Hanging out at the yacht club, you may have heard your sailing buddies talking about ensuing loss coverage for their vessels. If you’re not familiar with this clause in many marine insurance policies, this post is for you.
We’ll explain what ensuing loss coverage is. And we’ll review how it can benefit you as a boat, yacht, or marina owner.
What Is Ensuing Loss Coverage?
Ensuing loss coverage is a clause that’s typically added to your marine policy in case of severe damage or loss to things like collision, fire, or sinking.
It states that if a failed part or event causes loss that would normally be covered, the loss is still eligible for a claim and full reimbursement according to your policy.
For instance, if an engine overheats and starts a fire on your boat, resulting in it burning and sinking, the engine overheating is the cause of the sinking. While normally sinking might not be covered due to this issue, an ensuing loss clause that excludes engine problems would still see that you are reimbursed for the loss.
Many marine ensuing loss clauses have exclusions to provide better coverage for policyholders, such as:
- Improper repairs
- Latent defects
- Wear and tear
- Neglect
- Electrical failure
- Abnormal combustion
- Mechanical breakdown
- Weathering
- Rot, mildew, rust, corrosion, etc.
- Damage from insects and vermin
- Freezing and thawing
Why Ensuing Loss Coverage Improves Your Marine Protection
If you look at the list above for typical ensuing loss exclusions, you may find items that apply to your own vessel. You may have had an engine problem that you caught in time but would have otherwise started a boat fire. Perhaps your yacht was subject to unusual freezing weather here in the Pacific Northwest.
As you can see, having an ensuing loss clause in your policy gives you better coverage. Without it, a claim for the loss of your vessel could be denied, and you’d have to replace it out of your own pocket.
If you own or manage a marina, this could be even more catastrophic. There could be multiple vessels involved in a claim started by a single failed part on one boat.
Does Your Marine Policy Give You Enough Coverage?
Whether you’re eyeing a new boat or reviewing your yacht’s coverage, it’s important to understand any ensuing loss clauses in your policy. Without the right coverage, you could be faced with a devastating loss.
At Davidson & Associates Insurance, our Marine Division has a team of experts who can explain every aspect to you and make sure you have the coverage you need. We’ll also review your liability and other insurance protection so your entire policy meets your expectations.
You can start a policy online anytime, or give us a call at 360-514-9550 to let us know how we can help.
