Yes it is a serious question.
Think of boat insurance as a bet rather than an investment. The insurance company is making a bet that nothing serious will happen to you, your boat or a third party. You are paying insurers to take that risk so that in the event of a mishap you have some protection.
It is not an investment. In other words, you are not building up a fund that you can draw on at some convenient time in the future when you have added up the premiums. What you are buying is peace of mind.
If you are buying insurance through a broker, they are the ones that should advise you on the policy that best suits your needs. Don’t presume that there is a standard package that fits all.
If you are buying direct or on-line it is up to you to make sure that you are actually getting what you thought you were.
Finding out that it was not what you thought at the time of making a claim is not going to be a pleasant experience.
Have another look at your policy wording and schedule and be sure to make a note about the conditions and deductions. These will have some obvious requirements like type and age of the boat, the area of operation, type of mooring, power of engines, type of fuel etc and maybe other ones depending on the boat and its use (private / commercial for instance). These are all items that you deal with at the time of taking out the policy. Less obvious are the ongoing condition that apply with equal force and these are that the boat will be operated responsibly and that the boat, machinery and equipment must be maintained and kept in good condition. Engines must be serviced according to the manufacturer’s specifications, standing rigging (especially rod and composite rigging) must be inspected and service according to the manufacturer’s instructions, safety equipment must be serviceable and in-date where applicable.
In making a contract with your insurer you are doing so in utmost good faith, not only at the beginning, but throughout the life of the policy.
The deductions will consist of the amount you have to pay in the event of a claim (the excess) and also adjustments that might be made for wear and tear or betterment. The amount of the excess may depend on the subject covered and the type of incident.
We at Middle Sea Yacht Surveys handle a large number of claims on behalf of insurers and are experts in this field.
Here are some reasons why claims fail or the payout is substantially reduced:
- The claim is fraudulent
- Mis-information on the claim form
- Exaggerating the claim
- Proceeding with work before obtaining authorisation
- Operating outside of statutory requirements
- Missing or out of date documentation
- Inadequate checking or testing
- Inadequate servicing or maintenance.
Of all these, inadequate servicing or maintenance is by far the most common. The insurance is to cover unexpected accidental events. It is not there to cover developing problems that could or should have been discovered and rectified as a result of timely and prudent maintenance.
For example:
If the rudder breaks off because you hit something in the water, you are likely to be covered.
If the rudder breaks off because there was a fatigue crack developing over a number of years that led to the failure, you are unlikely to be covered.
If an engine failed due to a component breaking that was not discoverable in a prudent and timely service rebuilding of the engine would probably be covered (replacing the failed component itself is not).
If the engine seized because an aged cooling hose disintegrated there is probably no cover.
It is therefore essential to make sure that you boat is properly maintained and operated at all times.
Aside from insurance there are other very good reasons:
If the boat is not adequately maintained you are putting you, your crew, the boat and potentially the rescue services at risk.
If the boat is not adequately maintained it will lose value. The cost of maintaining a boat is always less than trying to catch up, even if that were possible. It will certainly be worth less when the time comes to sell and in extreme could be virtually unsellable (ie have negative value). This is an avoidable direct loss and the obvious remedy is maintenance so that for the life of your ownership, you are happy and so is your insurer.
So the answer to the question stays open.
The first six on the list are down to you.
The last two are areas where Middle Sea Yacht Surveys can assist with knowledgeable and experienced advice.
