Whether you are looking to insure your barge, the goods you transport on a canal, or your liability as an inland navigation professional, certain fundamental principles run through all river and lake insurance policies. Before delving into the details of a "hull", "cargo" or "civil liability" policy, it is essential to understand the common ground: the situations that insurers almost systematically refuse to cover (exclusions) and the reciprocal commitments that bind the insured and the insurer (obligations).
Knowing these general rules is essential. They determine the validity of your contract and your right to compensation in the event of a problem. Ignoring an exclusion or failing to meet an obligation can have major financial consequences. This article sets out to decipher these common exclusions and obligations for you, so that you can navigate the world of river insurance with full knowledge of the facts.
What river insurance generally does not cover: common exclusions
All insurance contracts have limits. Insurers define precisely the events or assets they agree to cover, and explicitly exclude those they do not wish to cover. When it comes to rivers and lakes, most policies contain certain exclusions.
Geographical limits of cover
Your river insurance policy is designed for... river and lake navigation. This may seem obvious, but the policies specify that cover only applies if your boat is navigating on inland waterways officially classified as navigable by the competent authorities, and located in the countries listed in the special terms and conditions of your policy.
In addition, there is a clear boundary with the maritime domain. Cover generally ceases as soon as the boat ventures beyond the piers in seaports communicating with the river network, or beyond the outer buoys marking the access channels to the sea. Insurance for mixed navigation (river and coastal maritime) requires specific cover.
Intentional acts and serious misconduct
This is a basic principle of insurance: you cannot be compensated for damage that you have deliberately caused. River policies therefore systematically exclude claims resulting from the intentional fault of the insured.
This exclusion often goes further and also covers "inexcusable fault". This legal concept is more complex, but it generally refers to an exceptionally serious fault, consciously committed without valid reason, and which exposes others to a danger of which the perpetrator should have been aware. The exclusion may also extend to intentional or inexcusable faults committed by persons close to the insured (designated crew members, beneficiaries of the contract, rightful claimants, etc.). The exact scope of this exclusion will depend on the precise terms of the policy.
Major disruptive events: war, terrorism, civil unrest
Insurers consider that certain major events, by their nature and scale, fall outside the normal scope of insurable risks. This is traditionally the case for acts of war. River policies therefore generally exclude damage resulting from :
- Civil or foreign war, hostilities, reprisals.
- Torpedoes, mines and other devices of war.
- Acts of sabotage.
- Acts of terrorism or terrorist attacks (sometimes with a distinction depending on whether they occur on French national territory or abroad, with cover being maintained in France depending on the policy).
Damage caused by internal disturbances is also often excluded:
- Captures, arrests, seizures, coercion by governments or authorities.
- Riots, civil commotion, strikes, lock-outs and similar incidents.
- Piracy is also sometimes targeted, especially if it is of a political nature or linked to an armed conflict.
It is sometimes possible to take out specific cover for some of these political or war risks, but these are subject to special conditions and rates.
Nuclear risk and illegal activities
As with most insurance policies, risks relating to nuclear energy are systematically excluded. River policies therefore exclude cover for damage resulting from the direct or indirect effects of an explosion, the release of heat, irradiation due to a change in the structure of the nucleus of the atom, or radioactivity, whether for civil or military use.
Logically, the insurance also does not cover the consequences of illegal activities carried out by the insured party. This excludes damage caused by the violation of blockades, smuggling, prohibited or clandestine trade, as well as the resulting confiscation, sequestration or requisition of the vessel or goods.
Precious goods often excluded (but sometimes redeemable)
Certain types of goods, because of their high value or special nature, are often automatically excluded from standard river insurance cover, whether for the vessel (hull) or the goods (cargo). The typical list includes :
- Jewellery, works of art and precious metals.
- Banknotes, securities of any kind.
It is important to note that this exclusion is not always absolute. For cargo insurance in particular, it is often possible to "buy back" this exclusion, i.e. to agree with the insurer, for an additional premium, to cover these valuables up to a certain amount. In the case of insurance covering the body of the boat, however, this possibility of purchase is generally excluded: your personal effects of great value on board will not be covered by the insurance of the boat itself.
The policyholder's duties: the key to maintaining cover
The insurance contract is an exchange: the insurer undertakes to pay compensation in the event of a claim, but the insured also has duties to fulfil. Failure to comply with these obligations can have serious consequences, ranging from a reduction in compensation to nullity of the contract or total loss of the right to cover (forfeiture).
Declaring risk: a reinforced obligation
This is the policyholder's primary and fundamental obligation: to inform the insurer in good faith about the nature and extent of the risk he is asking the insurer to cover. In the case of river and lake insurance, this obligation is different from that of traditional land-based insurance.
Since a 1989 law, for car or home insurance, for example, the policyholder is only required to answer the specific questions asked by the insurer in the underwriting questionnaire. In river insurance (as in marine), the rule is different and more demanding: it is up to the person requesting the insurance to declare spontaneously all the circumstances known to the insurer that will enable him to correctly assess the risks he is assuming. You must therefore be proactive and not omit any important information, even if the insurer does not ask you directly.
Similarly, during the term of the contract, if new circumstances arise that aggravate the risk (for example, a major change in the use of the boat, a major technical modification), you must in principle declare them to the insurer. Here again, it is up to you to decide what constitutes a notifiable aggravation.
