POSTED January 12, 2021
Do you need a Boat Survey for Insurance?
Do you need a boat survey for insurance? To answer that question, we first need to ascertain the age and use of the boat.
Each insurance company will set their own guidelines so it’s best to ask them directly, but as the industry standard, it is common practice for an insurer to ask for an out of water survey if the boat is over 10 years old and is moored permanently. Out of water is the most comprehensive, which includes inspecting the boat inside and out.
Other common cases in which insurers may ask for a survey is if the boat is old or an unknown make or model (even if it’s on a trailer). If the boat isn’t built by a reputable or well-known builder, the insurer will want to know that the boat is well constructed and sound.
Will I need a survey if I get a policy with the same insurance company the current owner is insured with?
Short answer: It depends.
Long answer: Some insurers will accept an existing report if done recently by the current owner. Although, most will want a fresh survey done on the sale of a vessel.
Can I get an in-water survey only?
In most cases no, although there are one or two insurers that I have heard of accepting in-water surveys. It is much more thorough to evaluate a boat out of the water, as you can access most areas of the vessel, hence, why insurers will likely want this. How would they know if an insurance claim was the result of pre-existing damage to the running gear? If the survey was inspection as in-water only, they simply would not know.
What is the difference between an insurance survey and a pre-purchase survey?
Often, you will have boat sellers who will show an insurance survey and pass it off as sufficient for pre-purchase. This is not the case. A good pre-purchase survey should be done with a sea trial and include some evaluation of the engines. An insurance survey evaluates if the vessel is an acceptable risk to insure, while a pre-purchase survey evaluates its entire condition as best as possible. Additional areas are considered at pre-purchase like the engine condition, operation of electronics, lighting, navigation gear fitted etc.
Agreed value vs market value
One important consideration when taking out a policy is agreed value vs market value. These are two different types of cover offered and, depending on the insurer, it’s a good idea to find out what you’re insured for.
If you have a policy for the market value, the value you are insured for can fluctuate and you may have had invested more into the boat than you will get back in the event of a total loss. Typically, this type of cover coincides with a cheaper premium.
If you have a policy for an agreed value, this means that you and your insurer agree on a set value, and in the event of a total loss, this is the amount that will be paid out and not the current market value.
Which is the best insurance company?
How long is a piece of string? This is a question that is subjective based on requirements, therefore it’s going to have to be a decision you make yourself. It’s important to understand the difference between agreed value and market value, the type of cover offered, and any exclusions. The best way to do this is to obtain a few quotes and then take a look at the PDS (Product Disclosure Statement). Be sure to check if there are restrictions upon who can drive the vessel, if there are exclusions to the cover (for example, hurricanes), and if the boat is covered for offshore trips. Choosing the cheapest quote does not mean it will be the best cover.
Some insurers will want a more comprehensive survey done before taking on a policy, and others will be more lenient. Insurers will have their preferred types of boats to insure, with some having exclusions on where the boat is moored. For example, Balmoral Beach moorings are often rejected due to being excessively exposed to the elements and Hamilton Island has exclusions at certain times of the year. Many insurers will want prior boat driving experience, or even some boat training done before a policy is provided. These requirements may seem like a hassle, although you will often find that the most demanding insurers will provide you with the best deal if you have a solid history and well-maintained boat.
The following is a list of popular insurers used in Sydney:
With most of the insurers listed above, you can obtain a quote online. Most will provide a price and then request an out-of-water survey be provided within a certain time frame.
Will an insurance company cover me if my engine fails?
To this day, I am not aware of any insurance companies that offer engine cover due to mechanical failure which was unrelated to an incident. What this means is if you buy a boat and the engine fails due to reasons unrelated to an accident, you cover the cost of repairs yourself. Insurance companies are well aware of fraud and customers taking advantage. Therefore, they hire professional Marine Assessors to investigate their insurance claims, adjusting the loss according to the policy wording.
Many insurers will have a clause addressing general maintenance and upkeep of the boat in their policy, for example:
“We will not pay claims arising from or in conjunction with: The unseaworthiness, lack of repair or lack of maintenance of the boat.”
This is why, as an owner, it’s most important to keep your maintenance up to date. It’s in your best interests not only to be able to use the boat reliably, but also in the event of a claim.
If you want the engines covered for mechanical failure, the only option is to purchase a new boat in warranty.