You'd think so, but actually: no. I discovered this when a boat in a marina where we moored sank due to gas locker floor corrosion and added a layer of diesel to the surface of the water which dissolved our new blacking. The boat's insurance didn't pay out because the owner had broken the contract by not maintaining the boat in canal-worthy condition, and that included not covering third-party liabilities. I even went as far as reading the law: The Road Traffic Act contains a clause enforcing the condition that a motor insurance policy's third party provisions cannot be nullified by the insured's negligence; the British Waterways Act, which otherwise borrows identical language, is missing that clause. In our case the options were to sue a fellow moorer whose boat had just sunk, claim on our own insurance, or stand the costs ourselves.
MP.