If you need marine insurance, you will soon hear the term “navigation territory.” The concept of the navigation territory is used by insurance underwriters to assign limits to the risk they assume. Consequently, the insured party must operate the insured property, the boat, within the limits of the territory defined. Understanding the navigation territory which is covered and complying with its limits will assure more satisfactory resolution of claims. Failure to comply with the limits of the navigation territory puts you at risk of a rejection of your claim for reimbursement after a loss.
The navigation territory defines where the owner may or may not take the insured boat. Navigation territory may be extremely limited or very broad within the following categories:
a. Port Risk Ashore – the insured vessel is not in the water. For the duration of coverage with this navigation territory, the vessel may not be placed in the water. If the owner decides that he wants or needs to put the boat in the water, he must contact the underwriter and negotiate coverage for a different territory.
b. Port Risk Afloat – the insured vessel is in the water but it may not be navigated anywhere. If the owner decides to move the vessel, he must contact the underwriter in order to determine if coverage is affected. Whether the boat is towed away for maintenance or moved under its own power to a new mooring, it is essential to contact the underwriter before the move to work out any coverage issues. In general it can be assumed that moving the boat out of danger such as fire or collision, but prompt communication with the underwriter is always advisable.
2. Inland and coastal navigation
This navigation territory generally extends no more than 5 miles from land. In the event of a situation where the outmost island of a group is more than 5 miles from the continental coast, it would likely be acceptable to cruise the islands as long as no single transit from island to island puts the boat more than 5 miles from land. However, it would always be advisable to discuss such a situation with the underwriter before embarking.
3. Navigation not more than a specified distance offshore
This navigation territory is negotiated specifically for the type of boat covered. A bass boat with an outboard motor would have a different limit than a 50-foot cruising sailboat. The limit for a fully-equipped cruising sailboat with an experienced crew might be as much as 250 miles off shore. To comply with such a limit while cruising the Caribbean, for example, would require that the navigator make sure to stay within 250 miles of some island at all times. If the boat took a course that carried it farther from land, any loss incurred would be non-covered.
4. Trip navigation
A trip endorsement covers a long passage which takes the boat beyond the normal offshore limit. For example, coverage for a passage from Bermuda to the Azores would require a trip endorsement. If the boat making such a passage does not have a trip endorsement, it cannot automatically be assumed that it will be covered for its offshore limit on departure from Bermuda and at the other end as it approaches the Azores. To make such a passage without notifying the underwriter might be interpreted as a violation of good faith and an increase to the underwriter’s risk without paying the premium. It is always wise to communicate such plans with the underwriter in order to avoid confusion and possible rejection of a claim after a loss. Moreover, if you negotiate and pay for a trip endorsement but then do not make the trip, the premium will not likely be refunded.
5. Canal navigation
Transiting the Panama Canal requires a unique endorsement. It is not covered by either coastal or offshore territories. Like a trip endorsement, the premium for a canal endorsement will not likely be refunded if you subsequently decide not to transit the canal.
The navigation territory covered by your boat insurance requires your careful compliance if you expect to be reimbursed when you make a claim. Before you buy marine insurance, be sure you understand the navigation territory that will be covered.