MyYachtsInsurance - Yacht Insurance Community

Reviewed by Alex Short, Independent Yacht Insurance Risk Analyst

TL;DR

Vessel towing regulations directly affect P&I coverage, particularly in general average and salvage claims. Compliance with towing standards under [TOWCON-2008] and [USCG-CFR46-PT26] is critical to avoid exclusions under the "care, custody, and control" clause. A failure to meet towing safety requirements can void coverage for third-party liabilities or salvage costs governed by [YORK-ANTWERP-2016] and [LLOYDS-OPEN-FORM].

Trigger Conditions

Trigger	Policy Impact	Consequence
Failure to comply with towing safety standards under [TOWCON-2008] and [USCG-CFR46-PT26]	Care, custody, and control clause	Coverage for third-party liabilities may be excluded
Unauthorized towing operations without valid Merchant Mariner Credential under [46-CFR-10]	Crew competency clause	Salvage costs under [LLOYDS-OPEN-FORM] may be excluded
Breach of navigation limits in [IHC-2003] during towing	Voyage clause	General average contribution under [YORK-ANTWERP-2016] may be denied
Hot work conducted without approval under [IACS-UR-W]	Hot work clause	Liability for fire-related damage may be void
Survey overdue for towing equipment under [IMO-MSC]	Class and survey clause	Coverage for hull damage may be reduced

Underwriter's Checklist

[Towage contract]: Verify compliance with BIMCO TOWCON 2008 [TOWCON-2008] to ensure the terms of liability, salvage rights, and general average are clearly defined, affecting insurance coverage under York-Antwerp Rules 2016 [YORK-ANTWERP-2016].
[Crew competency records]: Confirm that all crew members hold valid Merchant Mariner Credentials under 46 CFR the corresponding regulatory requirements [46-CFR-10], as unqualified personnel may increase operational risk and void insurance coverage.
[Vessel class certificate]: Check that the vessel is classed with a valid certificate and that the class rules align with IACS Unified Requirements W [IACS-UR-W] for structural integrity, especially for vessels operating in high-risk environments.
[Maintenance and inspection logs]: Review logs for evidence of regular maintenance and repairs, particularly for towing equipment, to ensure compliance with 46 CFR the corresponding regulatory requirements [USCG-CFR46-PT26] and reduce the risk of mechanical failure.
[General average security]: Confirm that the policy includes coverage for general average contributions under York-Antwerp Rules 2016 [YORK-ANTWERP-2016], and that any security provided aligns with the International Convention on Salvage 1989 [SALVAGE-CONV-1989].
[Pollution response plan]: Ensure the vessel has a pollution response plan compliant with the Oil Pollution Act of 1990 [OPA-90], as failure to comply may result in uninsurable liability or exclusion of environmental damage claims.
[Navigation area endorsement]: Verify that the vessel’s insurance policy includes the correct navigation area endorsement, especially for vessels operating in cyclone-prone regions, in line with IMO Cyclone Guidance [IMO-MSC-CIRC-1515].
[Refit/modification records]: Review records of any structural or mechanical modifications to ensure they were carried out in accordance with IMO MSC [IMO-MSC] and IACS Unified Requirements W [IACS-UR-W], to maintain hull integrity and insurance validity under Institute Time Clauses Hulls [ITC-H-1983].

Policy Wording Traps

Clause Type	Trap Mechanism	Scenario	Coverage Result
Care, Custody, and Control	Owner fails to maintain control over towed vessel, leading to collision	Vessel towing a barge in non-compliance with CFR 33 towing light requirements [USCG-CFR33] results in a collision	Loss excluded due to failure to exercise proper care and control
Contractors' Exclusion	Towing service provider excluded from coverage	Owner uses an unapproved towing contractor not vetted under IACS Unified Requirements W [IACS-UR-W]	Salvage or repair costs by the contractor are not covered
Consequential Damage	Damage not directly caused by a peril is excluded	Towing vessel breaches IMO MSC guidelines [IMO-MSC] causing environmental damage under OPA-90 [OPA-90]	Cleanup costs are excluded as consequential damage
Latent Defect Carve-Out	Pre-existing defects not disclosed	Vessel towed with a hidden hull defect not reported under IHC-2003 [IHC-2003] material change warranty	Hull failure during tow is excluded as a latent defect
Wilful Misconduct	Intentional breach of towing regulations	Captain intentionally ignores 46 CFR the corresponding regulatory requirements [USCG-CFR46-PT26] operational requirements during a tow	Loss is excluded due to wilful misconduct
Faulty Workmanship Exclusion	Poor towing equipment maintenance	Towing hawser fails due to wear and tear not inspected per BIMCO TOWCON 2008 [TOWCON-2008]	Loss excluded under faulty workmanship and gradual deterioration clauses

Operational Reality

Vessel towing operations often create friction between the owner and underwriter due to non-compliance with towing regulations. On the ground, yards and operators frequently overlook the need for a valid Merchant Mariner Credential for the master and crew [46-CFR-10], particularly in uninspected vessel operations governed by 46 CFR the corresponding regulatory requirements [USCG-CFR46-PT26]. This oversight can delay the commencement of towing and trigger claims under the International Hull Clauses (IHC 2003) [IHC-2003] if the vessel is damaged during transit. Documentation requirements include a completed Tow Plan and proof of crew competency, which must be submitted to the underwriter and class society prior to the commencement of the tow. Surveyors are typically involved during the pre-tow inspection to verify compliance with operational standards and may issue a report that affects the underwriter’s liability exposure. Failure to provide timely notice to the underwriter about the commencement of towing operations can void coverage under the hull policy, especially if the operation is not aligned with the BIMCO TOWCON 2008 [TOWCON-2008] standard. Common mistakes include failing to secure a valid Tow Plan or not ensuring crew credentials are current, which can result in denied claims and increased liability for the owner.

