Insured sold their pleasurecraft a year ago, the purchaser has not paid the full amount (will pay remainder later) but essentially owns the vessel.
The vessel continued to be insured because the client assumed that they would still be covered since they still have a financial interest.
If a loss occurred would the insured be covered?
Crossley Gates replies:
Is the loan a personal one or is it secured over the boat? If it is secured over the boat the insured is prejudiced by damage/loss
to that security up to the amount of the loan. The insured's insurance policy could protect this.
However, does the underwriter know the boat has been sold and the insured is insuring this financial interest only?
The owner of the boat has changed and so the moral hazard may have changed with it. Such a change in circumstances is probably material to the underwriter.
To be sure there is cover, I would strongly recommend the underwriter is on board (pun intended).
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