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Why boat insurance claims are complicated.

Oct 15, 2020
Even with the best-laid plans, incidents and accidents can happen that precipitates the need to make an insurance claim. But a boat claim is more complicated than a typical auto or home insurance claim. 

There are many factors that contribute to the complexity of a boat claim. 
  • Repair costs associated with the level of damage. 
  • Age-related issues - many older boats are harder to fix due to the limited production of replacement parts.
  • Self winterization - it is well worth the money to get a professional to winterize your boat.  
  • Obsolescence – production runs limited as manufacturers release new models and styles of boats frequently.
  • Marine insurance act – The vessel owner is the "the master" and must authorize all work to his craft and is required to ensure the vessel is seaworthy. 
  • Parts replacement:  if an original equipment manufacturer (OEM) part is not available then an aftermarket part or a complete rebuild of the part may be required. This affects the price of the repair.  The Government of Canada reports that Canada has a sophisticated track record of shipbuilding, repair, maintenance and refits. 
  • Availability of full-service repairers - in Canada, the boating season is short and many repair shops reach capacity to fix boats during the boating season. In addition, Covid-19 has created various supply chain issues. 
  • Pollution - boating accidents or incidents can cause major environmental damage. [link to second blog all about environmental rules]
  • All provinces and territories in Canada have pollution control regulations and boat owners must abide by the environmental rules. Trying to circumvent this can lead to large cleanup bills that the owner will be liable for. Fuel, oil, anti-freeze, detergents and hull paint are all marine pollutants. 
Common types of loss related to boat claims

Below water damage
  • Hull damage, stern drive and its components, and/or the propeller.
  • Rudder and keel on sailboats
Wind damage
  • Vessels tied to a dock are prone to physical damage if thrashed about during high winds and storms. 
  • Damages reported often include hull damage (ie/ scratches)  or damage to third party property (ex. boats, docks, boathouses). 
  • If the wind is strong enough (such as hurricane-force winds), the wind may be strong enough to collapse a building or structure onto the vessel.
  • Canvas and sails are susceptible to wind damage if not stored and secured properly.
Theft
  • Thefts can occur while a vessel is afloat, however, boats are also stolen while on a trailer. 
Inadvertent sinking
  • Mechanical failure is an example. If a bilge pump were to fail,  a vessel may fill up with water, causing the vessel to sink. 
  • Heavy rains may cause a boat to sink, should the bilge pumps fail, or not be able to keep up with heavy volumes of rain. 
  • A crack that goes unnoticed will also allow water to enter the vessel.
Fire, lightning or explosion
  • Lightning strikes may cause damage to the electrical and navigation systems of a vessel. 
  • Electrical shocks to docks can create damage to the boat.
  • Fires occur from fuels, worn fuel hoses, improper wiring, electrical arcs, overheating of equipment, no running blowers. 
Rodents/animals
  • Most often, claims are reported due to animals chewing on wires or upholstery & canvas, sails and bimini tops. 
  • Animals and rodents can hibernate or live on the boat in the winter and cause extensive damage before it is discovered.
First and foremost, if you have an accident ensure everyone is safe and call 911 if emergency assistance is required. If the incident relates to a criminal offense such as vandalism or theft, call the police and make a formal report.  Following that, take the next steps to protect the boat from further damage. And before you make any additional alterations or repairs, report to the claim center and have an adjuster assess the damages. If you have to alter anything to keep the boat safe, then photo document the damage prior to doing anything else. Our expert advisors, surveyors and claims adjusters can help guide you through the process, but as the owner of the boat, you will need to authorize all of the repairs to the boat.