Buying a policy of marine insurance is about hedging against risk. You're paying some money up front to limit the possibility of a downstream event that may or may not occur. The boat might never sink, a guest might never fall overboard and you might never strike another vessel, but that burble of potential risk is enough of a concern to justify obtaining insurance. And that's a good bet until your insurer declines a claim.
I'd venture that most boaters navigate a lifetime of waters without having to make a claim or having to rely on an insurance policy to protect them from exposure to a big loss. As a result, when a boater does face this kind of situation there's a certain amount of disbelief. When we pay for something, the thinking usually goes, we sort of expect the contracted-for performance. However, a policy of insurance is a contract and an insurer can sometimes decline coverage. For instance, risks that fall outside the agreed-upon policy language or misrepresentations by the boater at the time of procuring the insurance may be grounds for declining coverage.
What'll usually happen in these circumstances is that sometime after making a claim, you'll get a letter from the insurer or its attorney likely quoting large excerpts from your insurance policy and including a statement as to why the insurer is declining (or reserving its right to decline coverage). When this happens, a prudent mariner promptly calls his maritime attorney and seeks legal advice. These can be tough waters to navigate without a knowledgeable pilot, and you want to make sure that what you do following receipt of such a letter doesn't worsen the situation.
Finally, don't abandon ship should you ever receive a declination letter. There can be alternative arguments as to why coverage exists and, in the case of a reservation letter, an insurer is sometimes simply protecting itself until additional facts can be uncovered.
In the meantime, a Happy Thanksgiving to each of you.
Underway and making way.
--- Fulweiler llc