As a marine insurance policyholder, the last thing you want to hear is that damage or loss of your vessel isn’t covered. So, it is crucial to be aware of the exclusions in your policy. However, the complexity of marine insurance policies and the terms they use often make it difficult to know exactly what the premiums you pay actually cover.
What Are Marine Insurance Exclusions?
In an insurance policy, an exclusion is something that falls outside the scope of the policy. For example, policies of most types of insurance include exclusions for damage that was done deliberately by the policyholder or their representatives.
Marine insurance exclusions limit the insurer’s liability by excluding certain risks from the policy’s coverage.
Specific exclusions vary from insurer to insurer, across policy types, and between individual policies. Policy exclusions are listed in each insurance policy.
Common Types of Marine Insurance Exclusions
It is important for a policyholder to understand that the insurance company has the burden to prove that an exclusion applies to a claim. The policyholder is only required to present evidence that the vessel sustained damage that is normally covered by the policy. Common marine insurance exclusions include the following:
Wear, Tear, and Poor Maintenance
Most marine insurance policies contain an exclusion for wear and tear—meaning damage that comes from ordinary use—typically includes deterioration from weathering, animals, and other effects of marine life over time. This type of vessel damage is generally not covered by marine insurance policies.
Another common exclusion is damages caused by poor maintenance. When attempting to exclude for a lack of maintenance, the insurer needs to present evidence showing that the damage was caused by a lack of maintenance.
Misconduct
Most, if not all, insurance policies exclude claims for actions and behavior that constitutes misconduct. Improper use, recklessness, and illegal activities fall within this scope.
Manufacturer’s Defects
Manufacturer’s defects are flaws that originated during the manufacturing process and existed before you purchased your insurance. These are usually excluded from coverage as pre-existing conditions. In addition, some marine insurer’s exclude damage caused by certain types of equipment failures.
Mold and Blistering Damage
Both mold and blistering are common effects of marine life. However, losses due to mold and blistering are often excluded because the damage they cause can be prevented with proper maintenance and storage.
Losses Resulting From Civil Unrest, War, or Terrorism
The purpose of insurance is to protect you and your property from the unexpected. However, losses caused by civil unrest, war, and terrorism are outside the scope of standard marine insurance policies. As a result, coverage for this type of loss typically requires specialized policies.
Problems With Marine Insurance Exclusions
On the surface, the marine insurance exclusions in your policy might appear straightforward. But this can all change when it comes to filing a claim. Many policies have unclear exclusions or insurance companies apply the exclusions improperly.
For example, the following scenario demonstrates the complexities that arise from policy exclusions. Your boat catches fire and is significantly damaged. You make a claim with your marine insurer. The claim is denied on the grounds that the engine had a manufacturer’s defect that is excluded under the policy. However, there is no clear evidence that the fire was caused as a direct result of a manufacturer’s defect. Moreover, the insurance policy also includes both coverage caused a result of the fire and also contains a special endorsement for equipment breakdown. Further, the insurance company’s agent inspected the vessel’s engine prior to policy being issued (as a result, the insurer had reason to know of a manufacturing defect but covered the engine anyways).
A situation like this is not uncommon and demonstrates how insurance claims are not always cut and dry. Insurers often deny claims without good reason and policyholders too often accept a poorly reasoned denial to severe financial detriment.
Although marine insurance policies are maritime contracts governed by federal maritime law, insureds can often assert a claim for bad faith against insurers who have denied claims without good cause.
How an Attorney Can Help
Insurance recovery and maritime law attorneys have the knowledge and expertise it takes to resolve disputes with insurance providers both in and out of court.
Whether it’s establishing the fair interpretation of an ambiguous exclusion clause or ensuring your insurance company abides by the rules, an attorney can help you get the fair treatment and compensation you are entitled to.
When to Contact an Attorney
Contact an attorney when:
- You believe your provider has unfairly denied your insurance claim
- You believe your insurance policy entitles you to more compensation than you have received
- Your insurance claim has been unreasonably delayed
How Johns Law Group Can Help You
While insurance is a necessary element of your business, it is our business.
With a background representing some of the nation’s largest insurance companies, we are confident in our ability to help you achieve the best results, no matter how complex your case.
Johns Law Group, PLLC. attorneys have in-depth knowledge of insurance company practices and extensive expertise and experience in the law concerning insurance policies and recovery. Please see our featured case results for an idea of the results we achieve for our clients
We are dedicated to helping you understand your legal rights, and ensuring your insurance provider fulfills their obligations under the policy you have paid for.
Contact us for a free initial case evaluation and find out what avenues of recourse are available to you.