Since Hurricane Sally hit the panhandle of Florida, it has been reported that over 22 construction barges working in Pensacola Bay were lost, sunk, destroyed or washed ashore in the surrounding bay area.
The resulting damage to the construction site and associated property, pollution issues and salvage cost along with third-party losses will test the limits and structure of those associated marine risk transfer insurance programs. With the unprecedented number of hurricanes impacting the US during the turbulent hurricane season and the resulting losses, the need for correct and proper risk transfer mechanisms in the maritime construction arena is clear.
Therefore it is important for any company with a marine exposure review their coverages structure and limits of excess insurance.
Marine Insurance Coverage Considerations
With regard to the barges sunk under the collapsed portions of the bridge, those sunk in the Pensacola Bay and those washed ashore in the surrounding area, we will likely see a number of insurance pieces come into play — with “removal of wreck” and “sue and labor” provisions at the forefront.
In addition, any ensuing release of hydrocarbons from machinery on damaged barges will trigger potential pollution coverages for the containment and cleanup of those pollutants.
The damage to the bridge from the barges striking the bridge during the storm, and damages to property from barges washing ashore in the surrounding bay, will trigger potential coverage under the protection and indemnity policy.
There is also “time element” coverage for the delays in startup resulting from the hurricane. The insurance available will test the limits of the coverage and how delays were addressed when the policy was written.
Then there is the consideration of limits — the structure of underlying limits, excess limits and the total limits available to address the losses.
The best time to review the marine exposures and marine risk transfer structures is not after the hurricane season is over. Be prepared! We are specialists with clients in a variety of sectors, including energy, marine, power generation and renewables.