Product manufacturer liabilities exist regardless of the industry. Liabilities may appear when a manufacturer’s products are faulty or if they cause unexpected injury to others. In the commercial marine industry, marine manufacturer liabilities represent significant exposures.
The boating industry has seen its share of liability concerns, especially when defective vessels or equipment have caused property damage, injury, or death. For boat and yacht builders, managing liability risk exposures are the key to long-term success. Understanding liability risks and limitations helps manufacturers protect themselves, their businesses, and their employees from losses.
Marine Manufacturer Liability Considerations
Boat and yacht builders have a duty to their customers to provide well-made products free or as reasonably free of defects as possible. Failure to do so may result in significant manufacturer liabilities; there are specific laws governing liability claims arising from defective maritime products. In general, manufacturers of defective parts are held responsible if injuries or death occur as a result of the use of those products. Employers may also be held responsible in a liability claim if they fail to adequately inspect parts or equipment for defects.
If someone were to become injured due to defective maritime parts, specifically maritime workers, general maritime laws recognize that the injured party has a valid liability claim. There is one caveat, however: for the defective product claim to be valid, the injury must have occurred on navigable waters. While the concept of navigable waters may vary, commercial marine establishments including docking or mooring slips may fall under broad definitions; in other words, a vessel does not necessarily have to be at sea for a liability claim to be considered valid.
Products must also meet the definition of “defective” as covered by general maritime law. Any maritime product is considered defective if it has flaws in the design, composition, or construction of the product. If warning labels or markings are not adequately provided before use of the product, that product may also be considered defective. Defective maritime products that boat builders should be concerned with include:
- Electronics and electrical systems
- Fuel tanks/cells
- Safety equipment
- Vessel hulls
- Railings and decks
The major takeaway for maritime business owners is that just like their land-based counterparts, employers and manufacturers have legal duties when it comes to producing parts and equipment. Employers also have legal obligations to provide safe workplaces for their employees. Lapses in these obligations can result in injury, potentially opening the door to expensive liability claims. For boat builders, boat manufacturer liabilities insurance may help to protect business owners from certain liability exposures.
Supreme Court Ruling on Maritime Product Liability
In March 2019, the United States Supreme Court ruled that product manufacturers may be sued for maritime products modified by third parties with the knowledge of the original manufacturer, especially if those modifications result in injury to maritime workers. The ruling – covering federal maritime tort law – came as a result of two U.S. Navy veterans who were exposed to asbestos aboard Navy vessels on which the plaintiffs served. The plaintiffs allegedly developed cancer as a result of their asbestos exposure aboard the vessels. The vessels were not originally manufactured with asbestos; the material was added based on instructions by the shipbuilder. In addition, the plaintiffs claimed that they were not given adequate warnings of the presence of asbestos.
The Supreme Court ruling effectively expanded product liability for boat manufacturers, specifically their “duty to warn” of hazardous materials or other product modifications. In the ruling, it was determined that a product manufacturer has a duty to warn when and if:
- The manufacturer’s original part requires incorporation or modification of the part;
- The manufacturer knows or has reasonable knowledge that the incorporation or modification may be dangerous in its intended use(s);
- The manufacturer has no reason to believe that the incorporated/modified part’s users will be aware of the potential danger.
Boat manufacturers insurance typically provides broad liability coverage. However, with the recent Supreme Court ruling and the evolving nature of federal maritime laws, boat and yacht builders need to take the steps needed to minimize liability exposures. By doing so, they are more able to protect their business interests as well as the employees and customers who expect safe, reliable, and defect-free parts.
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.