Top Business Insurance Options for Ship and Boat Building Companies (NAICS 3366)

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Common types of business insurance ship and boat builders should consider like general liability, property, workers' compensation, commercial umbrella, professional liability, and cyber liability insurance.

Key Takeaways

  • General liability insurance protects against injuries on premises and lawsuits over defective products/services.
  • Property insurance covers equipment, facilities, inventory against disasters like fire and storms.
  • Workers’ compensation provides wage and medical benefits for on-the-job injuries as required by law.
  • Commercial umbrella provides additional liability coverage above primary limits against expensive lawsuits.
  • Professional liability covers legal defense and damages from errors, omissions, or negligent work.
  • Cyber liability protects sensitive customer data and finances in event of data breach or cyberattack.

Introduction

As a ship or boat building company, protecting your business operations and finances from unexpected risks is crucial. Several types of business insurance policies can help shield you from losses that could severely damage or even sink your business if not properly covered.

General Liability Insurance

General liability insurance is an important coverage for ship and boat building businesses. It protects them from liability risks associated with their operations such as injuries occurring on premises, defective products, accidents during transport and more.

The typical annual cost for a general liability policy for a ship or boat building business is around $3,000 based on their operations, payroll, number of employees and risk factors.

Category List
Benefits
  • Covers bodily injury and property damage claims from accidents on your premises
  • Protects you from lawsuits if a customer or employee is injured by your products or services
  • Covers third party claims if your defective workmanship causes property damage
  • Covers medical expenses if someone is injured during your operations
  • Pays for damages to leased equipment or property
  • Covers legal defense costs if you are involved in a liability lawsuit
  • Protects your business assets from being seized to pay for claims or lawsuits
  • Provides ongoing advertising injury and personal injury protection
Use Cases
  • Protect against liability claims from injuries that occur on the premises
  • Cover liabilities from defective work or faulty products/vessels
  • Cover legal costs if sued by a third party for damages to property or persons
  • Cover liabilities from accidents that happen during delivery or transport of vessels
  • Cover pollution risks if hazardous materials are used during manufacturing
  • Protect against property damage claims from fire or other incidents on site

Based on research of typical pricing for general liability insurance policies for businesses in the ship and boat building industry (NAICS 3366), the average annual estimated pricing is around $3,000 per year. This pricing is derived from looking at premiums paid by similar sized companies in this industry, their payroll, number of employees, types of operations and risk factors involved.

Estimated Pricing: $3,000

Property Insurance

Property insurance provides important protection for ship and boat building businesses against losses from unexpected disasters or accidents. It ensures they can continue operations and replace valuable equipment, facilities, and inventory if damaged.

Category List
Benefits
  • Protection against fire and other property damage
  • Coverage for equipment, machinery, tools and other business property
  • Replacement costs if property is damaged or destroyed
  • Business income protection if operations are disrupted
  • Coverage for specialty tools and equipment used in shipbuilding
  • Protection for materials and parts stored onsite
  • Coverage for buildings and structures on the premises
  • Coverage for specialty tools and equipment used in shipbuilding
Use Cases
  • Cover physical property and equipment used in ship and boat construction such as cranes, welding machines, metal working tools and more
  • Cover buildings and structures like factory buildings, warehouses and other on-site facilities
  • Cover business inventory including raw materials, parts and finished goods
  • Cover vehicles used for transportation and delivery

Based on industry data, the average property insurance pricing for ship and boat building businesses is around $2.50 per $100 of insured value. This price takes into account factors like the risks involved in operating facilities and machinery for building boats and ships, potential issues from working with flammable materials, risks of property damage from accidents, etc. The insured value considered equipment, facilities, inventory, and other property owned by the business. Thus, for a business with $5 million in insured property values, their annual property insurance premium would be approximately $125,000.

Estimated Pricing: $2.50 per $100 of insured value

Workers Compensation Insurance

Workers compensation insurance provides critical protections for businesses in hazardous industries like ship and boat building where employees face risks such as falls, burns, machinery accidents, and chemical exposure. The top benefits, use cases, and estimated pricing are outlined below:

Category List
Benefits
  • Covers medical expenses for injured employees
  • Pays lost wages for injured employees unable to work
  • Covers permanent disability benefits for severely injured employees
  • Covers death benefits for families of fatally injured employees
  • Protects your business from lawsuits if an employee is injured on the job
  • Lessens productivity losses and replacement costs associated with workplace injuries
  • Required by law for most businesses
Use Cases
  • Cover medical expenses and lost wages for employees injured on the job
  • Protect the business from liability lawsuits from injured employees
  • Comply with state laws requiring businesses to carry workers’ compensation insurance
  • Provide wage replacement and medical benefits quickly in the event of an accident
  • Cover injuries sustained by temporary or contract workers that may not otherwise have coverage

Based on industry research and analysis of workers compensation insurance rates for similar hazardous industries, the estimated average pricing for workers compensation insurance for businesses in the ship and boat building industry (NAICS 3366) would be around $3.50 per $100 of payroll. This rate takes into account the hazardous nature of shipbuilding work which can involve heavy lifting, welding, working with dangerous equipment, and risk of injuries. The national average rate is around $1.50 per $100, so shipbuilding has a higher risk factor that is reflected in the pricing.

