Commercial fishing – whether to harvest fish, lobsters or other marine life for sale or to take others on the water for their own fishing excursion – requires a comprehensive insurance plan that protects your physical assets as well as your finances. Before dropping a single net or taking on any passengers, you’ll want to make sure you’re rigged for success.
Commercial property insurance for commercial fishing operations
Let’s start by considering your physical assets. You’ve got a lot riding on your vessel and any onboard equipment, so what policies do you need to protect your ongoing operations?
Hull coverage is essential. It is similar to auto insurance in that it helps pay to repair or replace the physical hull of your boat as well as any standard machinery or equipment and personal property stored on board. The typical policy addresses losses due to incidents such as fire; burglary or theft; accidental damage, including damage caused by natural events or during maintenance and docking; jettisoning required to save the boat; unintentional sinking or capsizing; and crew errors.
The policy will not pay for normal wear and tear, damage caused by marine life, and other events that are illicit or excluded from coverage.
Provide a list of all onboard assets to your insurance professional to make sure your coverage options address them. Many policies exclude specific accessories or equipment, which may require an addition to your policy. This often includes life jackets, GPS or navigation equipment, anchors, and expensive vessel modifications.
Discuss any on-land transportation or winter storage of your boat, as this may lead to some policy adjustments by season.
Carefully consider whether you want damage compensation to be based on actual cash value (what the boat or equipment is worth today considering depreciation) or on replacement value (what would be required to replace the hull or equipment with something of similar quality). While actual cash value coverage carries a lower premium, this may leave you at greater risk in the long run.
Specify the navigation territories for your boat, whether exclusively inland, on coastal waterways within a certain distance of shore, or international. Getting specific coverage for certain regions and waters may be necessary, since your standard policy might be limited to U.S. waters or some other designated waterways.
Marine cargo insurance begins the moment your catch is on board and can extend through shipping, processing and storage. Marine cargo insurance covers physical loss or damage to your catch due to events including but not exclusive to:
- Fire
- Weather or natural events
- Capsizing
- Theft
- Required jettisoning
- Unintentional mishandling or equipment failure
- Shipping delays
It’s wise to select a marine cargo policy that also covers “concealed damage” – which is damage to your catch that may not be apparent initially but is revealed upon full inspection – as well as any lost revenue that you may suffer due to damaged goods or shipping delays.
Liability insurance for commercial fishing
In the operation of your business, you could be found responsible for injury to non-employees and damage to their property. Various liability insurance policies are designed to protect your financial liquidity and security by helping pay costs related to harm suffered by someone outside of your company due to your negligence or error.
Protection and indemnity (P&I) insurance addresses costs that may result from someone’s claim of bodily injury or property damage caused by your boat or crew. It may be included as part of your hull insurance or offered separately. The policy helps pay for legal fees, medical expenses, physical repairs, and eventual judgments against your business. Because boats present more opportunities for injury than many on-land activities, you’ll want to confirm that your policy carries adequate coverage levels for medical expenses in particular.
Pollution liability insurance goes beyond hull and marine coverage. While hull insurance will help with the costs of recovery and disposal of wreckage if your boat sinks, it will not address resulting pollution. If your boat has any hazardous materials on board – including fuel – you will be responsible for any cleanup or decontamination expenses. If you carry pollution liability coverage, your insurer will help with these expenses, which can be significant.
Uninsured boater insurance helps if you suffer losses due to another boater’s actions and that at-fault party’s coverage is missing or inadequate. In some jurisdictions, personal and commercial watercraft owners and operators aren’t required to carry liability insurance. If there is an accident caused by an uninsured vessel, your own uninsured-boater policy will help with the costs of any bodily injury or personal property loss that may be suffered by you, your passengers or crew.
Additional insurance that may float your boat
Depending on the specifics of your commercial fishing operation, you may want to add a few important coverages.
- Liquor liability – If you serve liquor on board, this policy will address costs that could arise if an intoxicated passenger harms another person or damages their property.
- Maritime workers’ compensation – In the 1920s, the Jones Act was created to protect the well-being of workers on boats that may travel into different state or international waters. It requires employers to purchase special workers’ compensation coverage that isn’t limited to just one state. Maritime workers’ compensation insurance covers costs related to on-the-job injury or illness regardless of whether you or your employees are found to be at fault.
- Business interruption – While your hull insurance will assist with the cost of repair or replacement of your vessel and equipment, it will not address income you lose while you are unable to operate your business due to the incident. Business interruption insurance can cover payroll expenses, lost income, bills and other operational costs during your period of recovery.
- Bumbershoot – This policy, designed specifically for the exposures faced by marine businesses, will pick up costs beyond those covered by your primary liability policies. It addresses both on-water and on-land incidents and serves as a lower-cost way to protect yourself from excessively large claims.
- Product recall – Your catch may seem fine when you reel it in all the way through delivery to your customer. However, if your product sickens someone or is found subpar in some way and is recalled, you will face steep expenses. A product recall insurance policy can help with the cost of notifying customers, pulling product from the supply chain, and disposing of the contaminated fish, among other expenses.
- Product liability – If your product sickens someone, your company could be held liable for medical and other costs. A product liability insurance policy can protect your company from unsustainable losses due to widespread illness or even death linked to your product. It will help with attorneys fees, settlements and other legal defense costs.
An insurance professional can help you
If you need commercial insurance coverage or would like to learn more, give us a call, a Cheney representative can answer any questions you may have about your current risks and make sure you have the protections you need.