Tuesday, 21 August 2012

So how does it work?

How many of us really understand what is covered by our insurance, and what the insurance company expects of us?
In the last issue we looked at Insurance terminology, in this issue we pose some hypothetical scenarios to illustrate the terms from the last article in use and show how they can be applied in a practical manner. 
If your vessel sinks, most policy wording will indicate that the liability for damage to the vessel including raising of the vessel is down to the insured .  Why? 
After a hard winter, or heavy rain fall you pop down to check on the boat and found that it is underwater.  You call your insurance company who log the claim and explain that although the vessel has sunk this is not necessarily covered by your insurance. 
 The reason it has sunk has to be identified before the claim can be assessed this is ‘identifying the peril’. Therefore the insurance company will expect you the insured to cover all recovery costs up until the cause of the sinking is identified. If this is due to poor winterisation, or a failed bilge pump the claim may be rejected; unless there is clear evidence that the casue was not preventable. If you did not regularly check your vessel when the river was in flood this could be classed as a failure of ‘duty of care’ and your claim rejected. If due to vandalism it may be covered but until the vessel is raised and the cause identified no insurance company will accept the claim. However once your claim is accepted then all costs incurred will normally be covered.
You are in a lock and you lose concentration, the boat drifts and as the water is emptying, you feel the boat start to tilt, and realise too late that the boat is caught on the sill. You quickly rush to rectify the situation but find that the steering has gone stiff and you can no longer move the rudder. Is this covered by your insurance?
 If you are in a car and you reverse in to a bollard, and had full comprehensive cover then this would be classed as ‘accidental damage’ and would normally be covered by your insurance cover. Apply this to boats and if you hit an underwater obstacle, catch your rudder on a sill, lose your propeller, etc, these could all be classed as accidental damage, and therefore may be covered under your insurance policy.
You visit your boat and find that someone has smashed you windows and doors leaving the boat open and unlocked. You take a wrong turn on a river with a strong current and suddenly find yourself stranded on a weir. Under these scenarios the insurance company would expect you to take measures to secure the vessel to insure that further damage is mitigated. This is your Duty of Care
In the first instance you would need to organise someone to board up the windows and put a lock on the doors, in the second you would need to organise for the boat to be rescued. If you did not undertake these measures and the boat suffered more damage your claims could be rejected or the full damage not covered. Costs of’ mitigating the damage’ is normally covered by your insurance company, once the claim is accepted.