Blog January 2017

Here are three emerging risks you need to know about commercial marine insurance in 2017.

Larger vessels. Many of the vessels under construction today are super large container ships. “We’re living in a world where economies of scale are very important,” “Some of the vessels that are getting built now are so enormous that they bring a whole new set of exposures, like the wake damage they can create if they are maneuvered incorrectly. Problems can be significantly heightened than if you had a vessel that’s half the size.”

Cyber. This is a big concern for more modern vessels that use computerized equipment, It’s the same old story—people who want to do harm can hack into the systems and create havoc with the navigation and communication systems,. Consider a large refrigeration vessel that carries fish, fruit or frozen products: “A hack could mess with the refrigeration systems, which are controlled by computers.”

So far, the commercial marine market has appeared largely unconcerned about cyber exposure. “I don’t think we’ve seen the really big nasty shock loss yet,. “And I hope we don’t, but some major loss may happen at some point that’s going to really school everyone. Then, I think you’re going to see many more products tailor-made to cover that kind of exposure.”

And when ships eventually begin to follow the lead of driverless cars, cyber will become an even bigger concern. “There’s constant discussion about drone ships—a shift in the future to unmanned vessels,” Hills says. “We’re quite a long way off from that, but that will create its own set of problems.”

Climate change. As weather events become more severe, the impact on harbors, ports, terminals and other marine territories could be staggering. “Whatever you feel about it—whether you believe it’s natural or manmade—climate change is going to create some challenges for commercial marine,” Vaughan says.

The problem is particularly worrisome in the Arctic, where melting ice caps make it possible for more vessels to venture further north. “There’s going to be more shipping going on up there, and that’s going to create new activity,” Vaughan explains. “If you have an accident, if you have a fire on board or collision or sinking, the arctic environment makes it more challenging to get rescue crews up there, to work on saving vessels, to work on saving lives.”

Normally, vessel owners can reap benefits from working hard to meet standards like the U.S. Coast Guard’s Sub Chapter M regulations for inspection and safety. “I was a broker for many years, and I’m a great believer that if your clients are complying with more stringent safety guidelines, you should make a point of driving that home to your insurers,” Vaughan says. “There’s been a lot of good work done on essentially improving the risk to the market.”

But in the absence of the type of infrastructure of more seasoned shipping areas, “there are going to be some new exposures there that probably are going to need to be worked out,” Vaughan says.

COMMERCIAL & CHARTER

If you make your living on the water, and own a commercial vessel, or even an entire fleet, you know all too well that an accident on the water could mean more than just a damaged boat; it could be a threat to your livelihood and the livelihood of your crew.

When you operate a charter boat, or other small vessel carrying passengers for hire, you have special legal and liability concerns. There are requirements for operator licensing, safety equipment, drug testing, and so on. Similarly, the kinds of insurance you need are unique, in part because maritime law places extraordinary burdens of responsibility on the master of a vessel.

The vessel owner is responsible for all damages resulting from "negligence," which has been interpreted very broadly by the courts to include any situation in which a crew-member or passenger gets hurt, other than intentional self-injury.

Our staff has the experience to assist with all commercial marine risks. From research vessels and commercial fishing to dock builders and tug and tow operations, we have a solution for you. We offer a wide range of commercial boat insurance options sure to fit any marine business’s needs. With an extensive network and years of experience, we will locate the best coverage with the best rates available.

We provide cost effective and comprehensive coverage to suit the operation of head boats and six packs.

Here are some answers to some questions that seemingly always come up.

Marine insurance is important as it protects your vessel from damage upon exposure to a broad range of risks, such as accident of the vehicle carrying the cargo, failure in the dock or port area and any damage incurred at sea. If you are planning to visit unfamiliar or international waters then all accidents and damages will be subjected to the laws and regulations of that jurisdiction.

How important is boat insurance?

Insurance provides monetary compensation against a predetermined risk. An insurance company offers such protection for a payment (or premium). It is also the amount the insurance company agrees to pay when an unfortunate event occurs. Insurance is a benefit to the society at large by allowing individuals to share the risks faced by many people. An insurance policy is a written agreement between an insurance company and an individual or organization that requires insurance. The insurance policy sets out the terms and conditions and specifies the risks that will be compensated for.

What is a Protection and Indemnity Insurance?

