Bargains don’t always equate to insurable value

BUSH ‘n Beach has brought Nautilus Marine Insurance on board to expand the fine print and provide readers with clear, easy-to-understand and helpful tips on protecting their boating assets.

The scenario

There’s nothing like a good series of storms in the US coastal boating states or a significant change in monetary exchange rates to trigger another zeroing in on the subject of supposedly cheap import opportunities. Thanks to the access provided by internet and social media, some locals start seeing stars and bells and whistles directing them to that 21-foot, brand name, centre console in Florida with twin 150hp outboards on a trailer, for what seems to be a ridiculously cheap price.

Many have undertaken the exercise and either brought them in personally or have done so in conjunction with an import agent. Known as self-imported, parallel or grey imports, they raise a series of questions including downstream legal liabilities, warranty issues, clear title of ownership, service history, various scams and social considerations.

While Australian boating industry association branches do not advocate the private importing of these vessels (the industry has from time to time produced brochures and bulletins explaining its reasons for this position), let’s leave those issues aside for a moment and consider one matter that really does need to be considered – its propensity to be insurable.

The owner of the vessel may claim it is exactly the same model boat as sold here in Australia by an authorised agent for that brand, but specialist marine insurers like Nautilus will nonetheless demand a credentialled condition report before any insurance cover is offered. They don’t consider it to be automatically insurable. The condition report is to check on construction and other legal matters which the private importer may have no knowledge about, for example, compliance of the trailer in terms of its legality, its maximum width and the type and size of hitch, the overall towing width of the boat on the trailer.

It also may have to deal with fuel, electrical and gas installations in terms of their compliance with Australian regulations. This may require the services of a qualified marine surveyor. A non-specialist marine insurer might happily note all the relevant details of model, trailer, length, boat construction material etc and issue the insurance cover.

However, down the track the new owner might find out there was a clause in the insurance policy that allowed the insurer to void it because the vessel did not comply in some way with governing regulations in Australia. This again proves the sense in insuring your boat with a specialist marine insurer rather than an all-purpose company which insures your car, your dog, your house and contents.

But again, moving away from that string of issues which the private importer will have to negotiate with authorities and others, there also is the question of insurable value. Just because a boat has an ‘equivalent’ value of $140,000 here, does not mean a specialist marine insurer will automatically insure the privately imported vessel for that value.

If a private importer purchased the vessel for $80,000 Australian (not including import costs), then that will be the starting point for the insurance valuation – not the $140,000. The reason is that you are not comparing ‘same for same’ – you are comparing an authorised import with the associated protections that brings, against a privately imported vessel of lesser value.

It is a similar situation in the automotive industry. Finally, insurance is not a method to make additional money out of a circumstance when things go pear-shaped. Rather, it is about compensating the owner for the loss of an asset in accord with the terms of the policy’s Product Disclosure Statement.

As always, any special conditions and excesses should always be explained clearly in your insurance policy’s Product Disclosure Statement. Always check your Product Disclosure Statement and if you have a query, ask for clarification.  If you need further information, you can contact Nautilus Marine Insurance on 1300 780 533 for any boat insurance requirements.