The consequences of an intentional misrepresentation or wilful omission are severe: Article L. 172-2 of the Insurance Code provides for the nullity of the contract. Even if there is no intention to deceive, if the omission or inaccuracy has altered the insurer's opinion of the risk, the indemnity may be reduced proportionately.
Recent case law (Bordeaux Court of Appeal, 8 March 2017) clearly illustrates the importance of this obligation: the insured's failure to declare that she was financing her boat (her work tool) with a large loan secured by a mortgage, while she was setting up her business, was deemed to be a factor likely to alter the insurer's assessment of the risk, justifying the cancellation of the insurance policy. The insurer considered that this precarious financial situation could influence the maintenance of the boat and therefore the risk of a claim.
Paying the premium: strict deadlines
The obligation to pay the agreed premium is the natural counterpart of the guarantee offered by the insurer. In the event of non-payment on the due date, the rules for river insurance are also stricter than the general rules.
Article L. 113-3 of the Insurance Code, which applies to terrestrial insurance, gives the insured a grace period of 10 days after the due date before the insurer can send a formal notice. After this formal notice, cover is only suspended after a period of 30 days, and cancellation can only take place 10 days later.
Nothing of the sort in river and lake insurance! The source document indicates that policies generally provide that in the event of non-payment, the insurer may send a formal notice, and the suspension of cover or even cancellation of the contract may only occur if eight days after this letter is sent. This period is extended to twenty days for policyholders who sail and usually live aboard their boat, but this is still much shorter than under the general scheme. It is therefore essential to be very vigilant about paying your premiums on time.
Preventing claims: the duty of care
Insurance is not a carte blanche for negligence. The insured has a duty to act reasonably in order to prevent losses from occurring. Inland waterway policies often state that the insured "shall take reasonable care of all matters relating to the vessel" or "the goods insured".
This is a general duty of care that stems from the common sense and professionalism expected of a carrier in particular. This means maintaining equipment properly, complying with navigation safety rules, securing cargo properly, etc. In some policies, such as that covering the carrier's liability, this obligation may be specified: for example, the obligation to park the boat under the supervision of a person able to intervene quickly in the event of danger.
Taking action in the event of a loss: precautionary measures
If, despite everything, a claim does occur, the insured still has important obligations to fulfil immediately.
Firstly, it must take all necessary steps to preserve or rescue insured objectsor at least to limit the extent of the damage. This is a "salvage" obligation: attempting to extinguish the beginnings of a fire, bringing the cargo to safety if the boat takes on water, etc. The costs reasonably incurred for these measures are generally covered by the insurer. The costs reasonably incurred for these measures are generally covered by the insurer.
Next, and this is essential if the insurer is to be able to pursue any claims, the insured must safeguarding rights and claims against liable third parties of the claim. In practical terms, this means that you have to draw up statements of facts, lodge reservations with the carrier if you have received damaged goods, and comply with the time limits for taking legal action... so that the insurer, once it has compensated its policyholder, can turn against the party responsible to recover the sums paid out (this is the subrogation mechanism).
The insurer's commitments: compensation and management
In addition to the policyholder's obligations, the insurer also has a number of other commitments, the main one being to pay the agreed compensation in the event of an insured loss.
Payment of compensation
Once cover has been acquired and the amount of the damage assessed (according to rules that vary depending on the type of policy), the insurer must proceed with payment. River policies generally provide for the sums due to be paid cashwithin thirty days after the policyholder (or beneficiary) has provided all the supporting documents requested. Payment is often made to the bearer of the documents and the contract, without the need for a specific power of attorney.
Automatic reconstitution of capital
A partial loss does not necessarily exhaust cover for the future. Policies often stipulate that after an event that triggers the guarantee, the sums insured will continue to be paid out. automatically reconstitute. This means that you remain covered for the total insured value in the event of future claims. However, this reconstitution generally takes place subject to payment of an additional premiumThe amount is negotiable with the insurer.
A few "procedural" rules
Finally, insurance policies contain clauses governing certain practical aspects of contract and claims management.
- Co-insurance : Sometimes a major risk is covered jointly by several insurers. In the event of a claim, each co-insurer is only obliged to pay compensation in proportion to the share of the risk it has accepted. There is no solidarity between them (you cannot claim the entire indemnity from just one). Often, a "lead" insurer is appointed to manage the policy on a day-to-day basis, but this does not automatically give it the power to represent the others in court.
- Subrogation : As mentioned above, when the insurer pays you compensation, it is automatically "subrogated" to your rights and actions against the party responsible for the damage, to the extent of the sums it has paid. It can therefore sue the third party at fault on your behalf to obtain reimbursement.
- Prescription : Legal proceedings arising from the insurance contract (claim for compensation by the insured, claim for payment of premium by the insurer, etc.) are time-barred by two years. This period runs from the event giving rise to the action (the claim for compensation, the due date for a premium claim). Please note that this time limit is short, and it is important to act quickly if a dispute arises.
Mastery of these general rules - exclusions and reciprocal obligations - is an essential prerequisite before taking out a river insurance policy. They form the basic structure on which the specific provisions for each type of cover will be grafted.
Knowledge of these general rules is essential if you are to navigate your river insurance contracts with peace of mind. For an explanation tailored to your situation, please do not hesitate to contact our office.
Sources
- Insurance Code (in particular art. L. 113-3, L. 172-2, and the general principles derived from standard policies)
- Standard river insurance policies (general principles)
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