Posted on September 4, 2026
By David Kinlan
Somewhere in most contract tender packages there is a few clauses on insurance or at best a one-page insurance schedule that nobody on the Employer’s side has really thought about.
Usually I suspect it has been lifted from the last civil or building contract, the limits have been rounded up to a comfortable number, and the box has been ticked.
Then it lands on the desk of a dredging contractor’s insurance broker, who reads it and asks the question I have heard for forty years:
“Do they actually understand what they’ve asked for?”
Usually, no.
The consequences are not academic. Badly specified insurance either drives tender prices up, produces a forest of qualifications that makes tenders impossible to compare, or leaves the Employer carrying the very risk it thought it had transferred.
Three errors I see over and over
Professional Indemnity (PI) Insurance required where there is no permanent works design.
PI cover is specified as a matter of routine on contracts where the Contractor has no permanent works design obligation whatsoever. The works are fully specified by the Employer’s consultant, the Contractor is told where to dredge, to what depth and tolerance, and where to put the material and is then required to carry $10 or $20 million of PI. There is nothing for the policy to respond to. The Contractor pays a premium for cover that will never be called on, and that premium is in the tender price. If the Employer genuinely wants design liability transferred, then transfer the design, define the design obligation properly in the contract, and specify PI to match. Otherwise, delete it.
Which insurance you choose is vital
Contract Works cover that excludes dredging. This one is close to comical. A standard Contractors’ All Risks policy is specified for a dredging project, and the CAR policy wording excludes dredging, or excludes floating plant, or responds only to civil & permanent works on land. The Contractor produces a certificate of currency that satisfies the letter of the schedule and covers almost nothing that could actually go wrong. Everyone is comfortable until a cutter suction dredger impacts a quay wall and the question of who owns the liability argument ensues.
Standalone Environmental Liability Insurance, bolted on for the sake of it. Environmental Impairment Liability is a product built for fixed premises and legacy contamination: gradual seepage from a plant, a historic tank farm, land being redeveloped. It is not built for a dredge working in a port’s channel. On a typical dredging contract the pollution exposure that can realistically occur is sudden and accidental. Say a fuel spill, a hydraulic pipe burst, a pipeline failure and that is already picked up by P&I, by marine liability, or by a pollution extension to the works policy. Meanwhile the dredged material itself, its characterisation and the conditions under which it may be placed are the Employer’s, sitting under the Employer’s approvals and permits. An EIL policy will not respond to a breach of those permit conditions, and it will usually carve out marine operations in any case. So the Contractor is mandated by the Employer to buy a policy that duplicates cover it already holds, for an exposure that is not its own, and adds the premium to the tender price. The exception worth thinking about is contaminated sediment going to an onshore placement area, where a gradual pollution exposure genuinely can exist : which brings us to the real gap.
Operating in a live port environment does not come without risk
No Hull & Machinery or P&I Cover is specified.
Marine works need marine cover: hull and machinery on the floating plant, protection and indemnity, wreck and debris removal, marine liability, cover for damage to existing structures such as wharves, revetments, submarine cables and pipelines, and pollution liability that actually responds to a sudden and accidental discharge. That is a different market, with different underwriters, different wordings and a different attitude to risk than the construction market. It is a specialist field.
Limits, exclusions and deductibles
Getting the type of insurance right is only half of it. The limits matter just as much, and they are usually chosen by reference to nothing.
I have seen third party liability limits set at a level that would not replace a single mooring dolphin, on projects working alongside live berths and international shipping. I have also seen limits so far above any credible exposure that the contract effectively excludes anyone but the largest international contractors from bidding. Neither serves the Employer. The right approach is unglamorous: identify the realistic worst case for that particular site say a struck submarine cable, a damaged berth, a third party vessel, an anchor through a pipeline and size the cover to it.
Then there are the exclusions and deductibles. Marine policies carry deductibles that would horrify a building surveyor. Six-figure deductibles on hull and machinery are normal, not a sign of a poor risk. Specifying a maximum deductible that the marine market will not write simply means the Contractor cannot comply, and one of three things follows: a non-conforming tender, a priced-in allowance for self-insuring the gap, or a certificate that quietly does not match the schedule. All three are worse for the Employer than a sensible deductible in the first place.
The same applies to the exclusions. If the specified policy excludes vibration, removal or weakening of support, seepage and pollution, resultant damage from defective workmanship, or consequential loss, the Employer needs to know that before tender, because whatever the policy does not cover has not been transferred. It is still the Employer’s risk, only now the Employer has paid a premium to believe otherwise.
The onshore disposal gap
This is the live issue that I see in Australia at the moment, and it deserves more attention than it is getting.
As we move away from the default of offshore disposal towards onshore placement and beneficial reuse, an increasing share of a dredging contract happens above the waterline: pumping ashore, bunded placement areas, decant systems and return water, dewatering, rehandling and final placement. It is a genuinely hybrid operation.
Onshore placement is becoming more common
The insurance market has not caught up with it.
Ask a marine underwriter and the response is that the exposure is on land and outside the marine policy. Ask a construction underwriter and the response is that it is dredging, and dredging is excluded. The result is a gap sitting squarely over the part of the works with real environmental exposure – bund failure, decant water discharge, loss of fine sediments, damage to third party land.
That gap is closeable, but only deliberately, by matching the policy wordings to each other at the design stage of the contract rather than discovering the seam after an incident.
What to actually do
Employers and their advisers: get a specialist marine broker to review the insurance schedule before the documents go to market, not after. It is a few hours of work against a risk allocation that will run for the life of the contract. Make sure the policy definitions align with the contract definitions of the Works, the Site and the Contractor’s Equipment. Decide explicitly who insures existing structures. Check that the period of cover extends through the defects notification period. A recommendation is to look at the FIDIC Blue Book, which was written for dredging and reclamation and whose insurance table provisions reflect the market that actually exists.
Contractors: put the insurance clauses and insurance schedule in front of your own broker as early as possible at tender stage, every time. If you need more time to check the cover available, say so clearly in your tender qualifications with the reason, rather than hoping nobody checks the small print behind the insurance certificate. A well-explained departure is far more persuasive than silence.
Brokers: you are being asked to price insurance provisions written by people who have never seen a trailing suction hopper dredger. Push back early, and say plainly which parts of the schedule the market will not cover.
Insurance on a marine project is not an administrative annexure. It is a risk allocation document, and like every other risk allocation document it works properly only when someone who understands the work has read it.
