Sunken boat claim covered after fault undetected

7 July 2022

A boat owner whose vessel partially sank due to an unidentified fault will have the damage covered after winning a claims dispute.

The claimant had the boat inspected or repaired by three experts before starting the insurance policy. A water pump leak was detected but he was not advised of any urgent repairs needed.

Club Marine declined the complainant’s claim saying that the man knew there was an issue and it was his responsibility to maintain the boat’s integrity.

The Australian Financial Complaints Authority (AFCA) heard the complainant filed an inspection report to the insurer on January 15 2020 and the policy started on January 22.

On about February 1 2020, the boat partially submerged while it was moored. The cause was determined to be a split in the water pump hose, an issue not identified by any of the experts’ inspections.

Club Marine said the owner should have done further inspections on the engine pump leak identified in the experts’ reports.

It argued that if the fault had been investigated and repaired swiftly, the hose split would have been noticed, and the accident would have been prevented.

The complainant said he relied on the inspection reports for his maintenance work and none of the three separate parties notified him of the split hose.

The claimant’s expert, referred to as Mr W, said it was possible that the company misdiagnosed the source of the leak but it was more likely the issue with the hose arose after the initial inspection.

AFCA said it was unreasonable for Club Marine to expect the complainant to inspect issues he was unaware of and he was within his rights to trust expert reports that identified no significant concerns with the vessel.

It said the damage to the boat was not caused by the owner’s lack of maintenance but rather a risk unknown to both him and the insurer.

AFCA said Club Marine failed to prove that its exclusion policies applied and required the insurer to cover the repair costs and interest from April 15 2020, until the claim is paid.

Click here for the full ruling.