In the event of a fault with an earthed hull a fuse will blow isolating the fault and protecting the hull. But with an unearthed hull will become live and will not cause the system to trip. Not only will stray currents cause damage to the hull occur during the fault there is a potentially dangerous situation particularly if high voltage systems are used.
Below is a good explanation I found via a google search.
http://www.boatdesign.net/forums/onboar ... 557-6.html
Let me explain once more why a ground strap or cable is good engineering practice.
In the first place fully isolated DC systems exist only in the imagination of some people.
Even with all electrical equipment fully isolated, there will always be a fairly low resistant path between DC and the engine block, caused by moisture, dirt and carbon deposits. Connecting the field windings of a starter motor or alternator to a terminal instead of the metal housing provides isolation only when the part is dry and unused. True isolation is always labelled with a class identification, referring to a minimum distance between conductors and housing, materials used and a test voltage of 2500 or 4000 volts.
In real life 99,99% of all marine engines have DC negative connected to the engine block. If you want to dispute, think of the millions of Mercruiser, OMC, Yanmar and Volvo engines and all outboards, regardless of brand names.
All of these have virtually 0 ohms resistance between DC minus and any part bolted to the engine.
In a stern drive setup, it is impossible to isolate the engine block from the hull, but a conventional prop shaft at first glance looks promising. Now assume that all precautions have been taken to keep the engine isolated from the hull, like isolated engine mounts, a non-conducting shaft coupling and fuel lines without a braided shield.
A simple test with a multimeter will reveal there is still a conductive path between the hull and the engine: seawater in the cooling hose.
Is that bad? No it isn't as long as all the DC wiring is in good order and nowhere is a wire touching the hull or a wet connector.
Under such circumstances it doesn't make a difference whether there is a ground strap or not, because there flows no current.
But if a short between DC positive and the hull or a current leak develops, the circuit closes and current will flow through the raw water pump and/or the walls within the heat exchanger. Dependent on the amount of current, it may take a few weeks or less than a day before corrosion has eaten through the 0.05 inch wall of a heat exchanger. And it may also make scars on the balls, rollers or needles in a bearing.
With a ground strap, none of that will occur. There will only be a blown fuse or damage to the part that created the short or leakage.
Reasoning should tell you what is wise and what isn't, not what is written in a handbook unless the author's reasoning is explained in detail.