10 September 2013

Losses and Lessons: Out of the frying pan …

Accidents happen. That’s why we work to ensure that our clients’ prized vessels are properly covered should disaster strike.

While a busted hose in your vintage Corvette might leave you stranded on the side of the road, a similar loss in a classic boat could have more dire consequences. For many boaters, the most substantial losses are often caused not by the initial physical loss or damage, but from the ensuing consequential damage. To make matters worse, it may come as a surprise to most boat owners that many marine insurance policies do not cover consequential damage if the initial cause of loss is excluded from the policy. Here’s an example:

While operating his boat on a small inland lake, a Hagerty Classic Marine client suffered a sudden catastrophic loss in steering, which resulted in his boat running onto a sandbar. The hull suffered extensive damage. Upon investigation, it was determined that the rudder failed due to corrosion caused by electrolysis. Since electrolysis is excluded by most policies, you would expect that the damage to the rudder wouldn’t be covered. However, many policies would not cover the damage to the hull either, since the resulting collision was a consequence of the non-covered electrolysis loss.

To address this potential gap in coverage, Hagerty is proud to add Consequential Damage coverage to our growing list of policy features. As part of a continuous rollout over the next year, new business and renewing policies will receive Consequential Damage coverage for most core boats. Cruisers, sailboats and non-wood boats newer than model year 1979 or measuring 26 feet in length or larger are not eligible.

As with all policy endorsements, only your policy includes a complete description of the coverage provided. Please contact your coverage provider to confirm what may or may not be covered by your policy.

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