A small shipyard was performing routine maintenance on a commercial fishing vessel—welding repairs, engine work, nothing unusual. During the welding, a spark ignited some residual fuel vapors. The resulting fire didn't just damage the vessel being repaired—it spread to two adjacent boats docked nearby.
Total loss: $4.2 million across three vessels.
The shipyard's general liability policy had a $2 million limit. The agent and the shipyard owner both assumed that would be adequate. Most projects were under $500K, and claims had been rare. But when they submitted the claim, they discovered the GL policy had a "care, custody, and control" exclusion that barred coverage for damage to vessels in the shipyard's possession.
The shipyard had no Ship Repairers Legal Liability (SRLL) coverage. They were liable for the full $4.2 million, with only $2 million in coverage that didn't even apply. The business filed for bankruptcy within six months.
The agent's question: "How was I supposed to know they needed SRLL?"
The answer: The shipyard was repairing vessels. That's exactly what SRLL is designed for—and exactly what standard GL explicitly excludes.
What Ship Repairers Legal Liability Actually Covers
SRLL is a specialized marine coverage designed specifically for businesses that work on vessels they don't own. It covers damage to vessels (and usually their cargoes) while those vessels are in the insured's care, custody, or control.
What it typically covers:
- Physical damage to vessels being repaired, maintained, or serviced
- Damage caused by fire, explosion, sinking, or collision while the vessel is in care, custody & control
- Loss of vessel equipment or Cargo
What it doesn't cover:
- The insured's own vessels
- Faulty workmanship and the cost to repair/replace their work
- Gradual deterioration or wear and tear
Why it matters:
Standard commercial general liability policies (Marine or Dry) exclude coverage for property in the insured's care, custody, or control. If your client works on vessels—even occasionally—and they damage one, MGL/GL won't respond. SRLL fills that gap.
Who Actually Needs SRLL (It's More Than Just Shipyards)
When agents hear "Ship Repairers Legal Liability," they think of large commercial shipyards. But SRLL applies to anyone who works on vessels they don't own, regardless of business size or scope.
Traditional shipyards and boatyards
Facilities that haul out vessels, perform repairs, conduct surveys, or store boats. This is the obvious category, but agents sometimes miss it for smaller yards.Marine repair and maintenance contractors
Businesses that travel to vessels to perform work, including mobile mechanics, marine electricians, canvas and upholstery shops, marine HVAC technicians, divers performing hull cleaning or underwater inspections, canvas and rigging installers, and independent surveyors or technicians. If they are working on someone else's vessel, they need SRLL.
Marina operators who perform any vessel services
Marinas that just rent dock space probably don't need SRLL. But if they also provide repair services, maintenance, fueling, or haul-out services, they're exposed. Many marina policies include limited SRLL coverage, but it's often inadequate.
Marine contractors doing vessel-related work
Pile driving companies, dredging contractors, or marine construction firms that occasionally work on or near vessels. Even if vessel work is 10% of revenue, damage to a single vessel often exceeds that amount and can easily exceed total GL limits.
If your client's work involves physically touching, boarding, or working on vessels they don't own, SRLL should be part of the conversation.
Why SRLL Gets Missed (Even on Obvious Accounts)
SRLL is one of the most frequently overlooked coverages in marine insurance, and it's usually not because agents are careless. It's because the exposure doesn't always announce itself clearly.
The "We Mostly Do Land-Based Work" Problem
A marine contractor does dock construction, bulkhead repairs, and marine pile driving. Maybe 80% of their work is shore-based. But twice a year, they take on a project that requires them to work on or near vessels—barge-mounted equipment, vessel-based pile driving, or repairs to floating docks.
That limited vessel contact feels incidental, so SRLL gets skipped. Then they damage a vessel during one of those "occasional" projects, and there's no coverage.
The "The Vessel Owner Has Insurance" Problem
Agents and clients often assume that if a vessel is damaged during repairs, the vessel owner's hull insurance will cover it. Sometimes that's true, but the hull insurer will almost always subrogate against the repair facility.
If the shipyard or repair business has no SRLL coverage, they're paying out of pocket for damages that should have been insured.
The "We've Never Had a Claim" Problem
Many marine repair businesses operate for years without an SRLL claim. That's not because the exposure doesn't exist, it's because they've been lucky. When a claim does happen, it's usually catastrophic. Fire, sinking, major structural damage, these aren't $10K claims. They're often total losses that exceed standard GL limits by significant margins.
Some clients push back on SRLL premium, and agents trying to keep the account competitive leave it out. But the cost of one uninsured SRLL claim will almost always exceed years of premium. This is coverage you buy hoping you never need it, and go bankrupt without if you do.
What to Do When a Client Pushes Back on SRLL
When clients push back on SRLL premium, here is how to frame the conversation:
"Your general liability policy specifically excludes damage to vessels in your care, custody, or control. That's standard across all GL and most MGL policies. It's not a gap we can close by switching carriers.
If you damage a vessel during repairs—fire, sinking, collision while hauling out, anything—you're responsible for the full value of that vessel unless you have SRLL coverage. Even if the vessel owner's insurance pays for repairs, they'll come after you to recover the cost.
SRLL coverage protects your business from a single catastrophic event that could otherwise force you to close.”
Most clients who understand the actual exposure, especially when you quantify the potential loss, will agree to the coverage.
How to Identify SRLL Exposure Before It's a Problem
If you're working with any account that involves vessel repair, maintenance, or services—shipyards, marine contractors, mobile mechanics, or any business that touches vessels they don't own—SRLL coverage needs to be addressed.
Don't assume the vessel owner's insurance handles it. Don't assume GL/MGL is adequate. And don't skip it because the client has never had a claim.
We've created a reality-check tool that helps you identify common SRLL exposure scenarios and determine when coverage is warranted.
And if you're working with an account where SRLL exposure exists but you're not sure how to structure limits or address client pushback, we're happy to review it with you.
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