You would think that marine insurance policies would be drafted to adequately protect the boat owner generally, given the accepted fact that boats live in a hostile marine environment. And that the insurer’s risk analysis policy would not make the customer the scapegoat, by interpreting their policies so broadly. However, it appears that some insurers are becoming more inclined to reject claims, even when you believe you have adequately maintained your vessel. So given that the rules on the insurance playing field are often not fair, protect yourself.
The starting point is to consider what you will use the vessel for, where
and possibly when. This will provide a road map when reading the insurance policy to ensure it meets the special requirements that owning a multihull requires such as salvage; property damage and includes towing to name a few examples. It is important that you are fully informed about the insurance contract you decide on and what happens to your salvaged vessel when it is recovered. The leaflet that you are provided with when you insure your vessel is more important than the cover may suggest. One positive for multihull owners is that traditional differences between multi-hull and monohull insurance options seem to have faded with advances in design and construction materials.
Multi-hull insurance premiums historically
These days the premiums that insurance companies charge are approximately the same amount for equally priced monohull and multi-hull Marine vessels. However, this was not always the case, historically there has been a difference in insurance premiums for multi-hull users compared to monohull. This was likely because multi-hulls were either poorly made or the construction materials were limited in the 60s and 70s, and thus more prone to sinking in some cases.
Nowadays multi-hulls are much safer in their design and due to advances in materials. Additionally, it could be argued that multihull designs have become more acceptable within mainstream boating circles. But for whatever the reason it appears that insurance companies charge approximately the same prices for multi-hulls as they do for monohulls.
Capsized Cat vs Mono
However, any owner of a multi-hull needs to be more aware than a monohull owner, about whether their insurance policy covers salvage operations. This is because when a Monohull capsizes the keel will cause the vessel to self-right. However, this proposition is not possible in a multi-hulled vessel.
You may not think this is a problem because you believe that your comprehensive insurance will cover you and all you will need is a simple tow to either right your cat or bring it back to safety.
While this might be practically true there are a few important terms to be familiar with when choosing an insurance policy especially, salvage costs, towing costs and various non-salvage costs. And, it is worth going into a little more depth regarding your salvage costs and distinguishing them from towing costs.
What is salvage?
One of the main areas of dispute when it comes to insurance law is definitions and interpretation of specific words. It is a whole area of law in itself, so it should not come as any surprise that “salvage” does have a specific definition.
If your marine vessel becomes ‘capsized or damaged while you are at sea and there is danger to your boat or yourself’ then you will likely need assistance. This is particularly true for a multihull, which does not self-right itself. Anyone who provides this assistance can be considered a salvor and are conducting a “salvage operation”.
There is a historical legal expectation that the salvors be paid a fee for assisting in the recovery of the vessel or its content, or protecting the environment from damage and this continues today on a more commercial basis. Historically this fee was to protect the damaged vessel’s contents from piracy, to encourage salvors to help for reward, as well as to provide monetary compensation for salvors who risk their own vessels and lives to assist in recovering people, vessels and property.
The definition of salvage and insurance
For the purposes of insurance, it is important to distinguish insurance cover for salvage operations, as opposed to insurance covering damage to property or non-salvage operations. This is because boat insurance typically provides a maximum amount of coverage for different type of claims; for example, damage to the hull is set to a set amount, and damage to the motor is set independently. The same is said for salvage. Plus, what you may think is a salvage operation may not be a salvage operation and you may not even be covered!
Insurance for salvage operations relates to the money that needs to be paid as salvage costs to the salvors, but it may not cover towing costs in a non-salvage situation, such as involving simple towing or minor groundings where there is virtually no danger to the vessel or crew.
Such non-salvage operations may be covered separately in an insurance contract.
Price of salvage operations
The price to be paid to the salvors for salvage operations can vary depending on:
- The value of the salvaged vessel (as salvaged) and the value of the other property salvaged,
- The skill used and the efforts made by the salvors in protecting the environment, in salvaging the vessel, its contents and the people,
- How successful the salvor was overall,
- How dangerous it was for the salvor,
- How quickly the salvage operation was done,
- How available other vessels and equipment were for the operation, and
- How prepared, efficient and valuable was the salvors’ equipment.
All this this can come to a substantial sum and it is therefore an important aspect of insurance contracts, whether present in the insurance policy or not.
It is important to briefly note: if the salvage operation gave no “useful result”, then there is no obligation to pay a reward to the salvors nor if you refuse expressly and reasonably salvage aid.
The concept of “buyer beware” can cover many different things – also insurance. It is important to remember that you are buying an insurance policy. You are quite literally, buying into contract. If you open up your $4 carton of eggs to make sure none are cracked than it makes no sense not to open up your Insurance Policy worth thousands of dollars to check its contents.
Salvage fees may be covered by typical insurance contracts; though it is definitely worth checking with your insurer first to confirm this, either by reading the insurance policy (the PDS) or calling and asking, or both! But make sure you receive any confirmations in writing, by email or standard mail to cover you and prevent any questions down the track.
Additionally, salvage clauses in insurance contracts can involve the insurance company gaining ownership of your damaged/written off multi-hull as part of the terms of the contract (and you receiving monetary recompense). It is definitely worth confirming that this is a term you would like in your contract or not.
The importance of reading your insurance contract very carefully cannot be overstated. In any aspects you do not understand you should immediately contact your insurance provider or get legal advice, ideally before signing the contract. Remember, contact your insurance company and get them to send any clarifications or advice in writing – it may prove invaluable later down the track.
If you are still concerned whether or not you are properly covered, you should contact a lawyer ideally well versed in marine law such as Vaarzon-Morel Lawyers.