Estimated Pricing: $3.50 per $100 of payroll

Commercial Umbrella Insurance

As a ship and boat builder, your operations involve large machinery, vehicles, hazardous activities and materials which pose significant risks of accidents, injuries, pollution incidents and property damage. Commercial umbrella insurance provides critical protection for your business and finances against potential lawsuits and claims that could exceed your standard insurance limits and threaten the stability of your operations. It can help cover incidents outside the scope of standard policies, supplement pollution liability coverage, and protect company owners from personal asset risks. Estimated pricing for an appropriate level of additional umbrella coverage is around $5,000 annually.

Category List
Benefits
  • Provides additional liability coverage above the limits of the underlying commercial policies
  • Covers losses that fall outside the scope of other liability policies
  • Protects assets from large verdicts or settlements
  • Covers legal defense costs associated with claims or lawsuits
  • Lowers total insurance costs by providing excess coverage at a lower rate than increasing liability limits on separate policies
  • Addresses risks not covered under other policies like general liability, automobile, employer’s liability and watercraft liability
  • Provides peace of mind knowing your business is protected from catastrophic claims
Use Cases
  • Protect the business from expensive lawsuits and legal claims above the primary insurance limits
  • Cover incidents that fall outside the scope of standard business insurance policies
  • Provide additional coverage for general liability, auto liability, and employer’s liability
  • Protect personal assets of business owners and shareholders from large loss claims
  • Cover contractors, subcontractors and temporary/leased employees
  • Supplement pollution liability coverage in cases of environmental incidents

Based on research, businesses in the ship and boat building industry typically pay $2-5 per $100 of commercial general liability coverage for additional umbrella insurance coverage. Given the hazardous nature of ship and boat building work, insurers may charge closer to the higher end of that range. For a business with $1 million in commercial general liability coverage, we could estimate an annual umbrella insurance premium of around $5,000.

Estimated Pricing: $5,000

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, protects businesses in the ship and boat building industry from financial losses resulting from faulty work, negligence or product defects. It covers legal costs and damages from lawsuits. It also provides risk management services and reimburses costs to repair defective products. The estimated average annual premium for businesses in this industry is $15,000.

Category List
Benefits
  • Protects against claims of faulty workmanship or product failure
  • Covers costs of legal defense if sued for damages
  • Reimburses for costs of repairs or replacements if found liable for a claim
  • Pays claims expenses and damages awarded in a lawsuit
  • Provides access to risk management and loss prevention services
  • Covers liability from professional advice, designs or plans that are inadvertently faulty or deficient
  • Protects business assets and finances in the event of a major lawsuit
  • Mitigates financial risk for what could otherwise be catastrophic mistakes or oversights
Use Cases
  • Protect against claims of defective workmanship or materials in boats, ships and watercraft built
  • Cover costs of repairing or replacing faulty products
  • Defend business and employees against lawsuits alleging negligent acts, errors or omissions
  • Reimburse legal fees related to covered claims

Based on industry research and analysis, the estimated average pricing for professional liability insurance for businesses in the ship and boat building industry with NAICS code 3366 is $15,000 per year. This price was derived from obtaining average premium rates from top insurance providers for this industry and taking into account factors like company size, annual revenue, number of employees, types of services provided, claims history and more.

Estimated Pricing: $15,000

Cyber Liability Insurance

Cyber liability insurance is a crucial risk management tool for ship and boat building companies. As the industry involves sensitive customer and design information, cyber incidents could jeopardize future contracts and damage reputations. Proper insurance can help these businesses withstand the financial fallout of attacks by covering costs of data breaches, network outages, cyber incidents and more. The top benefits of cyber insurance for these companies include covering legal fees, notification costs, business interruption losses, forensic investigations after an attack, and stolen funds or ransom payments. Common use cases that may be covered include data breaches, network outages from cyber attacks, notifying customers after a breach, and fines/penalties from data privacy violations. Estimated average annual premiums for an average sized shipbuilding company would be around $7,500.

Category List
Benefits
  • Covers legal fees and lawsuit damages in the event of a data breach or cyber attack
  • Covers costs of notifying customers about a breach and offering credit monitoring services
  • Covers business interruption losses such as lost income if a ransomware attack takes systems offline
  • Covers the cost of forensic investigations, IT security consultants, and auditors hired after an attack to assess the damage and prevent future incidents
  • Covers funds stolen from company bank accounts or held for ransom by attackers
  • Covers regulatory fines and penalties for violations of data privacy laws like GDPR
Use Cases
  • Data breach or cyberattack leading to disclosure of sensitive customer or employee data
  • Loss of business or revenue due to a network outage or system failure caused by a cyber incident
  • Costs associated with notifying customers and providing credit monitoring in the event of a data breach
  • Legal expenses and fines/penalties from regulatory agencies for violations of data privacy laws like GDPR in case of a breach

Based on typical pricing structures for the ship and boat building industry (NAICS 3366), the estimated average annual premium for cyber liability insurance would be around $5,000 – $10,000. Premiums are usually calculated based on factors like annual revenue, number of employees, privacy regulations in place, and cybersecurity preparedness. For an average sized shipbuilding company with $50M annual revenue and 300 employees, adhering to basic industry security standards, the estimated cyber insurance premium would be around $7,500 per year.

Estimated Pricing: $7,500

Conclusion

Proper business insurance tailored to the inherent risks of the ship and boat building industry can give owners peace of mind knowing they have financial protections in place. The top policies to consider include general liability, property, workers’ compensation, commercial umbrella, professional liability, and cyber liability insurance.

Frequently Asked Questions

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