Bought a second boat? How far provisional liability cover really goes

Autumn is when many boats change hands, and not every buyer is selling something in return. A sailing dinghy joins the cruising yacht, a small trailer boat joins the motor cruiser, or the old boat stays on its mooring until a buyer turns up. The owner already has third party liability insurance, so the question of cover for the new boat rarely comes up. Whether that is safe depends on a clause most people never read. In German liability wordings it is called Vorsorgeversicherung, literally precautionary cover, and similar provisions exist elsewhere under names such as automatic or provisional cover for newly acquired risks.

The idea behind such a clause is generous. Risks that arise after the contract was made are insured within the existing contract straight away, and a second boat is exactly that kind of new risk. Until a price is agreed, a separate limit usually applies, often well below the sum insured for the main boat. In the German wordings used here as an example, the figure is 3,000,000 euros for bodily injury and property damage. Read it as a bridge for the weeks between purchase and endorsement, not as the cover you chose for your first boat, and check which limit your own wording names.

The exception is the sentence that decides a claim. Provisional cover of this kind typically does not apply to vessels that are subject to registration, a licence requirement or compulsory insurance. On German inland waters, a motor boat from 15 hp (11.03 kW) needs a licence, on the Rhine from 5 hp. In Spain and Italy, liability insurance for recreational craft is compulsory, in Croatia from 15 kW of engine power, while Germany has no general obligation. In practice that leaves the typical motor boat, every jet ski and most trailer boats with a decent outboard outside the clause. Whether a simple registration plate for a small engine already counts as registration is not always spelled out. It is not a point worth testing after an accident.

Where provisional cover does apply, deadlines come with it. A common pattern is that the insurer asks for new risks to be declared, often on the renewal invoice, and the owner then has one month to answer. Miss it, and cover for the new risk can lapse retroactively to the day it began. The same can happen if no price for the new risk is agreed within a month of the declaration. If a claim occurs before the new boat was reported, the owner may have to prove when it was acquired. A dated bill of sale is the simplest evidence. Boats taken over for a single season may be excluded altogether, because risks lasting less than a year belong in a short term policy.

Swapping one boat for another adds a trap that has nothing to do with the clause itself. Many liability policies end automatically when the insured boat is sold. Sell the old boat first and take over the new one a week later, and for that week there may be no contract left to which provisional cover could attach. Buy first and sell afterwards, and the new boat is either inside the clause or outside it, depending on its engine. Either way the clean route is the same: put the new boat on cover before handover, starting on the day ownership passes, and take the old one off when it is sold.

Hull cover works differently. Provisional cover for new boats is a liability concept, and a hull policy normally insures only the boat named in the schedule, from the start date stated there. A newly bought boat therefore has no hull cover until an endorsement or a new policy names it. When buying second hand, the seller's hull policy may pass to the buyer under some legal systems, including German law, with the seller's sum insured, deductible and cruising area. A tender that belongs to an insured yacht may be dealt with in a separate clause and not need provisional cover at all.

None of this changes the cover for the first boat. For a dinghy, a canoe or an inflatable without a licensable engine, provisional cover can genuinely carry the new risk from the first day, within a limit and under deadlines. For a motor boat that needs a licence, a jet ski or a boat kept where insurance is compulsory, it usually carries nothing, not even the delivery trip. Before collecting the new boat, find the clause in your wording and ask your insurer on which side of the line it falls.