Related Risks

Non-compliance with towing vessel operational standards under 46 CFR the corresponding regulatory requirements [USCG-CFR46-PT26] may trigger exclusions under Institute Time Clauses Hulls [ITC-H-1983] for failure to observe statutory warranties.
Breach of towing agreements under BIMCO TOWCON 2008 [TOWCON-2008] could lead to disputes over liability apportionment, impacting coverage under General Average as defined by York-Antwerp Rules 2016 [YORK-ANTWERP-2016].
Failure to secure salvage rights under LOF 2020 [LLOYDS-OPEN-FORM] may limit recovery options, particularly where salvage obligations conflict with Oil Pollution Act of 1990 [OPA-90] liability.
Inadequate crew licensing under 46 CFR the corresponding regulatory requirements [46-CFR-10] may void coverage under International Hull Clauses (01.11.03) [IHC-2003] for human error-related incidents during towing operations.

Questions for Your Broker

Does the policy provide coverage for liability arising from non-compliance with towing regulations under 46 CFR the corresponding regulatory requirements, and if so, are there specific sub-limits for uninspected vessels [USCG-CFR46-PT26]?
Are there exclusions in the policy for claims related to salvage operations not conducted under the terms of the International Convention on Salvage 1989 or LOF 2020 [SALVAGE-CONV-1989] [LLOYDS-OPEN-FORM]?
What are the required notification timelines under the policy for incidents involving towing operations governed by CFR 33, and are these aligned with the reporting requirements under OPA-90 [USCG-CFR33] [OPA-90]?
Does the policy require specific documentation, such as compliance with York-Antwerp Rules 2016 or TOWCON 2008, to substantiate general average or towage-related claims [YORK-ANTWERP-2016] [TOWCON-2008]?
Under what conditions does the deductible apply for damage to the towing vessel or towed unit, particularly in relation to warranty compliance with IACS Unified Requirements W or IMO MSC guidelines [IACS-UR-W] [IMO-MSC]?
Are there sub-limits for liability arising from towing operations in cyclone-prone areas, and does the policy require adherence to IMO Cyclone Guidance as a condition for coverage [IMO-MSC-CIRC-1515]?

References

BIMCO TOWCON 2008 (framework) — https://www.bimco.org/contracts-and-clauses/bimco-contracts/towcon
46 CFR the corresponding regulatory requirements: Operations (Uninspected Vessels) (legal) — https://www.ecfr.gov/current/title-46/chapter-I/subchapter-C/part-26
York-Antwerp Rules 2016 (General Average) (framework) — https://comitemaritime.org/wp-content/uploads/2018/06/2016-York-Antwerp-Rules-with-Rule-XVII-correction.pdf
Lloyd's Standard Form of Salvage Agreement (LOF 2020) (framework) — https://www.lloyds.com/market-resources/salvage-arbitration-branch/lloyds-open-form-lof
International Hull Clauses (01.11.03) (framework) — http://www.fortunes-de-mer.com/documents%20pdf/polices%20corps/Etrangeres/Royaume%20Uni/International%20Hull%20Clauses%202003.pdf
IACS Unified Requirements W (Welding) (class) — https://iacs.org.uk/resolutions/unified-requirements/ur-w/
IMO MSC (framework) — https://www.imo.org/en/OurWork/Safety/Pages/default.aspx
International Convention on Salvage 1989 (legal) — https://www.dco.uscg.mil/Portals/9/CG-5R/nsarc/Convention%20-%20Salvage%20(1989).pdf
Oil Pollution Act of 1990 (legal) — https://www.govinfo.gov/content/pkg/COMPS-2991/pdf/COMPS-2991.pdf
IMO Cyclone Guidance (framework) — https://www.imo.org/en/OurWork/Safety/Pages/Cyclone.aspx
Institute Time Clauses Hulls (1.10.83) (framework) — https://www.fortunes-de-mer.com/documents%20pdf/polices%20corps/Etrangeres/Royaume%20Uni/Institute%20Time%20Clauses%20Hulls%201.10.83.pdf
CFR 33 (legal) — https://www.ecfr.gov/current/title-33

Disclosure

This content is provided for informational purposes only and does not constitute insurance advice. Coverage terms vary by policy, jurisdiction, and underwriter. Consult a licensed marine insurance broker for guidance specific to your vessel and operations.

Impact of Vessel Towing Regulations on Marine Insurance Liability