A boat owner has been denied a payout for his sunken vessel after the dispute authority found his insurer reasonably attributed the loss to excluded causes.

The complainant’s 1915 wooden ferry sank at its marina berth in April last year. It had been insured for an agreed value of $88,460. 

IAG declined the claim based on a report from a marine surveyor, referred to as NM, who found the boat had “not been in a seaworthy condition and was structurally unsound before it sank”. 

The surveyor noted sections of the boat were “very deformed”, and the deck shelf – which connected the deck to the overall structure – separated while submerging.

NM suggested that section had been “completely rotten and structurally unsound”.

”For a timber vessel to sink in such a catastrophic fashion and so quickly, from experience, there would have to be more than just a blown hose or skin fitting; this submersion is more likely the result of a serious structural failure,” the surveyor said.  

NM said the boat’s poor condition caused difficulties during the salvage operation, when parts of it were destroyed while being raised. They said the complainant had not completed out-of-water maintenance on the boat in nearly three years before the incident.

The boat owner insisted the loss was “unintended and unexpected”. He said NM’s findings were inconclusive because they inspected the boat only after the salvage work and referred to damage caused by the salvager.  

NM said the salvager had about two decades’ experience and their team decided to scrap the boat early because, given the extent of damage, the vessel would not return to its pre-incident condition.  

The Australian Financial Complaints Authority says NM’s findings are “persuasive”, noting they “contain careful analysis and numerous supporting images”.  

“No contrary independent expert opinions have been provided, and NM has comprehensively responded to the complainant’s submissions,” the authority said. “Based on the exchanged information, I am satisfied the insurer has established it is more likely than not that the vessel sank due to excluded causes, including maintenance issues, structural problems and gradual deterioration.”  

The decision does not require IAG to cover additional damage caused during the salvage, because the boat was already in an “unrepairable state”.  

Click here for the ruling.