PROTECTION TO COVER OAR-DEALS

Peter Valentino interviews Nigel Rausi on the importance of insuring a boat or yacht.

Owning a boat is an exciting mater it’s like a love affair; one that however comes with great responsibility where each boat owner should ensure the safety of the boat and her crew. With the cost of boats being what they are, being adequately insured nowadays is a must. Since we’re fast approaching the warmer months, I caught up with Nigel Rausi a Chartered Insurer and a keen sailor since the age of six. Nigel was active in the competitive sailing and windsurfing scene for several years and spent most of his free time at sea with family and friends.

I remember the days when our marinas consisted of a few stern to berths; when the number of boats was much less than today, and in fact, back then I very much doubt how many of these were insured. Te situation is very different today as the numbers have quadrupled.

Going back a good number of years, I remember spending weekends in Comino and there would be only a handful of boats. It is quite different now as the number of boats has dramatically increased and so have the risks associated with owning a boat especially with more powerful boats, increased sea traffic and bays which are geting more crowded than ever before. It is a legal requirement to have at minimum, third party insurance which will protect the boat owner in the event of both property damage or personal injury to third parties, like for example, a collision with another boat or accidental injury to a swimmer. Most owners, however, opt for more comprehensive cover to protect against any loss or damage to the boat itself in addition to having cover for third party damage.

Nigel, many probably purchase a marine policy giving it the same litle atention they give their automotive policy. What should they look out for?

True. Unfortunately, most people do not read the full policy terms and conditions and only dig out the policy document from under their chart table when they need to lodge a claim.

Tanks to recent legislation, insurers are obliged to make full disclosure of the terms and conditions of the insurance cover before a policy is bought. Insurers usually forward easy to read documents with summaries of cover and what is called an 'Insurance Product Information Document'. Tis document explains the insurance cover in simple terms. It is in a standard format that facilitates comparison of insurance products from different insurers if an owner is looking for quotes from different insurers. Boat owners need to go through these documents to select the best cover for their boat.

Once the best cover is selected, and the policy is bought, owners need to go through the final documentation to ensure that they are fully aware of what is covered and what exceptions there are. And secondly to ensure that the cover is adequate for the intended use of their boats. Another mater which owners should be aware of is whether there are any 'warranties' in their policy. Tese are policy conditions that must be adhered to always. To give an example, a typical warranty could oblige a boat owner to have automatic fire extinguishers in the engine room or use an anti-thef lock on the outboard motors of tenders. Non-adherence to warranties in the policy could result in claims being repudiated. ›

So, once a policy is bought what happens if someone buys a new tender or replaces any equipment midway throughout the policy term?

Boat policies run for one year, and it is essential that once a policy is issued if any changes are made mid-term such as the purchase of a new tender or changes to the berthing location the insurer must be notified. Any necessary amendments are made to the policy document itself. Tis will ensure that the owner is fully covered notwithstanding any changes that have been made mid-term.

Earlier, you mentioned 'intended use'. What exactly do you mean by this?

Te owner should know what the 'in commission' and 'out of commission' periods are, as these specify when the boat can be used and when it should be laid up, and out of use respectively. Te 'navigational limits' specify the use of the boat within some geographic regions like for example 'Maltese Territorial Waters' or 'Mediterranean Waters'. Tere could be weather-related restrictions or restrictions to where the boat must be moored or berthed, either throughout the whole of the year or at certain times of the year. Other restrictions include who can use the boat and the actual use of the boat which would typically be for 'private pleasure purposes', which means that commercial use such as charter is not permited. Tese are stated in the policy documentation, and owners must be familiar with these.

Earlier you mentioned notifying the insurer of any changes afer the policy is taken out midterm through the policy period. What about the renewal of the policy should boat owner’s lookout for anything in particular?

Particularly at this time of year at the beginning of the season, most boat owners will be receiving their renewal notices, which in effect is an invitation sent by insurers to renew the insurance policy for another year against a premium payment. Owners must review the value for which their boats, tenders, outboards and other equipment are insured. Te values should reflect the market value and insure for any higher value is pointless, as, in the case of a claim, the market value of the damaged item will be paid. Other things to look out for at renewal are the terms and conditions of the renewal itself as insurers might offer revised terms, such as revised in commission periods or changes to the permited use of the boats in certain weather conditions, and changes in excesses. An 'excess' is the first part of any claim that a boat owner would have to pay. Owners need to review any amended terms of the cover and ensure that these are acceptable and that the policy remains adequate for the intended use of the boat.

What is the procedure to lodge a claim with an insurer?

