Understanding insurance policies

Have you read your marine insurance policy lately?

 

Most of us don’t. The prospect of reading up to 45 pages of an insurance contract, even if written in plain English, is about as appealing as eating week old prawns. However, you may find you are not covered if you don’t. Marine insurance is important (and for certain races it is mandatory). Club Marine (“CM”) and Pantaenius (“PI”) are two that offer comprehensive insurance and many Members are insured with them. Despite the quality of these organisations and their insurance, it is still necessary for you to be familiar with the key terms of your policy. There are differences between the policies and you need to determine which best suits your needs.

Let me give you a few examples of issues Members may not be aware of,  based on these insurance companies’ current Product Disclosure Statements:

  • Are you relying on your policy to protect you against a claim if you are racing? CM covers you automatically for non-spinnaker races that do not exceed a distance of 25 nm.  Beyond that, you need to obtain an endorsement to the policy. PI automatically insures you for an organised sailing race of not more than 250 nm. Beyond that you need an endorsement.
  • Geographical restrictions: both policies have geographical restrictions. In the CM schedule I saw, it was generous- 250 nm off mainland Australia, Tasmania and NZ.  PI had more specific geographical limits and exclusions for tropical storms at certain times between 10 degrees S and 30 degrees S.
  • Does the policy exclude contractual liability? Some shipyards require you to sign a form in which you agree to indemnify the shipyard for loss or injury occurring while they are servicing your vessel (yes- outrageous I know). If you voluntarily accept this risk and sign the form, your policy is likely to exclude cover.

Good luck with your reading!

 

The author, David Jacobs, is a member of the CYCA Board and retired partner of the global law firm Baker McKenzie.

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