For Boat Manufacturers, product liability presents a complex and evolving set of challenges. Whether you supply propulsion systems, carpet, onboard electronics, or recreational water toys, any defect can result in serious injury and costly litigation. In this guide, we discuss what Boat Manufacturers need to know, how legal and insurance risks are changing, and how MHG Insurance can help protect your business.
What Are the Key Product Liability Risks for Boat Manufacturers?
Boat Manufacturers must navigate legal exposure under strict liability, negligence, and warranty theories. In U.S. maritime cases, courts often apply Section 402A of the Restatement (Second) of Torts to determine if a product was unreasonably dangerous when it left the manufacturer, regardless of fault (East River Steamship S.S. Corp. v. Transamerica Delaval, Inc.). Manufacturers may face claims involving design defects, manufacturing flaws, or inadequate warnings.
The National Marine Manufacturers Association (NMMA) offers certification programs that help Boat Manufacturers comply with ISO, EPA, and Coast Guard standards. Having NMMA certification not only boosts credibility but also reduces liability exposure by ensuring compliance with industry safety standards.
Trends Impacting Product Liability Risk
Product liability cases are on the rise. Allianz Commercial reports that defective product incidents accounted for over 40% of liability claims over the past five years and that so-called “nuclear” verdicts (awards over $10 million USD) have nearly tripled since 2020. In other words, risk exposure is intensifying for manufacturers as courts award increasingly large damages.
Additionally, emerging liability theories, such as claims tied to cybersecurity or misleading environmental claims, are expanding the landscape of risk. Manufacturers must now consider software vulnerabilities and sustainability marketing as potential liability triggers.
Why This Matters for Boat Manufacturers
There are two key concerns for Boat Manufacturers:
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High Litigation Risk: Legal action based on personal injury or property damage is common when boats or marine products fail or malfunction. Courts may apply general maritime law, which subjects manufacturers to strict liability for dangerous product conditions.
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Cost and Reputation Exposure: Multi-million dollar verdicts and class-action suits can severely impact finances and also brand trust. According to litigation data, product liability made up
37% of nuclear verdicts in 2023.
Risk Mitigation Strategies for Boat Manufacturers
Prioritize Robust Design and Testing
Ensure your product development includes thorough testing protocols and documentation. Data-driven design reviews and quality control reduce the risk of defects and strengthen your defense if claims arise.
Ensure Clear Warnings and Instructions
If users could reasonably misuse a marine product, such as expecting a small inflatable buoy to support multiple persons, adequate warnings are legally required. Courts expect manufacturers to foresee misuse and provide instructions accordingly.
Get and Maintain NMMA Certification
Certification helps assess compliance with safety and performance standards. It also provides legal protection by demonstrating adherence to recognized industry norms.
Contractual Protection and Supplier Management
Supply chain complexity often increases liability. Strong contracts with component suppliers, indemnity clauses, and documentation of design contribution help allocate responsibility and reduce exposure.
Engage Insurance Experts Early
Widespread liability trends and evolving regulations make it critical to work with experienced insurance advisors. This ensures that your policies include product liability and recall coverage tailored to marine operations.
What Product Liability Coverage Should Boat Manufacturers Consider?
MHG Insurance offers tailored solutions for marine trades, delivering product liability insurance that aligns with your risk profile. Our expertise, matched with our personal service, ensures you have insurance guidance to protect marine-related risks.
Policies should include:
Coverage for claims involving design or manufacturing defects
Support for recall costs
Protection for incomplete warnings or instructions
Coverage applicable under general maritime jurisdiction
Partnering with MHG: Your Trusted Resource
At MHG, we recognize the nuances of the marine industry. Our team is experienced and knowledgeable. We understand how product liability exposure connects with business reputation, legal risk, and compliance, and are able to satisfy insurance obligations while simplifying a complex process.
For more information, reach out to me, Conor Hayes, Director of our Commercial Marine division at +1 954 548 3596.
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