Boat not returned: embezzlement and fraud exclusions in hull cover

In winter, boat keys change hands more often than in summer. The boat sits at a yard, a dealer offers it on commission, a buyer wants a test drive before spring. If the boat is then not returned, it is gone, but it has not necessarily been stolen. Many wordings for hull cover draw exactly this line: theft is an insured event, while embezzlement and fraud sit among the exclusions. German hull wordings, for example, often list embezzlement or fraud, in German Unterschlagung oder Betrug, as a separate exclusion. Any owner should know on which side of that line a loss would fall.

German criminal law shows where the line runs. Theft under section 242 of the German Criminal Code means taking a thing away from its owner against the owner's will. Embezzlement under section 246 means appropriating a thing the offender already holds, with a heavier form where it was entrusted to them. Fraud under section 263 means deceiving someone so that the deceived person hands something over. What embezzlement and fraud share is that the owner gave away the boat or the key personally. One way to read such an exclusion: hull cover is built around risks from outside, not around the choice of a business partner.

The cases look different for each type of boat. With a trailer boat or a motor boat it is the test drive where the prospective buyer leaves alone and never returns. With a sailing yacht or a motor yacht it is the dealer who sells it on commission and keeps the proceeds. With a jet ski or a charter boat it is the hirer who keeps the craft after the rental ends. And in a private sale it is the buyer who shows a forged payment confirmation, tows the boat away and never pays. In none of these cases was the boat taken; in each of them, it was handed over.

The boundary is not always sharp. Whether a test drive that ends with boat and buyer gone counts as theft or as fraud depends on the facts: who was on board, whether the key was handed over or only passed across to start the engine, what had been agreed. In a dispute a court decides, and no article can say in advance how. For the claim, this means describing the events to the police and to the insurer precisely rather than labelling them. Most wordings also require a theft to be reported to the police without delay, and the claim itself to be notified in writing promptly; missing those duties can cost cover on its own.

It is worth reading two more points in the wording. First, what exactly is insured under theft: some policies cover only the theft of the whole craft, others also break in theft, theft of parts fixed to the boat and malicious damage. Second, who counts as an authorised person. Malicious acts are often insured only when committed by someone with no right at all to use the boat, and a yard or repairer entrusted with the boat may count as authorised. Handing the keys to the yard for the winter can therefore change how a joyride by one of its staff is treated. Readers insured outside Germany should check how their own wording and national law handle this.

Prevention costs little here. Go on test drives only with the owner on board, look at the buyer's identity document and write down name, address and phone number. Agree a written commission contract with any dealer that says when and where the proceeds are paid. In a private sale, hand over the boat only once the purchase price has been credited to the seller's own account, not when a receipt is shown. Check, too, what happens to the hull cover when the boat is sold. In short: a wording protects against the outsider who takes the boat, and much less against the partner who was given it.