A contract is a binding agreement between two or more parties. Your boat insurance policy is a contract between you and your insurance company. The work order is a contract between you and the boat yard. The clauses in these two contracts contradict and confuse and if you have an accident in the yard, you might have trouble.
What can we do? Most of us need both the service of a boat yard and boat insurance.
I firmly support the right for a business to limit its liability with a contract. Every business has this right, to the extent allowed by law, and every customer has the choice of vendors. Some contracts present more challenges than others and this article is written only as an introduction to this conundrum.
Your boat insurance policy stipulates that you cannot modify the insurance company’s legal rights or increase their liability exposure but boat yard’s work order will likely do both.
The bad news, in a worst case scenario, signing the boat yard’s work order could void your boat insurance policy in the event of a claim while your boat is in the yard. The “good” news is that it is unlikely.
Know that these types of problems may arise when you take your boat to a boat yard yourself, or when the boat is brought to the boat yard by your boat broker, captain or friend.
There are straight forward ways to avoid these conflicts. Many boat yards will allow the removal of these exculpatory clauses, hold harmless agreements, waivers of subrogation, and liability limitations. They will not do so if you do not ask. There are also special insurance riders which can be purchased to cover the gap in coverage.
This is a “hot topic” among boat yards, marine insurance professionals and maritime attorneys. Ask your boat yard, boat insurance agent and/or favorite maritime attorney if you want more details and specifics, they will give you plenty of information.