Fisher Maritime's Fairleads

'Lessons Learned' Strategies & Ideas for the Marine Industry


Naval Architects Should be Indemnified Against Errors and Omissions

Professional errors and omissions insurance is commonly carried by our land-based brethren, the civil engineers. Naval architects designing vessels that are to be constructed sometimes do not carry this coverage; either they have no coverage or they may be a named insured under the shipyard builder’s policy, since the design is part of the final product (the vessel).

In a recent product liability case, Fisher Maritime served as an expert in naval architecture and small craft design on behalf of a defendant naval architect. The incident centered around a fatality that occurred aboard a dinner/ cruise vessel for which the naval architect assisted a shipyard with the design. In this situation, we demonstrated that the naval architect had committed no wrongdoing and was not responsible for the conditions which contributed to the fatality. However, lacking professional insurance, the naval architect had to pay for his attorney and related fees out of pocket. Had the naval architect been covered under the shipbuilder’s policy or otherwise indemnified by the yard, the naval architect would not have had to face that financial burden.

In this litigious society, as attorney Bill DeGarmo once addressed a Maritime Product Liability conference, in our industry, it is not a question of whether or not you will you be sued, it is just a matter of when you will be sued. Since it is almost inevitable it will occur, attorney fees and costs will be incurred regardless of the final outcome which may find no liability on your part. Accordingly, steps should be taken to guard against the possible incurrence of such costs if and when you are named as a defendant in a lawsuit. The lesson to be learned here is that naval architects must carefully review the terms of the design contracts they engage in, and if necessary, modify them to ensure that their insurance needs are covered.

Business-wise naval architects, even one-man firms, often have a standard contract form for use in negotiating contracts with their clients, which form serves as a check list to ensure that all appropriate matters are addressed by the agreement executed between the parties. If the prospective vessel owner is the client, the contract can state that the vessel owner will not engage in a construction contract utilizing the architect’s product unless the architect is indemnified under the builder’s policy. Alternatively, if the builder is the architect’s client, this can be addressed directly. Failure to address this issue most often does not create a problem. But when something goes wrong aboard the vessel in subsequent years, the naval architect may be named as a defendant, in which case he will regret not having arranged for such coverage.