Take a Cruise on Insurance Love Boat

Take a Cruise on Insurance Love Boat

Thirty years ago, a TV show called “The Love Boat” (1977–1986) ignited interest in cruise ships. Today, industry studies show that more than 10 million people worldwide took a cruise ship vacation in 2004, a 40% increase since 2001. By 2010, analysts predict the cruise ship market will include 17 million people. There are currently several hundred cruise ships in service worldwide, with at least nine new ships added every year since 2001.

Given the skyrocketing passenger volume, intense competition within the cruise ship industry and technological advancements in ship design, modern cruise ships today offer passengers an incredible variety of leisure, educational and culinary activities, both on board the ship and ashore. So how does insurance cover a cruise’s exposures?

In November 2005, armed pirates attacked the cruise liner Seabourn Spirit off the coast of east Africa. The vessel, whose passengers included 20 Britons, managed to fight off the pirates. While piracy is a real exposure in some parts of the world, more mundane exposures are most likely to happen—and if they do, will standard personal lines insurance products rise to the occasion?

For more on ship-to-shore exposures, click here.

Flood Insurance Mandatory Purchase Guidelines

Mandatory purchase guidelines apply to properties located inside an SFHA when the lender is federally regulated. All lenders are free to require flood insurance in connection with any loan, regardless of the zone. At times, all the coverage lenders require is the bare minimum necessary for the lenders to avoid possible financial penalties imposed by their regulators and is not sufficient to properly cover a flood loss. The amount of flood coverage does not always have to equal the loan balance since NFIP does not provide coverage for raw land.

For more on the minimums required to satisfy federal lenders’ guidelines—and how the minimums at times are far from adequate to properly cover a flood loss—click here.

When Are “Completed Operations” Completed?

The CGL policy usually covers both ongoing and completed operations. However, at what point is an operation completed? This question has particular significance when the business is involved in a periodic service contract.

For example, take a contractor who does daily checks on pumps in an oil field, opening and closing lines into empty or full tanks. The CGL insurer declined a claim, saying that since a pump checker’s operation is ongoing on a daily basis and never completed, it does not meet the completed operations definition of the CGL form.

If this is true, does an office cleaning service not have completed operations until its month-to-month contract is fulfilled? What about an annual contract for monthly sprinkler system maintenance service—is there no completed operations coverage until the end of the year? What about a quarterly pest control service? Weekly lawn care?

No. The “products-completed operations hazard” definition says that “‘your work’ will be deemed completed at the earliest of the following times…When that part of the work done at a job site has been put to its intended use….” Note that the P/CO coverage kicks in when “that part” of the work is put to its intended use. It does not require that the complete job be accomplished or the contract fulfilled.

For more information, click here.

Bill Wilson (bill.wilson@iiaba.net) is Big “I” director of the Virtual University, an online learning center for agents and brokers.