MODULE 5 WATERCRAFT Yes. It is a boat. And this is insurance. Simple, understandable, no-mystery insurance.
82 CASE STUDY SECTION WATERCRAFT MODULE INTRODUCTION Apart from all of Mr. X s vehicles mentioned in Module 4, he also owns two watercraft. Since the water craft is currently not insured, Mr X would like to clear up all aspects with regard to the cover provided in terms of Section Watercraft and the underwriting thereof. It will be expected from you to correctly underwrite the water craft and to insure it accordingly. Lastly, it will be expected from you to complete the application form following on the information available to you. MODULE OBJECTIVE The goal of this module is to evaluate your knowledge of the following aspects with regard to water craft insurance: The answering of general questions on the policy cover and underwriting; and The completion of the application form in terms of Section Water craft of the Santam s personal policy. TASK 1 During your visit to Mr X, he asked you to clear up the following aspects: Motivate your answers with the relevant facts throughout to qualify for the maximum allocation of marks as indicated per question. QUESTION 1 At first, Mr X would like to know which type of water craft could be insured in terms of the Santam s personal policy. 1
QUESTION 2 Mr. X would like to know if we would insure the trailers on which he transports the water craft. If so, in terms of which section of the policy should the trailers be insured? 83 2 QUESTION 3 Mr. X would like to know which type of cover Section Watercraft provides. 1 QUESTION 4 Mr. X would also like to know which types of purpose of use Section Watercraft covers. 1
84 QUESTION 5 Will the navigation equipment of this boat be covered automatically, or should the policy be extended specifically for this? QUESTION 6 Mr. X would like to know which of the motors of the water craft (in/outboard motors) form part of the boat, in other words when will it be insured as a unit along with the hull. 1 QUESTION 7 Mr. X would like to know if indemnity in terms of Section Watercraft occurs on a replacement basis and if he should insure his water craft at market value. Explain the basis of indemnity comprehensively. 2 2
QUESTION 8 Mr. X would like to know if we will note the finance institution s interest on the policy and what impact it will have on indemnity. 85 QUESTION 9 The insured regularly sails between Cape Town and Mossel Bay with his yacht that is insured under his Personal policy. He is very happy that the policy now also offers cover for emergency accommodation, should it be required. How many nights of emergency accommodation does the policy make provision for? 2 QUESTION 10 It seems as if Mr. X would like to keep the premiums for cover of his water craft as low as possible. Explain to him what the impact of indemnity is on craft less than five years old and craft older than five years should he be underinsured. 1 1 TOTAL 14
86 TASK 2 Underwrite the cover you will offer for all of the following craft. If the photographs are not clear enough, you can view it on the CD. (Photographs 10, 12, 13 and 14). Water craft: Ski boat (DTC 1739E) Year of manufacturing: 2003 Use: Private mainly used to tow water-skiers and for pleasure cruises Name of craft: Seagull Speed: 60 km/h Registered owner: Mr X Registration: Inland dams and lagoon Value: R120 000 (No hire purchase agreement) General details Mr X and family use this watercraft. The watercraft is registered for use on inland dams and the Langebaan lagoon. The watercraft has a canopy as observed on the photograph, as well as various water ski accessories. When this craft is not in use, it is in the central boat storage facility in the harbour of Saldanha. Details of water craft: Ski boat with a hull of four metres and a 90 horsepower Suzuki outboard motor. Value of hull: R50 000 Value of trailer: R10 000 Value of outboard motor: R55 000 Value of canopy: R 6 000 Value of ski equipment: R10 000 Age of the craft: 2 years
87 Underwriting: (Can water craft be insured/type of use/cover for accessories, etc.) Underwriting: (How will you go about to insure the water craft? Take all the details available into consideration when insuring the water craft.)
88 Water craft: Jetski (CTM 6587) Year of manufacturing: 2003 Name of craft: Bombardier Speed: 55 km/h Use: Private, for pleasure cruises Owner: Mr X Registration: Inland lakes Value: R80 000 (Hire purchase agreement from XYZ Bank, Cape Town, hire purchase Agreement number: JA 555555555) General details Although Mr X bought the Jetski; his son who lives in George mainly uses it. This Jetski is registered for use on the lakes at Knysna. Details of the water craft: The length of the Jetski is two metres, with a 130 horsepower built-in motor. Value of Jetski: R74 000 Value of trailer: R 6 000 Age of the craft: 2 years
89 Underwriting: (Is watercraft covered/type of use/cover for accessories, etc.) Underwriting: (How will you go about to insure the watercraft? Take all the details available into consideration when insuring the watercraft.) Additional underwriting information He provides you with the following information with regard to the two following watercraft and would like to know if it is insurable in terms of the Santam s personal policy. How will you go about to insure it? Since he is only gathering information with regard to the two craft, it should not yet be insured.
90 Water craft: Pleasure/ski boat Value of hull: R200 000 Value of trailer: R 40 000 Value of inboard motors: R100 000 Value of a variety of loose equipment (radio, radar, fish-finders): R 60 000 Length of hull: 6,2 metres Age of boat: 3 years Speed: 60km/h Can this water craft be insured in terms of Section Watercraft of the Santam s personal policy? If this craft is insurable in terms of Santam s personal policy, explain to Mr. X how underwriting will take place.
91 Water craft: Fishing boat Value of hull: R40 000 Value of trailer: R20 000 Value of inboard motor: R35 000 Value of a variety of loose equipment (radio, radar, fish-finder): R10 000 Length of hull: 5,2 metres Age of boat: 6 years Speed: 30 km/h Currently, the craft is not seaworthy. The dealer is in the process of making the necessary alterations to ensure that the craft complies with the necessary requirements to go out to sea. Underwriting If this craft is insurable in terms of Santam s personal policy, explain to Mr. X how underwriting will take place.
92 TASK 3 Complete the application form following on the above-mentioned information. Remember to indicate clearly on the application form any requirements you may require following on your inspection. Watercraft Details of craft Craft 1 Craft 2 Registered owner Applicant Spouse Applicant Spouse Type of craft (e.g. ski-boat)... Year of manufacture....... Make/hull class (e.g. Seafarer/fibre glass)... Glitter finish Yes No Yes No Length of hull m m Maximum speed. km/h. km/h Name of craft.... Sum insured of craft Outbound motors Yes No Yes No Make (e.g. Yamaha).... Horse power. k/w. k/w Sum insured of outboard motor Specified accessories Yes No Yes No (e.g. water- skis and electronic.... equipment)....... Joint Value of accessories Hire purchase owner. Name of branch. Hire-purchase number. Endorsements Premium
SUMMARY Following on the information available to you with regard to this section: 93 How will you classify the insured and risk? Describe it in your own words. Categorise the insured and risk by making a cross in one of the following blocks. Low frequency/high risk Low risk/high frequency No potential risk