Thursday, 29 January 2015

More thoughts on Marine Insurance

After reading Peter Berry’s blog posts regarding the sinking of their boat <blog link here> I was even more concerned to read about third party insurance in the UK.  I was very surprised to read it’s not compulsory for a business to have 3rd party insurance.  I’ve used Peter’s experience as the basis for an example of what might happen to an unsuspecting boater.

  • The boater is insured and arranges for a supplier of marine services to complete some work on their boat.
  • As a consequence of that work the boat sinks.
  • The owner employs a marine surveyor to produce a report on the cause of the damage; extent of the damage; and estimated financial cost to repair.  Let’s assume the estimated cost is £30,000.
  • The owners insurance company will only replace any affected part of the boat if it is damaged beyond repair.  Any other repairs are considered “betterment” and not covered by the policy.
  • Engine, start motor, alternators, electrics and timber are all to be dried out.  Only if they have failed will they be replaced.  No consideration is given to potential reduction in total life or premature future failure.  The insurance company assesses repairs at £5000.
  • The supplier of marine services refuses to provide their insurance details.
  • The owner is now £25,000 out of pocket and decides to initiate legal action against the supplier of marine services.  The owner doesn’t know the supplier has no insurance.
  • The owner wins the court case but then discovers the supplier is actually two companies.  Company A does the work but only has assets of £1.  Company B doesn’t do the work and owns all the assets.
  • Now the owner has pyric victory.  Lost £25,000 on the boat and has a large legal bill.  Has won his case in court but Company A has no money to pay him.

So how does the boater avoid this situation?  How many of us request the potential supplier of a service to give us a copy of their 3rd party insurance policy.  Do we then go on to include in writing with the supplier that they must maintain this policy for the duration of the period they work on the boat?  I suspect very few boaters do such a thing.

Our contract with both our boat builders required them to hold insurance.  But I must confess I never demanded a copy.  It’s something I will definitely do in future should we ever want a supplier complete work on our boat that might result in serious damage or loss.


Peter and Margaret said...

Or perhaps even demand a written copy of the company's insurance that will be valid for the duration of work that wasn't considered to be extensive enough that the boat might be at risk of sinking? Who would have thought having a boat routinely blacked by the same marina three times over a five year period would have resulted in it sinking?

Tom and Jan said...

Hindsight is a rather frustrating and soul destroying thing! I've certainly leaned something from your experience and it doesn't solely relate to boats!