Ship repairers' liability

An 80,000-deadweight-ton ship enters dry dock for its five-year survey, with an insured value of USD 60 million. A welding spark starts a fire in the engine room. The shipowner has a hull policy that pays, then goes after the yard. The repairer's liability is that of a bailee: it answers for the ship entrusted to it and for what it does to it. The ship repairers' liability policy, sold mostly in London and in Asia, covers this liability. It is written per vessel and not per contract, with a limit per occurrence that in practice is below the value of big ships, since neither the yard nor its insurer carries 60 million for a small job. Yards limit their liability through their repair conditions, often by a contractual cap at the price of the works or a multiple of it, and policies coordinate with the waiver of recourse clause in the owner's hull policy. A distinction is drawn between damage to the ship, damage to third parties, injury to workers, damage to lifting and quay equipment, and delay in delivery, often excluded or capped. Hull insurers require the owner to follow the hot work program. A yard loss involves two sizable insurers and several months of surveys.