Is this correct diagram for fusing the battery cables?

To reach the master switch , i would have to run a 2m cable from port battery , and about 4m from the starboard, which is not an ideal connection for linking the batteries due to voltage drop. Theoritically, if not in reality, the port battery would work more than the starboard.
 
To reach the master switch , i would have to run a 2m cable from port battery , and about 4m from the starboard, which is not an ideal connection for linking the batteries due to voltage drop. Theoritically, if not in reality, the port battery would work more than the starboard.

Your diagram is the correct way to connect the batteries, it's about as balanced as you can get a 2 battery installation. Connecting the two positives to the switch creates an imbalanced installation, not only will the two positive cables be different lengths, the negative circuit will be wrong too.

As for the fuses...... It is vital to provide protection for the wiring, that does not automatically mean fuses though. Fuses should be fitted if there is a chance of a cable short circuiting. With a "normal" two battery installation the batteries are close together and cannot reasonably short circuit, so no fuses are used. Very often the cable between the batteries and the isolator also cannot short, so no fuse their either. For instance, my batteries are all next to each other, in one of the saloon sofa bases, so in a wooden box, in a plastic boat, no fuses between the batteries. The isolator switches are about 30mm from one battery, totally impossible for the cable to short circuit, so again, no fuse. After the isolator switch everything is fused.

So, if the cable between the two batteries passes beneath the wooden sole of a plastic boat, with no possibility of being able to short circuit, there is no need for the fuses. Likewise, if the cable from the battery to the isolator cannot short circuit, no need for a fuse.

The interconnecting cable and the cable to the isolator would typically be the same as for the engine battery, to allow for emergency engine starting, so if these need fusing, use fuses/breakers rated for the cables.

Any cables from the isolator to the switch panels/distribution boards/busbars should all be fused for the ratings of the cables, regardless of whether they are on the load side of the isolator or the battery side (for the always on busbar).
 
To clarify, I have a fused connection to each battery bank and an isolator at each battery bank (within a foot). The link between banks is downstream of the fuses and isolators. This has the advantage that if I have a battery failure, I can isolate that bank, but not loose power to the systems.
 
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