Some insurance policies will cover engines. Our policy is with Navis Marine and they will cover this sort of thing. You need to clearly document the maintenance you've done and show you are working to the manufacturers schedule. I've not had to use it, but a friend did in his sailboat (it actually convinced me to switch policies). He had a raw water pump fail, overheated his engine and cracked the block. Was able to show the insurance company that he had the pump serviced earlier in the year, and they covered the cost of a replacement engine.
In terms of how it happens.... marine engines simply work very hard -- much much harder than the engine in your car given they are running at higher RPMs and in a corrosive environment. Because of the higher workload, heat and stress minor issues tend to compound.
BTW - check your engine oil to see if it's white/creamy. It's possible you had a riser or manifold let go letting sea water into your engine. The risers on saltwater boats need to be replaced roughly every 3-5 years as it's where salt water mixes with exhaust.