What you should know about watercraft insurance

Watercraft Insurance is a comprehensive insurance and covers accident damage and theft of the insured watercraft. It also covers damages caused to third parties and third party property. These policies are purchased for yachts, dinghies, motor boats, canoes, rubber ducks and jet skis.

Standard watercraft policies usually cover usually only covers watercraft that are used solely for social, domestic or pleasure and if used in accordance with its designated purpose. The craft is covered while on shore afloat on inland or coastal waters as well as while it is being transported by road, sea or rail. The trailer on which it is transported is not covered under a watercraft policy and trailer insurance will need to be purchased to cover the trailer. An unroadworthy trailer could cause a claim under your watercraft policy to be repudiated in the event of a road accident.

If the rules and regulations applicable to the specific waters where the craft is being used are not obeyed then you are in violation of the policy rules and a claim may be repudiated.

The maximum that an insurance company will pay in the event of a claim will the reasonable market value of the craft or the insured value of the craft, whichever is the lesser. In the event of the watercraft being stolen most insurance companies have a waiting period prior to paying out a claim. The purpose of this waiting period is to wait and see if the criminals are apprehended and the craft recovered before paying the claim.

Insurance companies are obliged to first settle any debt of an insured asset before paying out the insured in the event of a total loss. In other words if the craft was financed the finance company will be paid out and only if the amount of the payment is in excess of the outstanding debt will the insured receive the balance of the claim monies. If there is a shortfall the insured will still remain liable to pay the remaining debt even though he no longer has possession of the craft.

Watercraft policies may also cover salvage costs incurred to prevent or minimise further loss or damage to the craft as well as the costs of locating the craft after it has been stranded or involved in a collision with any object or has sank.

Should the craft become disabled outside South Africa caused by any peril covered by the policy then most watercraft policies will cover the costs of salvaging and delivering the craft to the nearest border post of South Africa.

Third party damages caused by the navigator of the insured craft will be covered in the event of the navigator being held legally responsible for said damages as a result of an accident while being used for its intended purpose.

Death or injury will also be compensated for in terms of the policy but excludes liability to passengers of the insured craft and water skiers. There are insurance companies that offer water skier liability at an additional cost.

Any property belonging to the insured or other passengers on the craft is not covered under a watercraft policy and all risks insurance should be purchased if this cover is required.

Accidental death or injury of a household member or employee is excluded on most watercraft policies. Personal accident insurance policies are the responsibility of each individual and it is recommended that all persons should ensure that they have the appropriate cover in place.

Unless specifically insured for business purposes under a business policy watercraft used to earn an income or for hiring or chartering are excluded from standard watercraft policies.

This type of policy will not compensate the insured if any legal authority seizes or confiscates the watercraft for any reason.

Loss or damage caused by faulty repair work or maintenance, a latent defect in the craft's design, construction or machinery, or loss or damage caused when it is being launched through the surf will be excluded in most watercraft policies.

Loss or damage caused by fire will usually be repudiated if the craft is fitted with inboard machinery and was not carrying properly fitted and maintained fire extinguishers that were in proper working order at the time of the fire.

If the navigator is under the influence of alcohol or drugs, or if the percentage of alcohol in the navigator's blood exceeds the legal limit, or if the navigator fails a breathalyser test at the time of a claim arising no insurance company will pay out the claim. In all likelihood the insurance company will cancel the insurance and the insured will have difficulty in placing his insurance elsewhere.

Insurance companies often include policy wordings to the effect that they will exclude liability of damages to a motor if it has been submerged in water following an insured incident and the insured has not immediately flushed and restarted the motor.

Most watercraft policies limit liability for outboard motors and machinery stating that they must be securely bolted to the craft, failing which the motors and machinery will not be insured, unless they have been fitted with an anti-theft device.

Watercraft policies are not maintenance policies and do not cover loss or damage directly or indirectly caused by failure, breakage or rust, wear and tear, deterioration or depreciation, perishing, fading, mechanical or electrical breakdown, insects or vermin and consequential loss from any cause whatsoever.

It is important for all potential watercraft policyholders to be aware of circumstances that could jeopardise the cover offered under these policies and prevent risking claim repudiations by strictly adhering to policy provisions.