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.

So what does it all Mean?

Boat insurance is a something we all take for granted, we must have it and it provides that peace of mind of knowing that when something goes wrong you’re covered.

However how many of us truly understand the terminology that is used to quantify the cover that is provided? The following guide looks at some of the terminology that is used and how it can affect you if you do not fully understand the implications.

The following explanations have been put together using  a number of insurance  policies to provide a generalised description of the terminology, please refer to your own policy or insurance company for exact meanings.

Seaworthy –fit to encounter the ordinary perils of the sea, rivers, lakes, and  any other navigable waterways and suitably moored, crewed, equipped, fuelled, provisioned and with all equipment in proper working s order.  Seaworthyness applies not only to the hull but to all of your boat including parts, gear, equipment and machinery. 

In layman’s terms :- The hull, machinery and all equipment must be ‘fit for purpose’. In addition this also stipulates you have the correct knowledge and crew, and are fuelled and provisioned for your journey. 

Peril – The cause of the loss, damage or accident. Typically Fire, Lightening, Explosion, Theft, Malicious damage or Vandalism, weather event, Freezing of Machinery (as long as it has been winterised correctly) and Accidents.

This is at the heart of every claim – “was the damage caused by an insured peril?”  and will dictate if the claim is covered by your insurance policy.

Duty of Care (due diligence) – you take all reasonable steps to maintain and keep your vessel and its gear and equipment in a proper state of repair and seaworthiness and take all reasonable steps to protect your insured property from loss or damage. 

Weather event- an unusual strong force of wind, heavy prolonged rain fall, snow or sleet, freezing conditions resulting in ice, flooding of lakes and rivers beyond bounds. ( this can only be classed as loss when  as a direct result of a sudden and sever event) This would be classed as one of the Perils resulting in a claim.  

Accidental Damage –  Loss or damage to the vessel and associated equipment as agreed up to the total value insured due to external accidental means, fire, explosion, negligence, malicious acts and other causes specified in the policy. 

This covers most common issues ,( not caused by third parties) encountered whilst boating; loss or damage to the rudder, propeller, shaft, machinery or keel from hitting something underwater, grounding, sinking and water damage are all typical claims covered under accidental damage.

Fault – A failure in or of the design, manufacture or installation of a component or part of you vessel.

Modification  - made to the vessels super structure,  extended, major changes to the layout, additional structures built, and new engines fitted all of these have to be notified to an insurer, this may or many not result in a survey being required to access seaworthiness but in many cases much like vehicles if you make any changes then it is always prudent to let your insurer know.

Mitigate damage/loss – In the event of an incident that may give rise to a claim, you must take all necessary steps to minimise and prevent further loss.  Following partial or full immersion of your vessels machinery you must administer first aid. 

When loss or damage occurs act you must act as if uninsured. This may seem unusual advice but it is most important that, in the event of any incident involving your vessel you must take all reasonable steps to minimize the loss.  All reasonable charges, including salvage charges, incurred to prevent or minimise a loss by any risk is usually recoverable. You must notify your insurance company as quickly as possible.

Salvage - The act of saving imperilled property from loss.

 In the event of you requiring assistance from salvors it is imperative that you do not put life at risk by any delay in accepting salvage services. A potential salvor may be prepared to assist on a fixed price basis and only agree a price which you would be reasonably prepared to meet yourself in the event of having no benefit of insurance cover

Expense of Inspection (bottom inspection) the expense of inspecting the Vessel after grounding (even if no damage is found); 

Typical Limitations – please check your policy wording

• Loss or damage whilst left unattended on moorings unless otherwise agreed.
• any loss, damage, liability or expense directly or indirectly arising from: lack of reasonable maintenance; or wear and tear
• any liability to any person if they or anyone else has paid for them to be on-board the Vessel
• unrepaired damage, any failed repair, alteration, modification or  maintenance work carried out on the Vessel 
• Loss or damage to machinery  caused by fire or electrical failure of an item of machinery