Insurance Post

Master and commander


The history of the seas and the mastery of the ships that sailed them is a fascinating story but, as Veronica Cowan reveals, many of these maritime relics are in danger of being left high and dock-dry

What have HMS Victory and Prince Frederick's Barge got in common? They are both in the core collection of the National Historic Ships Register - a small but historically significant part of the UK's £37bn marine sector.

The Department for Culture, Media and Sport is establishing an advisory committee, operational from May, and it will need to make creative appointments if it is to avoid the perception that it is only rebranding what already exists. Martyn Heighton, a former chief executive of the Mary Rose Trust, has been appointed head of the new Historic Ships Unit. And the Institute of Conservation has proposed that at least two conservation specialists be represented on this committee.

Alastair McCapra, the institute's chief executive, however, concedes this is unlikely: "If there is going to be strategic experience of historic ships on the committee, our concern is that there should be a proportion of people who know what the mechanics of conserving a ship are - it needs accredited conservation professionals."

While the South-east boasts a rich maritime heritage, other parts of the country also have vessels of distinction.

John Kieran, head of the Merseyside Maritime Museum ships conservation unit, explains: "There are a couple of important ships in Liverpool - the Edmund Gardner, which received the World Ship Trust's award as an outstanding example of ship preservation, and a three-masted merchant schooner, the De Wadden."

Mr Kieran prefers to conserve than restore, and says that some well-known historic vessels have been restored to the point that they are essentially reproductions. "The main aim is to keep as much of the original material as possible, otherwise you lose the authenticity of the vessel - only replace original material if it is badly degraded," he says.

The Heritage Lottery Fund is a major source of support to the maritime heritage sector and, according to a spokeswoman, has given it approximately £40m in the past 11 years.

However, the Commons Culture, Media and Sport Committee on Maritime Heritage and Historic Ships seems concerned that less well-known ships will lose out, and points to a need for a greater variety and number of vessels to benefit "rather than the few who have swallowed the lion's share".

It stresses that the HSU should take account of the whole maritime sector and "those responsible for well-known ships must not exercise influence over the unit at the expense of others".

So what does this mean when it comes to insuring historic vessels?

Mr Heighton points out that the conservation costs of keeping historic vessels in an insurable state can be expensive but private owners cannot get access to HLF funding. This is despite the fact they make-up a higher percentage of vessels on the register than those that attract the funds.

In addition, although classic boat owners are keen to get their vessels onto the register, primarily for recognition, there is little benefit from an insurance perspective by being on it.

Registration recognition

Mr Heighton would like this to change, however, as he hopes insurers will be willing to recognise the register and help owners by offering discounts. He says his first hurdle will be getting historic vessels on the radar of mainstream brokers and insurers.

Mike Williamson, a surveyor with yacht consultants Ward and McKenzie, observes: "Most brokers won't entertain classic boats, and in the past 10 years it has become more difficult."

Indeed, spokespeople for the large brokers - Marsh, Aon and Miller - report that their commercial marine interests do not include historic vessels.

One broker developing an interest in this niche sector is George Hayes, chairman of Hayes Parsons. "Ships like the SS Great Britain and Cutty Sark are designated as historic buildings but are covered under marine policies," he explains.

In addition to marine cover, historic dockyards would have commercial policies to cover public liability, as well as employers' liability for staff and volunteers. "You can do this under a marine policy but only if the vessel is not open to the public," says Mr Hayes, noting that the rating is affected if the ship is alongside or in dry-dock.

Naval dockyards like Devonport have some areas open to the public. Commander Charles Creighton, naval base liaison officer, explains: "We have navy days when the public can go onto current warships - the HMS Courageous has been decommissioned, so the public can visit it. We also have a small museum but need charitable-status to get HLF money."

Although the ship belongs to the navy, he takes out public liability insurance to cover volunteers and visitors. "We work to the best practices of the voluntary world, and are seeking museum accreditation so we can get grants," he says.

While the sea-going days of most historic vessels are over, not all are dry-docked or permanently moored. Some carry passengers, such as the motor vessel Balmoral and the paddle steamer Waverley, which offer river and estuary cruises.

However, Mr Heighton observes: "Insurers worry if a ship is a working vessel - like a fishing smack - but it is important that certain historic ships, like the Waverley, keep operating. There are pressures around health and safety issues, and it is becoming difficult to run a working historic vessel."

