Saturday, July 28th, 2012

Deductibles and how they apply

The marine insurance policy is typically divided into 2 sections: the Hull & Machinery form, and the Protection and Indemnity form.

Each section covers very different exposures.

The hull part covers the value of the vessel owned by the insured. If something happens  to the boat and it’s a covered peril, one deductible, usually a percentage of the hull value, applies. No deductible applies in the event of a total loss though.

The Protection and Indemnity part (P&I) covers the policyholders liability for damage to property of others or injury to their person. If someone is injured, the bodily injury deductible applies. If the vessel damages someone else’s property, such as wake damage breaking up a floating dock, the property damage deductible applies.

The hull part also covers, but only in the event of a collision or allision, damage to another vessel or vessels that may also have sustained damage, but all the costs added together of such a casualty are only covered in the hull part up to the value of the insured vessel. In this case, the deductible stated on the hull part is applied only once, even if more than one vessel is damaged.

If the amount of all the collision damage exceeds the hull value insured, the P&I part picks up the rest. No additional deductible is applied. This single deductible scenario is only if the other person’s property is another boat. Allision differs from collision in that when one of the 2 vessels involved is not underway it’s called an allision. This coverage is called Excess Collision on the P&I part; some insurors require you to specify you want this endorsement. We do not.

So: If your vessel’s reverse gear control falls off as you are jockeying into the slip after a trip (and this is not uncommon; the connectors vibrate apart down at the gear) and you, thinking there’s not enough power to slow the boat down like you wanted to, give more throttle and find yourself backing even faster into the slip and hitting the dock, you’ll have… guess how many deductibles…

One for the hull damage, since you have a hull part of the policy claim on your own boat.

One for the property damage claim on the P&I part, to fix the broken dock. This is NOT a collision or allision, since the dock isn’t a boat, but is defined as property.

And one for the bodily injuries some of your passengers will claim after they get up off the deck! Subject of course, to the medical payments part of the policy which has no deductible-

So, make very sure your reverse gear control connections are staying together, dammit.