Protection and indemnity (called P & I) insurance protects the vessel owners against their liability for damage to cargo in their care and custody; death or injury to passengers, crew, cargo loaders, and others; damage caused to piers, docks, underwater cables, and bridges; and, more recently, damage caused by pollution. The terms and conditions of the policy can be extended, limited, excluded, modified or changed upon the request of the client.

What is Marine Hull Insurance?

Hull insurance affords protection to owners of all types of ships for loss or damage to their waterborne property. Typical perils insured against are stranding, sinking, fire, and collision. The hull policy offers an unusual coverage under its collision clause, which provides liability insurance for loss or damage to the other vessel involved in a collision, as well as to its cargo.

What does Freight, Demurrage and Defense Insurance Cover?

FD&D covers the costs involved for necessary legal assistance in charter party and other contractual disputes which are directly connected with the operation of the vessel. The cover entitles clients to a comprehensive legal consultancy service.

What is War Risks insurance?

Usual Hull insurance does not cover the risks of a vessel sailing into a war zone. A typical example is the risk to a tanker sailing in the Persian Gulf during the Gulf War. War risks cover protects, at an additional premium, against the danger of loss in a war zone. The war risks areas are established by the London-based Joint War Committee, which has recently moved to include the Malacca Straits as a war risks area due to piracy.

How much can I expect to pay for marine insurance?

Cost for marine insurance depends on several factors, like your boating experience, current navigational equipment, where your yacht will be used, the value of your yacht and whether you will be living aboard or cruising offshore.

Preventing Mold And Mildew

If you store your boat or leave it inactive for periods of time, the Mold Battle is real.

Here ‘s a great article penned by Charles Fort

Most boat insurance policies don't cover mold damage. So it can be a rude awakening to open your boat in the spring and be greeted with a dank, musty smell or an interior full of mildewy cushions, carpets, and headliners. Mold spreads by forming spores, and every boat, charter, recreation, or luxury has them. The key is to deny them what they want so they can't grow.

Keep Water Out

It's easier to prevent mold and mildew than to stop it. Mold is accelerated by warmth and high humidity and, once formed, can survive for years, even if conditions change. And as anyone who's waited too long to clean out a refrigerator can attest, mold also thrives in cooler weather. Even in frigid climates, the interior of a boat can reach temperatures that will support mold when the sun shines on the hull and in the early days of spring.

A single water leak can start spores growing. Rain leaking through hatches and portlights will make a boat's interior a mold haven, so the first thing to do is find and seal leaks. Portlights and windows are probably the primary leak spots on a boat, followed by loose stanchions. On sailboats, chainplates that penetrate the deck are a common problem area, as are deck-stepped masts. Leaking deck hardware (cleats, rails, and windlasses) is another common problem.

Water leaking through the deck core can cause mold that rots deck coring. Rebedding portlights or deck hardware is the only way to stop them from leaking. Clogged cockpit scuppers are another source of water ingress. If the drains clog with leaves or ice, water can back up and flow into the cabin. In places with large snow accumulation, portlights, hatches, stanchions, and fittings that normally seem leak-free can begin to drip as snow slowly melts over several days; check them after a heavy snowfall. Placing a cover on your boat helps keep the water out, but if it prevents air from getting in, you could still be faced with mold and mildew this spring.

Keep Air Moving

Mold loves a closed boat. Air trapped inside holds moisture on which mold thrives. Unattended boats generate moisture inside through condensation because water, air, and hull temperatures are always changing and at different rates. This process accelerates in a humid climate. The solution is to exchange inside air for outside air, which greatly reduces the chance of mold forming. Dorades, louvers, vent plates, and other waterproof ventilation systems help with air circulation. But if there's no air movement in the boat, they won't be effective; powered ventilation might be required. There are 12-volt vents for boats, but unless you can count on a constant supply of electricity, solar-powered vents are a better choice and can move a surprising amount of air. Some models with batteries can run for 24 hours a day, using stored power to run at night. A good rule of thumb is to replace the air inside the boat every hour, and vents are typically rated by how much air they can move in an hour; a 30-foot boat, for example, contains about 800 cubic feet of air. Larger boats typically need two powered vents, one for intake, one for exhaust.

