A boat owner whose vessel was damaged while temporarily anchored has won a claims dispute despite making a misrepresentation to his insurer.

The complainant lodged a claim after strong wind broke his anchor chain, leaving his boat to run aground.

Berkshire Hathaway Specialty Insurance declined the claim because the boat had been anchored at a beach rather than moored at a nearby jetty.  

It referred to policy documents in which the owner said the vessel was kept at a jetty, not at anchor. It said if it knew the boat was kept at anchor, it would not have insured the claimant.

The insured said he had kept the boat at a jetty provided by a friend but was forced to anchor at the nearby beach when the friend moved his own boat back to the jetty.  

He said he was looking for a new permanent jetty when the incident occurred and that he checked his boat daily because he lived nearby.  

The Australian Financial Complaints Authority says the claimant misrepresented where the boat was kept, but it questions whether this prejudiced the insurer.  

It notes that, despite requests, the insurer did not provide a statutory declaration from its underwriter saying how the insurer would have assessed the risk if accurate information was provided.  

Berkshire Hathaway Specialty Insurance referred to a paragraph in its underwriting guidelines that contained a list of acceptable storage methods; “at anchor” was not one.  

It also provided a statement from its Australasia head of marine, who said an anchored vessel presented a “much more onerous risk than those moored at berth or a dedicated mooring” and would not be covered.  

However, AFCA says the insurer’s response related to owners permanently keeping boats at anchor, but the complainant was seeking a new permanent jetty.  

It acknowledges the insurer insisted there was “no flexibility or discretion in the application of its underwriting guidelines”, but says without direct information from the underwriter, it cannot confirm how the guidelines would have applied when a boat was not intended to be permanently at anchor. 

AFCA’s decision requires Berkshire Hathaway Specialty Insurance to pay the policy limit of $120,000 for damage to the boat.

The insurer also flagged a policy exclusion relating to boats “left unattended at anchor for more than 24 consecutive hours”. But the panel says the claimant visited the ship three hours before the incident. 

Berkshire Hathaway Specialty Insurance must pay an additional $2500 because its handling of the salvage process was found to have caused significant damage to the boat and rendered it a total loss. 

AFCA heard the insurer’s agent did not have the right equipment for a successful salvage and its failed attempts exacerbated damage to the hull. 

“On the information available, the panel considers the boat would not have been a total loss but for the actions of the insurer’s salvage agent,” AFCA said. “Therefore, the panel accepts the complainant has experienced an unusual degree of stress and inconvenience due to the loss of his boat.”  

Click here for the ruling.

For in-depth analysis, features and opinion, read the latest Insurance News magazine