29 June 2026

Contractual risk: who’s responsible for what?

Bald man wearing a neon yellow safety vest and teal shirt smiles with arms crossed in an outdoor industrial setting.
By Malcolm Stewart Head of HKJ Commercial
Four business people discuss marine trade policy around a conference table with papers, laptops, and coffee mugs in an office.

Contractual responsibility isn’t always as clear as it seems

Contractual risk is an area that often causes confusion – not because contracts are ignored, but because responsibility is frequently assumed rather than clearly understood. In commercial marine businesses, contracts sit at the centre of many day‑to‑day activities, from repair and maintenance work to vessel operation, hire, storage and consultancy services.

At its simplest, contractual risk comes down to who is responsible if something goes wrong. Contracts may transfer liability, impose indemnities or set out specific insurance requirements, sometimes in ways that go beyond standard policy cover. Where terms are not fully understood or reviewed, businesses can find themselves accepting risks they didn’t intend to take on.

Common issues arise where contracts are issued by clients or principal contractors and signed without scrutiny, or where historic terms continue to be used despite changes in how the business operates. In some cases, liability is assumed to be covered by insurance, only for exclusions or conditions to come into play when a claim arises.

From an insurer’s perspective, contractual clarity matters. Insurers expect businesses to understand the obligations they are entering into and to ensure contracts align with the scope of cover in place. Where contractual risk is unmanaged, it can affect claims outcomes and, over time, influence insurer appetite and terms.

Best practice is to regularly review contracts alongside your insurance programme, particularly when taking on new work, expanding services or working with new partners. Understanding where responsibility sits – and whether it is appropriately insured – helps avoid disputes, delays and unexpected exposure.

If contracts form a key part of how your business operates, they should be considered an integral part of your overall risk management approach, not an afterthought.

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