Policies include what is called a 'notification clause' that outlines what should be done in the case of a claim or in the case of an event which could give rise to a claim like for example a minor collision with another boat. Fundamentally most polices oblige owners to immediately notify their insurers of the circumstances of the loss as well as the details of any third parties involved in the incident. Depending on the incident, insurers might appoint their surveyors, loss adjusters or other professional to assess and quantify the loss, and collate any reports from any relevant authorities which they might need to process a claim.

I remember that purchasing a policy for a sailing dinghy was impossible. Te number of dinghies has increased, as has their cost. Te same goes for a windsurfer; a craf that seems unable to do any harm, until of course, it sails straight into the hull of a boat. Are insurance policies readily available nowadays in such cases?

Yes, it is possible to insure these, although not all insurers cover these small crafs. Up to last year, my son Luke was actively racing in the Optimist Class, and it was no problem finding insurance for this small boat.

Boat owners use their boats in different ways, and I get the feeling that experience doesn’t factor in when taking out a policy. I feel that in many ways, the responsible and experienced

boat owners are not fairly treated; and this reflects in the rising policy costs. What is your take on this?

Simply put, the premiums that we pay form part of a pool of funds which insurers then use to pay for any valid claims that arise. If the frequency, severity and cost of claims increase, we would collectively need to pay higher contributions to the pool resulting in higher premiums. So back to your comment, yes I feel that we are paying for the costs of less experienced owners and skippers however some insurers do consider both the experience and the claims history of a boat owner to justify and charge lower premiums.

Te fine print – this generally defines quite a bit. Can a boat owner negotiate changes to a standard policy?

Most insurers price their premiums based on standard terms and conditions within specific parameters. It is sometimes possible to negotiate changes to the standard policy. However, this depends on what the requested changes are. If these increase the risk and the likelihood of a claim to the insurers, then you cannot expect that they will be happy with a change to their standard policy. However, if the proposed change comes with no additional risk or a decrease in the likelihood of a claim, I am sure that an insurer will give due consideration and might agree to the proposed change.

Exceptions ofen include wear and tear, deliberate acts of negligence or recklessness, operating under the influence. In the interest of the cautious, do insurance companies ever investigate accidents?

Insurers and their appointed surveyors usually investigate all claims, and I am confident that if a claim arises and an insurer has reason to believe that any one of these is the cause of a claim they will take the appropriate action to decline such a claim. Te issue here is that an insurer needs to have adequate proof that for example, a person was under the influence of drugs or alcohol before going down the road of refusing to pay a claim. In instances where there is no proof beyond doubt, unfortunately, it could be difficult for insurers to decline such claims. With regards to your mention of negligence and recklessness, I have seen may cases out at sea where owners give no due regard to other vessels in the vicinity or the sea conditions when using their boats. Tis, of course, is a recipe for disaster and there have been such claims.

In my mind, leaving a boat on a mooring in an exposed area when inclement weather is forecasted is something that shouldn’t be covered by insurance. Can we have your opinion, please?

As a boat owner, I cannot understand how certain boat owners abandon their boats to the mercy of the elements even when policies of insurance permit the mooring in certain bays mid-summer. Updated weather reports are easily accessed online, and owners should take appropriate precautions. From the insurance perspective, we all need to act as if we are uninsured; however, some owners abdicate their responsibilities to care for their vessels under the pretext that there is insurance cover in place. My annoyance to this probably arises from my passion for boats, but it is sad to see a boat cut loose from its mooring drifing onto the rocks with no owner in sight trying to stop the ensuing damage. If a boat is moored in an exposed bay, in the 'laid up' or, 'out of commission' period, an insurer will most probably decline such a claim.

What are the main points that an owner should look out for while shopping around for a policy?

As we said earlier, the cover should be adequate for the use of the boat. Most premiums are calculated in part on the insured values so owners must ensure that they obtain quotes based on the market values of their boats. Obtaining quotations on values over market values will only result in higher premiums. Te quotations must include cover for all that needs to be insured under the policy such as hull, machinery, personal effects, tenders and their outboards, cover while racing, chartering or water skiing, and the navigational waters in which the boat will be used. If you navigate outside Maltese territorial waters owners need to make sure that they have adequate third party cover for the country being visited and that they have any mandatory documentation in hand such as the 'Blue Certificate' for Italian waters.

While thanking you immensely for affording us your time and sharing your knowledge, would you like to add anything you wish our readers to know?

Everyone wants to enjoy their boats, and while at sea we depend on the seaworthiness of our boats. Tis means that the boat and all the safety equipment need to be well maintained to afford us safe passage and make sure that any claim is not invalidated for lack of maintenance. We must all use our boats prudently, within their designed scope and within the competence of the crew, we take on board with us.

One thing that I would like to see more of while at sea is more consideration towards other boat owners for the peaceful enjoyment of all. I hope that your readers find the information useful and I would like to wish them an enjoyable boating season.