Don’t get caught unprepared!
Don’t for one moment think that boat, home and other insurance policies are pretty much the same. In fact, even among marine-insurance specialists, coverage can vary dramatically.
However, several major home- and car-insurance companies like State Farm and Progressive do underwrite policies for boats. And while they’re worth investigating, many boat owners opt for boat-insurance specialists like BoatU.S. For a pretty comprehensive list, visit recreationalwatercraft.com and click on “Boat Insurance Companies.”
One benefit to using a marine-insurance specialist rather than putting your boat on your home policy can be seen immediately following a storm. After a hurricane, say, people’s homes become the top priority for the Allstates of the country. Your boat might get short shrift in the attention department. Not so with a marine specialist.
Also, if you do experience a claim, do you want an auto or home adjuster coming out to tell you how to fix your boat? There are many complicated systems and repairs that are not as cut and dry as they might be on a car or home. A boat specialist can make sure the repairs are done properly and to marine specifications (ABYC Standards).
What Insurance to Buy
Boat insurance breaks down into two categories: insurance for boats 26 feet and under, and policies for yachts larger than 26 feet. Information that will dictate exactly what your policy covers and what your rate will be includes power (speed), where you plan to operate your boat, when you use your boat (do you lay it up for the winter?), the equipment you carry on board and the limit of liability that you choose.
Though some companies offer you the ability to add comparatively inexpensive “no-frills” boat coverage to your house or auto policy, be wary. These often don’t cover such boat-specific items as spilled fuel, salvage, towing, or coverage for electronics or fishing tackle.
While no state law requires you to insure your boat or trailer, you’d be wise to cover both. It’s also worth noting that your auto policy automatically covers the liability for damages caused to others while towing a trailer but not the physical damage to your boat or trailer. Even though this is standard, you should check with your auto-insurance company to see if it has any limitations on the liability coverage while trailering.
You should look for coverage guaranteeing 24/7 response to handle claims and dispatch resources to recover (and repair) your boat. Not only does this get you back on the water faster, it can often save you serious fines for pollution stemming from a sinking vessel leaking fuel, oil and effluence.
What to Watch For**
Perhaps the most important determination you can make concerns what you get paid if your boat gets deemed a total loss. The two types of policy are Agreed Value and Actual Cash Value. In a total loss or theft situation, the first pays an agreed-upon amount (the policy limit) — period. Actual Cash Value pays you blue-book value, taking into account depreciation and condition, and it often doesn’t include equipment.
Obviously, the former costs more. In both policy types, partial losses might be depreciated, so it would be a good idea to review with your agent what types of losses might experience depreciation.
It’s critical that you review any and all exclusions before signing on the dotted line. Exclusions frequently eliminate payment for scratch-and-dent damage (wear and tear), animal damage, manufacturing defects, damage from marine life, osmotic blistering, corrosion, electrolysis, ice and freeze damage, and design flaws.
Make sure you are covered for consequential damage. That’s damage incurred as a consequence of wear and tear, rot, corrosion and all those other previously mentioned common exclusions. Consequential damages are often a result of catastrophic events, which include damages specifically from fire, explosion, sinking, collision or stranding. Think about it: These are the types of losses that are going to cause significant damage to your boat and might even result in a total loss. If you don’t get this and your boat sinks or catches fire due to a part or piece of equipment that just plain wore out, you will be stuck with eating the loss rather than the insurance company compensating you.
Experts also recommend that you avoid Named Peril policies, which are very narrow and restricting in coverage. An ideal policy would be All Risk (meaning accidental losses are covered unless specifically excluded), which provides replacement cost for your expensive onboard equipment.
If your boat is financed, your bank might require Breach of Warranty coverage. It protects the finance company’s interest. Why would you want to do that, you rightly ask? Because if you step outside the limits of your policy — by venturing outside your navigational-area limits or using your boat on that gorgeous, warm sunny day in December when it’s supposed to be stored, and then suffering damage or the loss of your boat in the process — coverage might be denied by your insurance company. Since you will still be responsible for the outstanding balance owed to the bank, this coverage makes sure their lien gets paid.
Finding the best coverage for your boat requires diligence and curiosity. Ask your agent every question you can think of so you have a complete understanding of what is covered and what isn’t.
Buy only from a company with knowledgeable marine-insurance experts who stand ready to respond with claim and physical assistance.