Boat Policy and Lack of Reasonable Care in Maintenance Exclusion

We insure a boat on a boat policy with hull coverage. The insured inadvertently drained the oil from the engine during maintenance and failed to replace it. Upon starting the engine, internal damage occurred.

The policy has two exclusions that we believe apply:

               a) Wear and tear, inherent vice, deterioration, marine life, vermin, ice or freezing, electrolytic action, mechanical breakdown; and

               d) Lack of reasonable care in the maintenance of your boat.

We believe this claim should be denied but are interested in your opinion.

Puerto Rico Subscriber

We believe that the damage should be covered by this policy. The first exclusion that you cite is intended to prevent payment for losses that occur over a period of time. Mechanical breakdown usually implies a breakdown in equipment that cannot be traced to a specific nonexcluded cause. In this case, oil accidentally was not replaced and the engine was damaged. There was a specific cause; it was not gradual damage that occurred because of age and extended usage, and it was not merely mechanical breakdown.

In addition, the exclusion for lack of reasonable care in the maintenance of the boat is very broadly worded and not specific. Exclusions that are so broadly worded have often faced problems in the court system because they can be interpreted in many different ways. Our interpretation would be that this exclusion is meant to void coverage for damage that occurs because reasonable routine maintenance was not performed, not because a mistake was made in the maintenance.

 

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