Beware cheap third-party insurance
IF YOU’RE planning to buy or renew boat insurance this year, make sure you know exactly what you’re covered for as some cheap third-party insurance policies will not pay out if a boat sinks.
At River Canal Rescue, we estimate around four out of 10 sunken boat claims are being rejected and this is due to a lack of definition in the policy small print, misleading wording that refers to ‘wreck removal’ rather than ‘salvage’, exclusions for salvage cover and salvage costs being rejected unless the peril is covered.
In my view, ‘low cost’ insurers selling policies that are neither fair nor transparent are breaking Financial Conduct Authority guidelines.
We’re not insurance experts, but we have many years of experience and some of the clauses and reasons used to reject claims are not made clear at the outset. In many cases the small print is shocking and full of ambiguities, meaning people don’t know what they’re covered for when buying the policy.
The definition of ‘ wreck’, for example, varies between companies and while we regularly undertake salvage for customers under this clause, an insurer recently rejected a salvage claim stating ‘wreck removal was for vessels that had broken up and required disposal’.
The most important reason for third-party cover is it’s required when mooring in a marina/boat yard. Should the vessel sink, insurance is in place to cover the refloat. When buying cover, the assumption is a refloat is included; however I know of one insurer offering two third-party policies – one with salvage and one without. So unless you look at both policies in detail, and know what you’re looking for, you could end up with sub-standard cover.
RCR is authorised to handle claims for most of the UK’s leading boat insurers and in the past I’ve reminded boaters about the importance of understanding what they’re covered for in their policies.
If you have a basic third-party liability policy you could face crippling costs if a major incident occurs as it will only cover the cost of a claim against you if you hit another boat, cause damage to someone else’s property or injure someone. While the majority of third-party policies automatically include the raising, attempted raising, removing or destroying the wreck of your boat as standard, not all do. These costs will only be met if the vessel’s causing an obstruction to navigation or potential damage to a third-party property.
And with sinking and underwater damage the biggest risks on the inland waterways, you should ensure you’re covered for this, as well as personal accident and medical expenses.
When it comes to paying recovery costs, some insurers may only do this once the cause of the sinking is identified. To assess the claim, they’ll want a clear understanding of what happened, before deciding to accept or reject it. If a sinking’s due to poor winterisation, a lack of maintenance or a failure to check when the river/canal is in flood, the claim may be rejected, unless there’s clear evidence the incident could not have been prevented. In contrast, some insurers cover salvage under the third-party agreement as standard, no matter what the cause.
It’s important to check a third-party policy meets your exact needs, pay close attention to the third-party liability sections and ask about exclusions and how a potential claim will be handled. Is there a 24/7 claims hotline, are there approved inland waterway repairers and if so, who and where are they? How a claim is handled should take equal priority alongside cost and cover options.
Cheapest is not always best; if in doubt, consider an ‘all-risks’ policy or swap insurers.
Stephanie Horton is happy to answer any insurancerelated questions from boaters. These should be emailed to Insurance questions, editorial@ towpathtalk.co.uk and RCR will respond.
To find out more about River Canal Rescue, follow the team on Facebook, visit www.rivercanalrescue.co.uk, email enquiries@rivercanalrescue.co.uk or call 01785 785680.