Replacing the cabin air won't do any good for closed lockers; keep them clean and open where possible. Open covers over the bilge, but don't forget later that there may be a giant hole in the sole — leave yourself a note on the cabin door so you or someone else doesn't accidentally step into the bilge in the dark. Removing some of the contents of lockers over the winter helps air to circulate. Small, 120-volt heated wands are available that warm and circulate the air in lockers, but they won't be effective if the cabin air isn't vented, and it's often not possible (or legal) to get shore power to a boat in storage. If you're able to use shore power, these heaters are safer than hanging an electric bulb in a locker because they can't get too hot and aren't prone to breaking if the boat is rocked. Never leave an unattended household heater on board; every winter boats (and neighboring boats) catch fire from these heaters or their extension cords.

Another way of lowering humidity in a confined space is with chemical dehumidifiers, which use calcium chloride to absorb moisture and then direct it to holding containers. These tubs and bags are safe, inexpensive, easy to put into lockers or other places where removing humidity is a problem, and available at most marine stores. Depending on the amount of humidity, a couple of packets might last all winter; use more for a larger boat.

When you visit your boat this winter on a sunny day, be sure to open it up and let fresh air in while you're doing an inspection. Go have lunch, then come back and button things up again. Your boat will appreciate the blast of fresh air. Over winter, many boats are shrink-wrapped, which can present problems for air circulation. Shrink-wrap is great for protecting a boat from snow, dirt, and sun, but it limits how much air can get below. Vents should be installed in the shrink-wrap; depending on the size of the boat, several may be required. There are also solar-powered vents designed specifically for shrink-wrap. If no security concerns exist, consider leaving the cabin doors open under the shrink-wrap so air can better circulate.

Finally, remove all bedding, mattresses, clothing, towels, and other items that can attract moisture, as these can be ruined by mold. 

— Published: December 2016

Is my boat covered everywhere?

Many boaters may be unaware of the navigational limits on their boat insurance policy.

"Many policies contain what is called, “a navigational warranty, It’s usually covers the inland waters of the U.S. and Canada or the coastal waters of the U.S. and Canada for smaller boats up to 26 feet, or for larger craft, the territories that are defined by geographical points.

For instance, one of them goes from Eastport, Maine, to Cape Hatteras, N.C.; another goes from Eastport, Maine, all the way around Florida to the panhandle."

Make sure your policy provides coverage where you want to roam. It may exclude certain areas for political or security reasons (think Somali pirates). And if you decide you want to explore and do a one-time trip, ask your insurance agent if they can provide you the ability for the one-time trip.

Some policies contain optional endorsements that can help pay to move your boat out of harm's way when a named storm approaches.

How can you save money on boat insurance?

 Get specific. Don't buy a yacht policy if you own a dinghy. There are many varieties of boat insurance, including powerboat, charter boat, sailboat, houseboat, bass boat, wooden boat, fishing boat, pontoon boat, personal watercraft and so on, each with its own price structure and set of features.

    Go all-in on safety features. Many carriers offer policy discounts for gadgets that protect their investment, such as wireless auto tethers that act as an engine kill switch should the skipper or any of the passengers fall overboard.

    Take a boating class. A trained boater is a safer boater.

Give us a call, we are happy to help.

WHAT DOES THE INSURANCE COMPANY CONSIDER AS SINKING?

When faced with a sinking claim, the first question to address is, "What exactly does the insurance carrier mean? Is a trawler sinking when sitting at the dock with water leaking in through the stuffing box at a rate the bilge pump can keep up with? Is it sinking if the bilge pump can no longer keep up? Is it sinking if the bilge pump fails? How about a ski boat that gets swamped by waves? Or a boat with positive flotation awash to the gunwales?

From an insurance perspective, a boat is sinking if it must be actively pumped out to remain afloat and undamaged.

This definition highlights two key issues.

First, a sinking boat is not watertight. There is always a source of water that must be located and stopped to keep the boat floating.

 The second is that well-designed boats do not sink due to failed bilge pumps. A boat should stay afloat in the conditions for which it was designed without water having to be pumped out of it — even in heavy rain and big seas (relative to the size of the boat).

That's not to say that adequately sized, functioning bilge pumps are not important. In addition to removing water, they can keep your boat afloat long enough for you to find a leak and fix it. But that time should be measured in minutes and hours, not days and weeks.

When it comes to gradual leaks due to slowly failing parts, too many of the boats in claim files existed in a state somewhere between floating and sinking, completely dependent upon the bilge pump to keep them on the water instead of below it. The bilge pump merely postponed the sinking until it failed, lost power, or was overwhelmed by the volume of water. Had someone fixed the leak in those days, weeks, or months, that boat would not have sunk.

