Red Skies in the Morning, Insurers Take Warning

Red skies at night, sailors’ delight. Red skies in the morning, sailors take warning. Just as the old adage infers, when it comes to marine risks, there will be losses. But, not every loss can be attributed to the weather, and some marine losses can be avoided if agents, underwriters and boat owners know the warning signs.

There are insurance companies that offer agents an additional layer of expertise for marine risks. For example, some insurance companies have adopted a different staffing model within their specialty product lines which includes former technicians, parts, service, and warranty managers, and marine surveyors. These expert teams can help agents identify weaknesses when considering a marine risk. Along with collecting pre-insurance photos, agents and underwriters will find requesting a current marine surveyor’s report, a review of the physical fitness of the vessel, is also a helpful tool. A marine surveyor’s report with photos provided by an experienced and vetted surveyor is key to assessing these vessels.

Some surveyors will only include a few photos of the boat providing a Hull Identification Number (HIN) and an overall photo of the vessel. These vague reports can cause questions and a decline in coverage for a good risk or an acceptance of coverage on a poorly conditioned vessel. The better the evaluation and review, and the more information that can be obtained, the better position the agent and underwriter will be in when evaluating these boats.

While it may be impossible to prevent a marine loss caused by Mother Nature, there are steps boat owners can take to maintain their vessel. Boats need regular maintenance, and after a few years, need to be serviced annually. Knowing what type of maintenance is needed and how the boat’s various systems work is critical. For example, boat owners may not fully understand how their motors work. Unlike a car, boats do not have multiple gear shifting transmissions which hold the engine’s RPMs at a higher level. Therefore, the use of proper oil and additives designed for moist marine environments is important. This knowledge could reduce towing, liability, and mechanical failure claims.

Another more common risk is freeze damage. Many boat owners may attempt to save money through homemade winterization techniques. For example, although not recommended by the motor manufacturers, the boat owner may attempt to drain all of the water out of the motor’s cooling system to prevent freezing, and as a result, losses occur. This winterization technique may be successful for a few years with a new motor. However, over time, the remaining moisture will lead to rust inside the cooling jackets.

Many boat owners feel they do not have to winterize their motors that have heat exchanger systems, as they have been told it cools like a car’s radiator. Although these heat exchangers house antifreeze to cool certain components, failure to properly winterize these components or service these fluids can lead to freeze damage, motor issues, and/or overheating. Having a qualified marine shop provide preventative maintenance on these boats can preserve them from freeze losses.

Many maintenance tasks are not listed in a boat owner’s manual, while some maintenance is dependent on the vessel’s usage and the environment. Therefore, regular maintenance checkups by an expert are important to keep the boat owner and passenger, captain, crew and fellow boaters safe.

By learning more about boats, collecting underwriting photos, and working with vetted marine surveyors, agents can increase their knowledge of the perils these crafts face along with the costs associated with repairs. Agents who do this will then be better positioned to advise their clients, encourage preventative maintenance, accept seaworthy risks and experience those red skies at night.

Wolfe is a watercraft specialist and Master Marine Surveyor in the personal lines physical damage unit at American Modern.