Marine insurance policies cover the loss of, or damage caused to, boats and other types of vessel.
Types of complaint we see
Customers complain to us that their insurer unfairly rejected, or restricted, a claim, because:
- the vessel wasn’t seaworthy
- they didn’t take reasonable care to avoid loss or damage
- they didn’t disclose information the insurer asked for when they took out the policy
- they made a fraudulent claim
- they didn’t comply with the policy’s security requirements
Sometimes customers complain that their insurer didn’t adequately put things right to settle the claim.
Handling a complaint like this
When you receive a complaint involving marine insurance, you should reply to your customer within eight weeks.
If you don’t reply within the time limits, or the customer disagrees with your response, they can bring their complaint to us. We’ll check it’s something we can deal with, and if it is, we’ll investigate.
We’ll expect you to be able to show us that you’ve investigated the complaint thoroughly and that you have reflected carefully on the circumstances.
Find out more about how to resolve a complaint.
What we look at
As with every case, in reaching a decision about what’s fair and reasonable, we consider:
- the relevant law and regulations
- any regulator’s rules and guidance that applied at the time
- any industry codes of conduct in force at the time
- what we consider was good industry practice at the time
If there are disagreements about the facts, we’ll make our decision about what probably happened using evidence provided by you, your customer and relevant third parties.
Here's what we consider in different scenarios:
Most marine insurance policies provide cover for sinking. The extent of the cover depends on the reason for the sinking. For example:
- full cover generally applies if the sinking was caused by an accident that resulted in a sudden and rapid ‘incursion of water’
- no cover, or restricted cover, may apply if the sinking was caused by a slow build-up of water in the vessel
A slow build-up of water may indicate that the boat wasn’t seaworthy and/or the customer hadn’t maintained the boat adequately.
Sometimes we’ll see a dispute about how a sinking happened and whether no cover or restricted cover should apply. We’ll look carefully at the evidence, including the cause and speed of the incursion of water.
You may reject a claim because a customer knew their vessel was unseaworthy when they used it and loss or damage occurred because of its unseaworthiness.
In these cases, we’ll usually look for evidence that the:
- vessel was regularly and well maintained by a professional marine engineer
- the servicing and maintenance were carried out according to manufacturer and industry recommendations
If you claim that your customer should have known that the vessel was unseaworthy, we’ll carefully consider the customer’s knowledge. If they’re a qualified and experienced skipper, we may expect them to have a technical understanding of the vessel and its seaworthiness. But we don’t generally expect a customer to have this level of knowledge.
You may reject a claim because a customer:
- didn’t carry out basic checks and precautions before casting off
- ignored weather warnings
- ignored warnings about the condition of the vessel
In these cases, we’ll look at the evidence to see if your customer was:
- aware of the risk, but chose to carry on without taking precautions to avert it – in which case we may say it was fair of you to reject the claim
- unaware of the risk – in which case we may decide you should pay the claim
Whatever the knowledge of a customer, there are some basic checks and precautions that insurers say should be carried out. These include:
- checking the bilges (inside the bottom of the vessel) to make sure there isn’t any water in them, as this may be evidence of a leak
- putting bungs into the drain holes at the back of the vessel if it’s being launched from a trailer
- closing all sea cocks to stop water coming into the vessel
- checking all safety equipment
Insurers sometimes reject a claim because a customer hasn’t carried out certain checks and precautions. If you expect the customer to carry out certain checks and precautions you should make this clear in the policy details.
Disputes about misrepresentation and non-disclosure of information often happen because of the way customers answer questions about their experience on insurance proposal forms. For example, a customer who has hired a speed boat once a year for 20 years may state that they have 20 years’ experience.
It’s often difficult to establish a customer’s experience in boat handling, because they may not have had marine insurance before or don’t have other supporting evidence.
Find out more about how we deal with misrepresentation and non-disclosure complaints.
You may reject a claim because you suspect a customer deliberately sank or set fire to their vessel to get the insurance money.
The types of alleged fraud we usually see include when an insurer says that a customer:
- made up a claim
- presented a claim in a way that would be covered by their policy when the circumstances of the loss or damage weren’t actually covered
- exaggerated the extent of the loss or damage
Fraud is a serious accusation, so we’ll expect you to provide robust evidence to support your reasons for saying a claim is fraudulent.
We’ll also take into account whether a customer’s alleged dishonesty was to get something they would have got anyway because of the true situation. In these circumstances, we might not think the alleged dishonesty is enough to stop you paying the claim.
You may reject a claim because a customer didn’t meet certain security requirements.
Marine insurance policies often include additional security requirements for smaller boats and personal watercraft – which are easier to steal. A policy may require this kind of vessel to be anchored to an immovable object and fitted with a hitch-lock.
We’ll look carefully at whether you brought the security requirements to the customer's attention. If we decide you did do this, but your customer didn’t follow the requirements, we’ll consider whether meeting these requirements would have made a difference to the vessel being stolen.
A customer may complain about the cash settlement you’ve offered when their vessel sinks or is stolen or ‘written off’.
We’ll ask both sides to provide evidence for their view on the vessel’s fair market value. We’re likely to give weight to any valuation made by an independent qualified marine surveyor or a local yacht/boat brokerage.
Putting things right
If we decide you’ve treated the customer unfairly, or have made a mistake, we’ll ask you to put things right. Our general approach is that the customer should be put back in the position they would have been in if the problem hadn’t happened. We may also ask you to compensate them for any distress or inconvenience they’ve experienced as a result of the problem.
The exact details of how we’ll ask you to put things right will depend on the nature of the complaint, and how the customer lost out.
Business Support Hub
If you want to talk informally about a complaint you’ve received, you can speak to our Business Support Hub. They can give general information on how the Financial Ombudsman might look at a particular complaint. We also offer guidance on our rules and how we work.
Find out how to contact the Business Support Hub.