Could your marine insurance claims be too high or rejected through not testing your oil?

For as long as insurance companies have existed they have been looking at new and innovative ways to determine risks of a claim when setting insurance rates. In recent years this has even extended to apps on your mobile devices to track your car driving habits.

For decades now, insurers have been using oil and fuel analysis to confirm the validity of claims. This can be confirming actions arising from oil analysis have been implemented, but also, from larger claims, has involved insurers collecting their own samples of oil, fuel, grease and filters to confirm the cause of a failure. I in the past have been involved in some £100,000+ claims as the independent party for analysis of the samples between the vessel owner and insurers.

What surprised me having spoken to marine insurers in my day job was that 1 in 4 marine insurance claims is because of main engine failures. Since the larger vessels are essentially floating cities in terms of the wide and varying equipment they carry on board, although the main engine is a large part, it still seemed a large proportion of the overall number of claims. This is perhaps because the cost of replacement and loss of earnings in the vessel being out of action that every single failure is an insurance claim compared to smaller parts that may be underneath any excess thresholds to warrant a claim. This means it’s often the single biggest claimed item on marine insurance both in terms of cost of claim and numbers of claims for a failure.

e040770b 0520 4616 9279 a1cde71f89a6l0001 img 4042.png Could your marine insurance claims be too high or rejected through not testing your oil?

What is even more interesting is at least for the investigations performed by marine insurers, a whopping 75% of failures are related to lubrication. This means at least 75% of the single largest marine insurance claim are detectable by oil analysis, this is not including the non-lube related failure that oil analysis detects too such as wearing of a component.

Hence it is not surprising that oil analysis is now a big criterion for accepting or rejecting a marine insurance claim. This may encourage some to not do oil analysis in fear it might highlight reasons for rejecting the claim such as poor maintenance practices on board. However, as mentioned earlier the marine insurers have accounted for this and hence do their own sampling. Equally, your insurer may even reject a claim purely by you not doing regular oil analysis. This is because condition based maintenance is such a critical part of any marine maintenance strategy that missing oil analysis can be considered not fully maintaining the equipment in line with manufacturers recommendations.

Even if your insurer doesn’t reject the claim and pays out despite not doing regular oil analysis, you end up paying more in the end. This is because the most important factor for an insurer of “risk” is increased meaning your premiums are almost certainly going to increase over time to reflect this. In the worst cases this can lead to refusing to insure you at all because you are too high a risk. Hence oil analysis helps you here too by identifying the faults before they lead to expensive failures and also reducing the downtime of the ship. Ultimately this makes you less risk and could mean you are likely to reduce your premiums over time for the no claims.

If you would like to find out more on how you can improve your marine maintenance strategy to include oil, fuel and grease analysis then click the chat button on the bottom right of this screen.