While only a small number of marine insurance claims each year are for losses due to fires or explosions, the claims that are filed are often very costly for insurance companies. What this means for policyholders is that insurance companies are often very motivated to limit payment of marine fire claims, and it could be a struggle for marine policyholders to get a fair recovery for their losses.
What Causes Vessel Fires and Marine Explosions
Although marine policyholders take steps to limit fire damages, such as training employees on fire procedures and stocking the vessel with appropriate fire-fighting equipment, fires and explosions can still happen unexpectedly. Electrical fires are probably the most common type of fire on vessels, but it is not unusual for marine fires to start with fuel leaks, heating issues, or even kitchen fires. Explosions that cause damage are often caused by fueling issues and leaks.
Unfortunately, although the damages may look the same regardless of the source, the causes and circumstances of the fire may become painfully relevant during the resolution of the insurance claim. Depending on the coverage that is carried, some losses may be excluded under the terms of the policy in specific circumstances. In some cases, policyholders may have to call upon a legal professional to scrutinize their fire policies and determine their rights.
Why Fire-Related Losses Can Be So Extensive for Marine Policyholders
When a fire or explosion creates losses, marine policyholders can face a complex and costly recovery because fires and explosions can:
- Cause the loss of an entire ship, especially when smaller crafts are involved.
- Be responsible for extensive equipment damage, including damage from smoke and fire-fighting efforts.
- Delay regular business operations.
- Create liability in matters of cargo loss and contract agreements.
- Damage the brand image of a marine business.
Additionally, insurance companies aren’t always willing to pay the full cost of marine fire claims, and they may take action to limit what a marine policyholder is able to recover. This may come in the form of delayed claims, low settlement offers, disputes about policy coverage, and even outright denials.
However, it is possible for marine policyholders to organize an effective recovery and fight for the true worth of their fire claims. For more information about negotiating fire-related marine insurance claims, contact our experienced legal team today by phone, or simply take a moment to request your free copy of our book, Your Basic Guide to Marine Insurance.