If you ever felt confused or entangled with the intricacies of marine insurance, you are not alone. Commercial insurance can be a complex and challenging area for businesses to navigate, particularly in the marine industry.
This is because there are unique risks and exposures of marine businesses that require specialised coverage, which vary depending on the type of business and the vessels involved. The marine industry also has specific regulations and requirements that must be taken into account when selecting insurance coverage.
Finding the right insurance policy to adequately protect a marine business can be a daunting task, but it is essential to mitigate the financial risks associated with accidents, injuries, and property damage. In today’s article, we’ll attempt to help you understand the difference between private and commercial marine insurance. Then, we’ll look at how you can assess which policies to get and how insurance brokers ease the process.
What is Marine Insurance in General?
Marine insurance, in general, aims to provide protection against risks and liabilities associated with maritime activities including fishing, tourism, transport and the associated assets such as cargo, commercial vessels, marinas or private boats. It is designed to safeguard individuals or businesses, as well as their assets involved in marine operations or commerce.
Because of the broad range of activities and regulations involved in the marine industry, it resulted in a diverse variety of marine insurance policies. Two broad categories of marine insurance are private and commercial marine insurances.
What Commercial Marine Insurance Covers
Commercial boat insurance policies typically provide broader coverage and higher liability limits than private policies. This is because commercial boat operators may be responsible for carrying passengers or cargo and may be held liable for any injuries or damages that occur during the course of their business. In addition, commercial policies may include coverage for passenger liability, commercial towing, and other specialised needs that are not typically covered under a private policy.
In summary, Commercial Marine Insurance:
- Designed for businesses that operate boats
- Provides broader coverage and higher liability limits than private policies
- Can include coverage for pollution liability, commercial towing, and other specialised needs
- Coverage is based on the business’s needs and the type of boats being operated
- May require additional coverage for employees and crew members
What Private Boat Insurance Covers
Private boat insurance policies are designed for individuals who own and use boats for personal use, such as pleasure cruising or fishing. Private policies may include coverage for physical damage to the boat, liability for bodily injury or property damage caused by the boat, and coverage for personal property on board the boat.
Where private and commercial marine insurance differ is that private insurance has exclusions for vessels that are used to generate an income. Most policies would have a clause that states that the contract will void if the vessel is used for financial reward. This kind of exclusion can be found in policies from all major marine insurers in Australia.
Examples of exclusions clauses found in Private Boat Insurance contracts dictating that your policy does not cover you for:
- “…the use of Your Personal Watercraft covered by the Policy for hire, charter or reward of any kind unless You have advised Us and We have agreed to extend cover in writing”
- “Any claim arising from an incident involving Your Boat or any Boat covered by the Policy, when it is being used for hire, charter or reward of any kind unless You first advise Us and We agree to extend over in writing”
- “…hire or charter, or for payment or reward at the time of the accident or loss.”
- “Your Vessel being used for hire or charter, or for payment or reward at the time of the Accident or loss unless We specially agree to cover this use and specify the cover in Your Policy Schedule.”
In summary, Private Boat Insurance:
- Is designed for individuals who own and use boats for personal reasons
- Generally provides coverage for physical damage to the boat and liability for bodily injury or property damage caused by the boat
- May include coverage for personal property on board the boat
- Typically has lower liability limits and less specialised coverage than commercial policies
- Will not cover you if you hire it out or use it to generate income
How to Assess & Identify Which Insurance Policy You Should Get?
Assessing which insurance policy to buy for a commercial marine business involves a thorough evaluation of your specific needs, risks, and budget. Here are some steps to help you in the process:
1. Identify Risks
Start by identifying the specific risks associated with your commercial marine business. Consider potential liabilities, property damage, loss or theft, business interruption, and any other risks unique to your operations.
2. Evaluate Legal & Regulatory Requirements
Determine any legal or regulatory requirements for insurance coverage in your industry. For example, certain types of marine businesses may have mandatory insurance requirements imposed by local authorities or industry associations.
3. Consult with Insurance Professionals
Seek advice from experienced insurance professionals who specialise in marine insurance. They can help assess your risks, understand your business operations, and recommend appropriate insurance coverage options.
4. Seek Recommendations
Seek recommendations from other commercial marine business owners or industry professionals who have experience with marine insurance. Their insights and experiences can provide valuable guidance in selecting the right policy.
5. Review & Understand the Policy Terms
Before making a final decision, thoroughly review the terms and conditions of the insurance policy. Ensure you understand the coverage, limitations, exclusions, and any additional requirements or obligations.
6. Review & Update Regularly
Remember that insurance needs can evolve as your business grows and changes. Regularly review your insurance coverage to ensure it continues to meet your business requirements and adequately protects against emerging risks.
Commercial marine insurance is a special type of insurance that covers a company’s liabilities. It is important that businesses get the right type of policy to avoid breach of contract that will cost more in the long run. With the help of insurance brokers, boat operators can get help assessing and identifying various policies that will match their risks and requirements.
Insurance brokers can help obtain quotes and compare insurance policies from multiple insurers. They can assist and advise on coverage limits, deductibles, exclusions, and optional coverages offered. Not only that, insurance brokers also evaluate the overall value and suitability of each policy based on your business needs and risk profile.