A boat owner whose vessel was damaged and had to be rescued during a voyage to Perth has overturned his insurer’s decision to decline his claim after it determined a mechanical failure caused the incident.  

RAC Insurance asserted the boat had several structural and mechanical faults before its journey, but a dispute ruling found it had been seaworthy and weather was the primary cause of the damage.  

The claimant bought the boat – originally built for the Darwin Port Authority in 1971 – from a shipwright referred to as EP, and planned to take it from Albany to Perth for refurbishment.   

The complainant said EP told him the boat was in average condition but had been inspected by a marine mechanic and was “ready for sea”. The insured appointed a captain and crew to sail it to Perth.   

The boat left Albany about 1am on December 12 2022 in “favourable” weather, but forecasts worsened mid-journey and wind speeds increased. 

The captain said high seas overwhelmed the boat and caused its engine to break down. The vessel also sustained cabin damage from a moving stove and oven, and was required to be towed by rescuers, during which it continued to take on water.  

An RAC Insurance-appointed assessor, referred to as AK, observed the boat’s generator was heavily rusted, which he said indicated the alternator belt had not been in place for an extended time.   

AK said the missing belt meant the vessel’s electrics drained power out of the engine. He said if the boat did not have the mechanical fault, it would not have stopped working and sustained significant water damage. 

The assessor also said the boat had visibly loose fittings that allowed for water entry and had electric bilge pumps installed instead of mechanical bilges. 

RAC Insurance declined the claim based on AK’s inspection, saying its policy held exclusions for losses caused by mechanical failures or wear and tear.   

However, the Australian Financial Complaints Authority challenged the insurer’s assessment of the boat’s condition before the journey, noting that EP provided a “comprehensive and logical” report showing the boat was seaworthy.  

EP also said they “personally saw the fan belt in place” and had replaced it before selling the boat.  

The authority’s ruling also acknowledges that the captain said the engine was “in good running order” and that a marine mechanic inspected the boat before the journey.  

It agrees the boat encountered a “significant weather event”, with weather stations reporting wind speeds above 60kmh, meaning potential wave heights of between 5.5 metres and 7.5 metres.  

The authority also says AK “erroneously asserted” that the complainant anticipated water ingress by installing electric bilge pumps, noting there was no evidence to support this claim.  

“In light of all these considerations, I am of the opinion the vessel was in a seaworthy condition when it commenced the voyage and the proximate cause of the damage and loss sustained during the voyage was an insured event,” the ruling says. “It follows the insurer must accept the claim and process it in accordance with the terms and conditions of the policy.”  

Click here for the ruling.