The Equipment That Did Not Fit Any Form

How specialized marine equipment is outpacing marine contractors insurance forms, and what agents need to ask when placing marine equipment coverage.

A marine construction company added a remotely operated underwater vehicle to their fleet. The ROV handled pipeline inspection, hull surveys, and site assessment. It cost $340,000 and became central to the company's work within two years.

When the agent went to renew, nobody could agree on where the ROV belonged. The inland marine carrier said it was a watercraft, and its equipment floater sublimited electronic equipment to a fraction of the ROV's value while excluding the underwater environment entirely. The hull carrier said it wasn't a vessel and declined to schedule it. The GL carrier questioned whether the ROV's operations created liability that the base form didn't address.

Eighteen months in, the company still didn't have proper coverage. Then the ROV was damaged during a survey. No policy responded correctly, and the company absorbed most of the loss.

The ROV wasn't unusual. Dozens of marine contractors are running the same equipment right now. The forms just haven't caught up.

Why Specialized Marine Equipment Creates Placement Problems

Standard marine insurance forms were written for the equipment categories that existed when the forms were developed: cranes, heavy equipment, watercraft, electronic systems. Equipment that doesn't fit one category cleanly falls into the gaps between forms, with each carrier pointing to a different exclusion.

The industry is producing new equipment faster than the market is producing forms to cover it. The types that most often create placement problems on marine contractors’ accounts:

• Remotely operated vehicles (ROVs) for underwater inspection, survey, and construction

• Unmanned aerial systems (drones) for vessel inspection and site survey

• Autonomous surface vessels for data collection and patrol

• Subsea tooling for pipeline repair, salvage, and offshore work

• Integrated sensor and monitoring platforms

Where the Coverage Gaps Appear

The failure points that show up most often when specialized equipment is involved in a claim:

• Inland marine floaters whose electronic sublimits don't reflect the value of sophisticated systems

• Hull policies that exclude equipment not permanently installed on a scheduled vessel

• Marine equipment floaters that exclude waterborne operation the moment the equipment enters the water

• GL policies that don't address liability from operating unmanned or remotely operated systems

How to Approach Scheduling on Marine Accounts

When an account includes equipment that doesn't fit standard categories, the question isn't which existing form covers it. It's how to structure coverage around the equipment's operating environment and value. Before placing or renewing:

1. Inventory the equipment and what it does. Not just make, model, and value, but where it operates and what happens when it fails. Equipment that works in multiple environments needs coverage that follows it across all of them.
   
   
2.  Identify each form covering it, and what each excludes. A piece of equipment that appears covered often isn't, once the exclusions are read carefully.
   
   
3.  Check for third-party liability the GL doesn't address. Systems operating near infrastructure or on third-party vessels can create scenarios standard GL forms weren't written to handle.
   
   
4.     Bring the account to a marine specialist before binding. Standard carriers write what they're comfortable with and exclude the rest. A marine MGA can structure coverage that doesn't leave gaps at the edges of what standard forms will write.

If you're working a marine contractors account with equipment that doesn't fit cleanly into standard categories, that's a submission worth bringing to us before renewal.

Have an account you'd like us to look at?
Reach us at Ask@LIGMarine.com or call (727) 578-2800.
Send submissions to Submit@LIGMarine.com or visit LIGMarine.com/Apps.