accounts, including subcontractor arrangements.

About Merrimac Marine Insurance

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