Ship Repairers Insurance: Managing Third-Party Property and Custody Risks

Ship repairers routinely take physical control of customer-owned vessels, equipment, and onboard systems. Whether a vessel is hauled out, dry-docked, or undergoing onboard repairs, that control creates significant third-party property exposure. 

Your clients may well ask you: Does ship repairers insurance cover damage to customer vessels while they’re in your care? The answer is yes, but only when coverage is properly structured. Unfortunately, many ship repair operations mistakenly rely on general liability policies that were never designed to handle care, custody, and control exposures.

What Are Care, Custody, and Control Risks for Ship Repairers?

Care, custody, and control risks arise anytime a ship repairer assumes responsibility for a vessel or its components. This includes vessels hauled onto land, positioned in dry docks, or moored at a repair facility while work is underway. It also extends to onboard systems, navigation electronics, engines, and stored customer equipment.

From starboard to the stern, potential risks are everywhere. Fires can occur during welding or hot work. Vessels may shift or suffer damage during lifting, blocking, or launching. In some cases, water intrusion or accidental sinking can occur while systems are disconnected or modified. And vessel casualties are always a possibility.

Notably, the risks that a ship repairer faces are typically excluded or severely limited under standard general liability policies. General liability is designed to address third-party bodily injury or property damage, not property that has been entrusted to the insured for repair or service.

Does Ship Repairers Insurance Cover Damage to Customer Vessels?

Ship repairers insurance is specifically designed to address damage to customer vessels while they are in the insured’s care, custody, or control. Coverage applies differently from general liability and is structured around the value and condition of the vessel at the time it is entrusted to the repairer.

That said, terms, limits, and conditions matter. Coverage may include sublimits for certain types of property, restrictions related to specific operations, or exclusions tied to contractual obligations. Agents are often asked whether coverage applies during storage, while subcontractors are involved, or when work is partially completed.

Clear documentation of vessel values, scopes of work, and contractual requirements is essential so that coverage responds as intended.

Overlooked Custody Exposures That Can Drive Claims

Some of the most costly claims stem from less obvious custody exposures. Damage to navigation electronics, propulsion systems, or integrated technology can exceed expectations, especially on modern vessels. Winter can bring unpleasant surprises, with blizzards and ice damaging a vessel. Environmental exposures, such as fuel or oil spills during repairs, can further complicate losses.

Extended storage periods and the involvement of multiple trades or subcontractors also increase complexity. Determining responsibility after a loss may involve contracts, timelines, and overlapping operations.

One item that should certainly be on your to-do list: Review repair contracts, and confirm declared vessel values with insureds. Small documentation gaps can have outsized consequences at claim time.

Managing Custody Risks With the Right Marine Partner

Third-party property and custody risks are central to ship repair operations. Relying on generic coverage solutions can leave gaps when vessels are damaged under a repairer’s control.

Specialized ship repairers insurance programs are designed to reflect how shipyards actually operate, from hauled vessels to onboard system work. Partnering with a marine-focused specialist such as Merrimac Marine Insurance helps agents structure coverage that aligns with real-world shipyard exposures.

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.