I suppose that British Standard BS 8511:2010 Code of practice for the installation of solid fuel heating and cooking appliances in small craft being £198 isn't going to appeal to anyone trying to fit out a narrowboat on a tight budget... or on the cheap!
It's pertinent to know that, although the code isn't compulsory, it will always be referred to if an accident occurs.
A few bits from the code.... I don't think the OP's flue was following the code. Captain Barbossa's excuse wouldn't go down too well in court, me thinks.
Fully insulated flue.
Check with the makers, but insulated pipe often needs to be 3/4 of its diameter away from unprotected combustibles
If there has to be a short length of un-insulated pipe to connect to the insulated chimney, then at least 3x its diameter away from unprotected combustibles.