I was cruising at 20 knots when the starboard engine seized. A connecting rod had snapped and punched a hole through the block. I didn’t hit anything. It just blew. I filed a claim for the $25,000 repower. The denial letter cited the “Mechanical Breakdown Exclusion.”
Key Takeaways
- Insurance is for Accidents: Insurance covers things happening to the boat (collision, fire, sinking). It does not cover the boat breaking itself (wear and tear, rust, fatigue).
- The “Consequential Damage” Exception: Good policies exclude the part that failed (the $200 rod) but cover the consequential damage (the $25,000 engine block) IF the failure was due to a “Latent Defect.”
- Latent Defect Definition: A flaw in the metal that could not have been discovered by reasonable inspection. If the rod snapped due to a casting flaw, you might have coverage. If it snapped due to lack of oil or old age, you have zero coverage.
- The “Resulting Loss” Clause: If the engine blows and starts a fire that burns the boat, the fire damage is covered, even if the engine itself isn’t.
The “Why” (The Trap)
The trap is “Maintenance.”
Insurers assume engines die eventually. They don’t pay for new engines any more than car insurance pays for a new transmission.
However, premium yacht policies (Chubb/AIG) have broader “Latent Defect” clauses than standard boat policies (Progressive/Geico).
The Investigation (I Analyzed Clauses)
- Chubb Masterpiece: Covers “Latent Defect.” They often pay for the engine block if you can prove the defect.
- Progressive: “We do not cover mechanical breakdown.” Strict denial unless you have a specific “Mechanical Breakdown” warranty add-on (which is rare/expensive).
- Warranty vs. Insurance: If the boat is new, this is a warranty claim (Mercury/Volvo/Yamaha). If it’s 10 years old, you are self-insured for the engine.
Comparison Table
| Scenario | Standard Policy | Premium Yacht Policy (Chubb) | Manufacturer Warranty |
| Rod throws (Old Age) | Denied | Denied | Expired |
| Rod throws (Defect) | Denied | Covered (Consequential) | Covered |
| Overheating (Bag sucked in) | Covered (Accident) | Covered | Denied (User Error) |
Step-by-Step Action Plan
- Don’t Tear Down Yet: Stop immediately. Do not disassemble the engine until the adjuster approves it. They need to see the oil and the break.
- Get a Metallurgical Analysis: If you suspect a defect, you might need a lab to prove the metal had a flaw. This costs $1,000 but can save a $25,000 claim.
- [IMAGE: Photo of a broken connecting rod showing the fracture point]
- Check for “External Cause”: Did you suck up a plastic bag? Did you hit a log? If an external factor caused the overheat/failure, it is an accident (covered). If it just died, it’s mechanical (denied).
FAQ
Does my extended warranty cover this?
Maybe. Third-party boat warranties are notorious for denying claims based on “pre-existing conditions.” Read the contract.
What if the engine falls off the transom?
That is “Accidental Loss.” Covered.