22 January 2024

What does third party boat insurance cover?

By Paul Knox-Johnston Sales & Marketing Manager

What is a third party boat insurance policy? Inherently it is an insurance policy which can be taken out to provide a basic level of cover, which may satisfy the minimum requirements to comply with the rules and regulations governing parts of our coastal and inland waterways.

It is designed to offer a policy option for boaters who are happy with the minimum level of protection required should they harm a third-party vessel or person.  It’s a simple, bare-bones policy designed, as named, to protect others and their property, around the insured and it’s worth noting that cover may not necessarily include removal of wreck and salvage charges.  However, every insurance company has the option to add extra cover inclusions to a policy as they feel appropriate, to add to the potential appeal of their policy.  It should almost go without saying that making additions and amendments need to be communicated in a clear fashion to the policy holder.  Any reduction in cover must legally be communicated with policy holders as a matter of course.  It cannot be hidden in wording and just glossed over; it has to be clearly notified at the point in time that policy wording changes.

Any insurance company worth their salt (and in compliance with FCA guidelines) will have clear guidance on what the policy covers and what it doesn’t.  This is sent in the form of a full policy wording document, as well as in a succinct manner in the form of an IPID (Insurance Product Information Document).  Both should be included within the quotation and the policy documentation received by the customer upon purchase and insurance companies will recommend for the customer to read through the provided information carefully, to make sure the cover on offer/requested is suitable for their purposes.  Most insurance provider’s websites will have a copy of the wording to download and read at any time before the policy is taken out.  With regards to renewals, insurance companies are required to send out reminders with any cover changes noted and advise customers to review the changes prior to taking up the cover.  This is usually done 30 days prior to renewal.

When it comes to a requirement for a survey, it is common for boaters purchasing a third party only policy, or equivalent, that a hull survey will not be required as the insured’s hull itself is not covered by the policy. Once a policy has been taken out, an insurer cannot modify the terms and conditions, or ask for further information without communication with and acceptance by the client

The fundamental basis of the insurance claims process is ‘to act as though uninsured’. i.e. do everything you would to ensure the minimisation of further damage to your vessel and the environment around you. Boaters should act as though there is no security blanket in place and make sure the vessel is as secure as it can be.  A third party should only be involved in this process with the agreement of your insurance company.  The insurance company can only deal with the customer, or someone who has been authorised to speak to them.

During the boat insurance policy purchasing process it is fine to approach each insurance company or broker with questions regarding any element of cover.  It makes sense to create a comparison table to figure out the best cover option and most boat insurance businesses will be happy to help in any way which aids an informed decision with accurate information.

A boat insurance purchasing decision should be made with a full comprehension of what is and what is not covered, and insurers are duty bound to ensure this is the case.  The FCA has created consumer friendly regulation which offers huge protections in the case of ‘Mis-selling’ or not having enough information at the time of making the purchasing decision.  All UK companies are bound by FCA regulations and must always act in the best interests of customers.

It is worth keeping in mind though that it is up to each individual customer to choose the level of cover they require.  Choosing third party insurance can be a risk.  A boat owner can increase insurance cover to include a variety of extra additions on top of a base policy, it will just cost more in premium to cover the increased risk.