Ramsgate Maritime Museum has some of the smaller historic vessels but curator Michael Hunt says that the only sea-going vessel the public can visit is the Sundowner, a veteran of the Dunkirk Evacuation in 1940 and formerly owned by the senior surviving officer of the Titanic, Commander Charles Lightoller. It is insured for short-sea voyages, such as maritime heritage events and the commemorative activities of the Association of Dunkirk Little Ships and PL is carried on top of the requisite marine cover.

The historic ships of the Square Sail Shipyard in Charleston, Cornwall, can also be chartered, provide venues for corporate events and can be used for film stunts. For example, the yard's Earl of Pembroke underwent a transformation to become Hornblower's ship Hotspur for the film.

David Redhead, the yard's general manager, explains: "The vessels are insured permanently - marine and protection and indemnity club. There is PL for the harbour and workshops, as we own the harbour and beaches."

Tall ships and other historic vessels - like the Thames' barges - can also be chartered from Topsail. "We have cover as an events agency, and marine policy for the boats", says a spokeswoman. Classic boat racing is, however, difficult to insure. According to Simon Winter of Winter Marine, if historic ships are used for sail-training it throws up problems, such as indemnity limits.

Insurer appetite

Few mainstream insurers operate in this sector overall, although Royal and Sun Alliance has an interest in the Trincomalee, the last of Lord Nelson's frigates. It appointed its marine surveyor, John Perera, to oversee the securing of the vessel for its move to Hartlepool but most cover is underwritten at Lloyd's.

Robert Holbrook, managing director of Admiral Marine, remarks: "You have to be brave to insure classic boats. There is a limited skills base for repairing traditional boats, along with scarcity of woods, which can lead to high costs." Vessels also have to be inspected regularly, which can be costly.

Jonathan Langford, underwriter at Noble Marine, explains a new survey should be completed approximately once every five years and, additionally, insurers would want a pre-cover survey: "In most cases, we insist on an out-of-water surveyor's report."

Defining a classic boat for insurance purposes is not always possible. Mr Langford explains: "They tend to be wooden, 40 years old or older and it makes no difference if they are on the register - premiums are higher because of the cost of repair."

Mr Williamson notes that insurers are interested in whether the vessels are safe to go to sea, because they are no different from other ships and have to comply with maritime regulations. "Skills are rapidly disappearing in Europe - especially wooden boat-building skills. Another issue is what can go wrong with them, and the way the timber is put together," he says.

Russell Kelly, a lawyer with LA Marine, says legal issues arising with older vessels can include difficulty in proving title: "Documents become lost when a vessel is laid up for years awaiting adoption, and registration lapses after five years unless renewed."

While the Small Ships Register gives no proof of title, it can be relied on to show ownership if a vessel sails abroad.

Definition clarification

Debates about what amounts to a 'ship' could, however, arise in respect of whether a policy should be marine or commercial. "If you remove the means of propulsion and steering, arguably it is no longer a ship but, if it is a ship, there are limitations of liability you can benefit from," notes Mr Kelly.

According to Andrew Higgs, a marine lawyer with Davies Arnold Cooper, Hurricane Katrina brought forward the question of whether vessels - like casinos moored off the coast - are buildings or ships.

Closer to home, he notes: "In the entrance to Portsmouth Harbour, there is a ship that is a cafe tied up. I would expect them to have marine cover for the hull, and PL cover."

In R v Goodwin (7 December 2005), the reasoning on what amounts to a "ship" under section 58 of the Merchant Shipping Act 1995 related to a jet-ski. Yet Edmund Whelan, legal manager at the Royal Yachting Association, believes its implications were more far-reaching: "It is unfortunate the application for leave to appeal to the House of Lords was refused. We would have welcomed wider consideration of the case as the Court of Appeal has blurred the issues."

Valuations of historic vessels can also be tricky, as they cannot be replaced and rebuild costs would be high. Cover is usually provided on an agreed value basis.

Additionally, if a vessel has benefited from lottery money, it requires sufficient insurance to allow the HLF to recover what it has invested in the event of a loss.

Mr Hayes explains: "Ships like the Great Britain would not be re-built because they are unique, and the premiums to reinstate would be unaffordable."

Insuring historic vessels can be further complicated because the market value does not reflect the money spent. The value of the vessels tends to be low and the repair costs disproportionately high, so the result can be a constructive total loss.

Mr Langford says this upsets owners that want their boat repaired - some have been known to buy back the salvage and repair the boat themselves. "Classic boats are bought with the heart, not the head," he says - unlike insurance.

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