A few days ago, you shipped a consignment carrying valuable goods on the old boat. That night, as the vessel sailed, a storm hit. Despite all precautions, the vessel began taking in water. The hull gave way and the engine failed mid-sea. By morning, communication was lost, along with the shipment, resulting in massive losses. Well, you would not have faced these losses if there had been a marine insurance policy for older boats in place.
What is an older boat in marine insurance?
The term ‘older boat’ refers to vessels manufactured more than 10 years ago, and with some insurers, more than 15 years ago from the day of applying for coverage. These boats carry higher risks due to age-related wear, are prone to mechanical failures, or may suffer from structural deterioration. Older boats are categorised based on hull material, engine age, and usage patterns.
What does marine insurance for older boats cover?
The marine insurance extends coverage to the following scenarios:
- Marine insurance offers coverage if the hull, which means the body of the ship and its key engines, propellers, and rudders, faces physical damage. The term ‘damage’ includes scenarios caused by grounding, collision, and severe weather.
- If the covered boat collides with another buoy, dock, vessel, or harbour structure and causes damage, the policy has a provision for compensation. However, no compensation shall be provided if the boat is on unlicensed navigation when the third-party damage occurred.
- There is a chance that the older boat has an outdated wiring system and a decades-old fuel system, making it vulnerable to onboard fires or explosions in the engine or fuel storage room. If any such situation arises, the policy will cover the repair expenses.
- If the insured boat sinks and there is a wreck in navigable waters, the policy will pay for salvaging usable parts and removal of the wreck. The coverage in this situation extends to cranes, transport, and divers.
- If the old boat becomes immobile due to mechanical failure, grounding, or water-logging, the policy will take care of the cost of emergency towing to the nearest repair yard or port. However, remember that this inclusion has a defined limit.
Factors influencing older boat coverage premiums in marine insurance
While many parameters determine the cost of insuring older boats, the five key ones are detailed below.
- Hull material and condition
The marine transit insurance provider checks if the boat is made of fibreglass, steel, or wood to evaluate its integrity. If you are looking to insure a boat with a wooden hull, be ready to pay a higher premium because wood is prone to rot, cracking, and marine borers. Even fibreglass raises the insurance premium as it is at risk of damage from osmosis or blistering over time.
- Engine age and type
Insurers check the boat’s engine age and whether it is onboard or inboard. They also review its maintenance history by analysing service logs. If the boat has an outdated engine that is heavily used, increasing the risk of mechanical failure and raising claims, the policy premium becomes costly.
- Usage purpose
The purpose the boat serves also determines the premium. If the boat is used for charter operations or commercial cargo, it will not only have longer operational hours but also multiple users operating it. Both of these scenarios increase the likelihood of claims, and to mitigate the risk, a higher premium is charged.
- Structural modifications
Any change to the boat structure, such as hull extensions, custom decks, or engine upgrades, can increase or decrease the premium. If modifications are certified and improve seaworthiness, premiums may drop. However, unauthorised or poorly documented modifications raise red flags and lead to premium hikes due to concerns about structural integrity.
- Mooring
The premium for the older boat is also determined by its docking location. If the boat is moored in cyclone-prone or flood-risk areas, insurers will charge higher premiums.
Exclusions of older boat marine insurance
Marine insurance for older boats does not offer coverage benefits in the following scenarios:
- Insurance excludes breakdowns due to normal engine wear in older boats. If the engine fails because of rusted cylinders, outdated parts, or worn seals, it is not considered an insurable event.
- If the boat is listed as private-use but is later involved in income-generating activity, any resulting claim will be denied under the commercial-use exclusion.
- Older boats have lower load tolerance due to material fatigue. If you overload beyond its certified capacity (cargo, passengers, or gear), and it leads to capsizing or hull stress, the insurer will deny the claim, citing a breach of design.
- If the person operating the boat during an incident was unlicensed or unqualified, the insurer will void coverage.
- Many older boats are restricted to inland or coastal waters. If the boat enters open seas, international routes, or high-traffic ports outside of the approved navigation range, any loss or accident will be excluded.
Conclusion
Marine insurance for older boats offers protection against a range of risks associated with their age and condition. From physical damage to salvage operations and emergency towing, the policy helps mitigate financial losses that can arise from unforeseen incidents at sea. However, when purchasing this cover, be aware of exclusions, including normal wear and tear, unauthorised usage, and navigational limits.