Choosing A Policy

All-risk policies, with consequential-damage coverage for losses due to specific peril such as fire or sinking, are among the broadest recreational marine policies available today. They cover certain types of losses resulting from a failed part, even if the cause of the part's failure is excluded. With consequential-damage coverage, for example, if a thru-hull should fail due to corrosion (a typical exclusion in marine policies) and your boat sinks, the repair or replacement of the thru-hull would not be covered, but the damages directly related to the sinking would.

All-risk policies provide for a broad array of losses from an accidental cause that could befall your boat, such as theft, vandalism, lightning, fire, grounding, and sinking. When comparing policies, look for options that protect your personal items, such as watersports equipment and fishing gear. Non-emergency towing coverage is also important to have in the event of a breakdown.

Typical recreational marine policies in the market give you the option to insure your boat in the event of a total loss for its "agreed value" (also known as "stated value") or for the current market value (often "called actual cash value"), which may be lower than the agreed value. Generally, an actual cash value policy is less expensive. The larger the boat's value relative to your total assets, the more important insurance becomes to protect yourself from financial loss.

The Bare Minimum

If you're comfortable with risking the value of your boat, many companies, give you the option for a liability-only policy that doesn't insure physical damage to your boat at all but provides a specified amount of coverage for your liability to others in the event of an accident, as well as protection from uninsured boaters.

Even if your boat isn't worth very much, you should still consider purchasing liability insurance. A collision with a small powerboat can cause serious injuries, and even if you're not found liable for those injuries, it could cost a significant amount of money in legal fees to defend yourself against such claims.

Policies that cover liability only, with no hull coverage, can be significantly less expensive than full-coverage policies.

Note that if you already have a homeowner's umbrella (or excess-liability) policy, it will usually require your boat policy to have certain minimum liability limits (typically $300,000, but sometimes as high as $500,000), and you should make sure there's no coverage gap.

Boat insurance is flexible, so you can buy the right kind of policy at the right price for you, from one that protects your assets in case of a liability claim against you to one that covers most situations that could damage or destroy your boat. Getting quotes on several different types of policies will allow you to make an informed decision based on the coverage versus the cost. 

Winter Down South

It's no surprise that when freezing temps blast an area where annual winterization isn't the norm, damage claims are sure to follow. If your winter storm-prep plan consists of hanging a garage drop light in the engine compartment and calling it good, you may want to beef it up with some of the following tasks. Just because its not freezing all winter down here, doesn't mean you should ignore these tips.

Engines:

Because the engine is likely the most expensive piece of gear you'll have aboard, proper engine winterization is crucial. From cracked blocks to fractured manifolds and risers, engines are particularly susceptible to costly freeze damage. Review your engine manual so you correctly complete all manufacturer-recommended steps for protection against freezing weather.

Sanitation System:

Properly dump and clean portable, self-contained toilets. Flush and completely pump out permanently installed toilets and holding tanks. Follow the manufacturer's instructions for additional winterization guidance.

Air-conditioning System:

Drain or purge all water, including the raw-water strainer. An alternative is to flush the system with antifreeze; just be sure the entire system is protected (the seacock, strainer, pump, and all downstream plumbing).

Canvas:

Remove all canvas (including bimini tops and curtains) where appropriate and store ashore. Don't wait until it's too cold to do this, as the material may crack or be too stiff. Ensure that any canvas or covers left in place are robust enough to withstand high winds, ice, and snow. In many parts of the country, storm winds exceed what a bimini top is designed to endure.

Sails:

Ideally, sails should be removed and stowed ashore before a storm. If that's not possible, however, they should be secured to prevent unfurling and flogging

Remove and stow sails ashore to prevent damage. If you can't, securely lash them in place to prevent unfurling/flogging. A flogging sail can damage not only your rig but also your neighbor's.

Hauled/Stored Ashore:

Check the condition of cradles, support blocks, and jackstands. Ensure that each is positioned properly and that your boat is properly supported.

Place strong, stable plywood sheets under jackstand bases, and ensure that safety chains are in use. Boats can rock in high winds, causing unchained jackstands to move and allowing the boat to fall. Make sure your boat is level, to promote proper drainage. Never tie covers to jackstands or support blocks. Flapping canvas can yank them out in high winds, causing the boat to topple over. Remove all bilge drain plugs.

Based on an article in BoatUS by Frank Lanier