I have received two emails from an insurance broker advertising boat insurance with the following claim:
“If your insured’s boat burns or sinks is it always covered by insurance? With our boater’s assistance program YES.”
Now, as an amateur wordsmith and a moderately informed insurance agent with fully paid-up E&O coverage, I can say – with a reasonable amount of certainty – there is no policy in existence that will guarantee it will “always” cover a loss. Upon further examination of this agent’s claim I found the fine print which included the following:
Boater's Assistance is available for pleasure boats only; boats used for charter, commercial, rental or other use do not have consequential loss. Personal watercraft (jet skis) do not have consequential loss.Consequential Loss does not apply to boats that are unseaworthy. Unseaworthy includes boats left unattended (abandoned), neglected, not reasonably fit for intended use, lack of reasonable state of repair to maintain the boat against loss or damage from ordinary weather conditions. The loss must be a direct and sudden event.
This particular agent/broker was trying to explain a fairly technical insurance concept (consequential loss) in as few words as possible then he/she was trying to use that concept to attract clients by making a promise that no policy can keep – using a literary “absolute” to convince them that their insurance company would “always” pay a loss.
The theory of consequential loss is tedious at best. It is considered an indirect loss or a loss that comes about as a result of direct damage to property. Having consequential loss coverage can be handy if a direct loss results in an event that causes a more severe loss or a total loss or causes you to continue to experience a loss after the direct loss. See? It’s a bit tricky and can’t be explained in an advert – or even my blog.
This advert is making a fairly significant claim about "always" paying claims which makes me think, "if it sounds too good to be true it probably is." As an example: in this instant consequential loss would not “always” pay if you: chartered your boat, rented your boat, commercially registered your boat, set fire to your own boat, sank your own boat, paid someone to destroy your boat, hired someone to steal your boat, sold your boat for cash or parts then reported it lost/stolen/missing, etc…
Nor would it “always” pay in the event of gross negligence, fraud, or in the event that the actions of the owners constituted a breach of contract between owner and insurer or obligated the insurance company outside the scope and terms of the insurance contract.
Point being, insinuating that consequential loss coverage (or any insurance coverage) will “always” cover a loss is misleading at best, and while this particular advert tried to "fine print" its way out of the corner it was painted into, in using the word "ALWAYS" it walks a fine line between what is right under the law and what is allowed under the law. I will defer official determinations to our esteemed legal professionals and the various state insurance regulatory authorities.
Over all, as an insurance professional I understand what this advert was trying to do but as a responsible insurance professional I understand that in this industry making guarantees is dangerous and speaking in absolutes is just plain foolish.
Folks, don’t buy insurance based upon the promises of an advert, and be sure you ask questions any time you think something seems even the slightest bit out of the ordinary. And if you don't understand something, call a professional and buy insurance from someone who takes the time to explain to you not only the benefits of the policy terms but the most important concept you need to know about your policy: when it WON’T pay.
And always remember: never speak in absolutes.