Marine Insurance Exclusions: Protecting Your Vessel and Your Rights
Most boat owners and maritime companies insure their vessels for both property damage and other liabilities that may arise. As a policyholder, there are few things as frustrating as discovering your insurance won’t cover a maritime insurance claim because your policy contains an exclusion. Even more frustrating is when an insurer wrongfully denies coverage or interprets an insurance policy in bad faith. It is essential to understand what exclusions are contained in your policy. However, it is equally important to consult with an experienced marine insurance attorney when presenting a complex claim or fighting a claim denial.
What Are Marine Insurance Exclusions?
Every insurance policy contains coverage exclusions that, when correctly applied, bar coverage for a loss or claim. There are numerous types of exclusions – indeed, most marine insurance policies contain dozens. Marine insurance exclusions limit the insurer’s liability by excluding specific risks from coverage. It is important to understand the specific types of exclusions your policy contains and to explain they type of coverage you need to your broker or agent.
Common Types of Marine Insurance Exclusions
Understanding exclusions is vital since insurers must prove that a specific exclusion applies to a claim. Policyholders need only show that the damage typically falls under the policy’s coverage. Here are common exclusions in marine insurance:
- Wear, Tear, and Lack of Maintenance
Damage from regular wear and tear or poor maintenance is typically excluded. This includes weather-related deterioration, marine life damage, and neglect. If an insurer claims damage resulted from inadequate maintenance, they must provide evidence. - Misconduct
Claims involving misconduct, such as improper use, recklessness, intentional damage, or illegal activities, are generally excluded in marine insurance policies. - Manufacturer Defects
Damage from defects present before purchase or caused by equipment failure is often excluded as a pre-existing condition. - Mold and Blistering
Mold and blistering are common in marine environments, but because they can often be prevented through regular upkeep, they’re typically excluded from standard coverage. - Sinking or Groundings Losses from an event in which the Vessel sinks or is grounded are sometimes excluded from coverage.
- Battery Exclusions Damages caused by battery fires or equipment with an expired manufacturer’s warranty are sometimes excluded.
Challenges with Marine Insurance Exclusions
Many exclusions are not clear-cut and may be subject to different reasonable interceptions. When evaluating an insurance exclusion, it is important to address how the policy defines various policy terms and if the policy’s coverages are contradictory. In other situations, an insurer may apply an exclusion in a manner that is not consistent with the facts of the claim or the purpose of the exclusion. Often times, insurers haphazardly deny a claim without realizing that the insurer has the legal burden of proof to establish that a claim may be excluded.
Here is an example of how marine insurance disputes sometimes arise. Suppose your boat suffers fire damage. The insurance company denies your claim due to an exclusion for failure to maintain the vessel’s electrical systems. Assuming the maintenance exclusion is valid, the insurance company would still need to establish that the sole cause of the fire was improper maintenance (what constitutes “reasonable maintenance” is normally disputed). In addition, the exclusion may not apply if the insurance company made the decision to insure a vessel after being made aware that the boat had outdated electrical systems.
There are numerous other situations in which an exclusion may not apply. When involved in a complicated or denied claim, the assistance of a marine insurance attorney can be invaluable.
Failure to Act in Upmost Good Faith
When applying for marine insurance, the applicant is obligated under the general maritime law to act in upmost good faith. Often, an insurance company will deny a claim on the grounds that the applicant did not act in upmost good faith. The obligation of upmost good faith requires an applicant to answer application questions truthfully and to furnish all information that is relevant to the insurance being requested. Failure to disclose relevant information about the vessel’s history or condition could void the insurance policy. The duty of upmost good faith can operate similar to an exclusion because it is a mechanism used by insurance companies to deny coverage by voiding the insurance coverage.
How an Attorney Can Help
Marine insurance claims can be challenging, particularly when exclusions are improperly applied. Attorneys specializing in insurance recovery and maritime law can help resolve these disputes effectively. Whether interpreting unclear exclusions or advocating for fair treatment, an attorney can help secure the compensation you deserve.
When to Contact an Attorney
Consider consulting an attorney if:
- Your claim has been denied unfairly
- You believe you’re entitled to greater compensation
- Your claim is experiencing unreasonable delays
Why Choose Johns Law Group
With extensive experience in insurance recovery and in-depth knowledge of maritime law, Johns Law Group, PLLC, is well-prepared to handle even the most complex insurance disputes. Our attorneys work to hold insurers accountable and ensure you receive fair treatment under the law. Contact us for a free case evaluation to explore your options and understand your rights.