|
Marine and
Ocean Insurance
Insurance for:
Small Boats, Performance Boats, Yachts, and Marine
Facilities
Boat Insurance 101
The two basic sections of a typical boat or yacht
insurance policy are physical damage and liability.
The physical damage section covers accidental loss
or damage to the boat and its machinery. This not only
covers the hull and the engine(s), but also the sails
and other equipment on board that are required to
operate the boat.
The liability section, sometimes referred to as
Protection & Indemnity, covers your legal obligations to
third parties. This legal liability can arise from
bodily injury or loss of life, or damage to someone
else's property, as a result of the ownership or
operation of your boat. Liability coverage also helps
pay for your legal defense if you are sued for a
liability that may be covered under your boat insurance
policy.
Physical Damage — What Losses are Covered?
Physical damage coverage generally pays for repairs to
your boat that are necessary as a result of damage
caused by a wide range of perils. The best policies
provide "all risk" coverage, which means that if the
cause of loss is not specifically excluded, it is
covered. Typical causes of loss that are covered
include: weather-related perils such as wind, rain,
hail, lightning and wave action; fire; loss or damage
caused by theft or vandalism; and collisions with docks,
submerged or floating objects or other boats. It is wise
to select a policy that continues to cover your boat
while it is stored on land, or while you transport your
boat over land by trailer.
The boat owner has the responsibility to maintain their
boat, and so normal wear and tear is often excluded
under a boat or yacht policy. The number and type of
physical damage exclusions vary from company to company,
so take the time to compare to avoid surprises later.
Loss Settlement - Agreed Value vs. Actual Cash Value
When comparing physical damage coverage, the most
significant difference that can be found among boat or
yacht insurance policies is whether the coverage is
based upon "agreed value" or "actual cash value" (ACV)
loss settlement. Agreed value policies normally pay the
amount shown on the policy if the boat is considered to
be a total loss. Under such a policy, damage resulting
from a partial loss is generally paid for on a
replacement cost (new for old) basis, less your
deductible; that is, physical depreciation will not be
factored into determining the value of the lost or
damaged items. However, some items that are subject to
higher amounts of normal wear and tear, such as canvas,
sails, trailers and some machinery may be subject to
allowance for depreciation in the event of a covered
loss.
An actual cash value policy provides less coverage than
an agreed value policy, but generally at a lower cost.
An ACV policy provides coverage up to the current market
value of the vessel in the event of a total loss, taking
into account depreciation and the condition of the boat
at the time of the loss. Payments made for partial
losses are usually reduced based upon physical
depreciation of the lost or damaged items, and the
policy deductible is also applied.
While an agreed value policy typically costs the boat
owner more, and provides broader coverage, an actual
cash value policy may suit the needs of an owner looking
for an economical alternative. Your insurance
professional can explore these options with you.
Personal Property and Towing & Assistance
Two additional coverage’s often found in boat and yacht
insurance policies are: Personal Property coverage, and
Towing & Assistance coverage.
Personal Property coverage includes such items as
clothing, personal effects, and sports and fishing
equipment belonging to you or your family while those
items are being loaded/unloaded and while aboard your
boat. Similar to physical damage coverage, there are
exclusions that vary from company to company, so it pays
to compare.
Towing & Assistance coverage reimburses you for
the costs that you incur when you need emergency
assistance for your boat, and you and your boat are not
in immediate danger. Some examples of emergency services
that you may need which may be covered include: towing
to a place where repairs can be made; delivery of fuel,
oil or parts; or emergency labor while underway. Check
before hand to determine whether a deductible applies to
this coverage.
Liability — Other Important Coverages
The liability section of a comprehensive boat
insurance policy provide many coverages that are
important to boat owners. Coverage for the removal or
disposal of the wreck of your boat is important to have,
especially if the wreck is deemed to be a hazard to
navigation. Boat owners may also be responsible for any
containment and clean-up expenses resulting from oil
pollution or contamination caused by their vessel. It's
important that your boat or yacht insurance policy
covers your liability for those clean-up expenses, which
could add up to a considerable amount.
Most boat and yacht policies exclude coverage while your
boat is chartered to someone else, or used to carry
passengers for a fee. Under the right circumstances, a
good marine insurance company may extend your coverage
to include those situations. So ask first to ensure that
you will be properly protected.
Medical Payment Coverage
You should verify that your policy has an adequate limit
of coverage for Medical Payments. Medical Payment
coverage will pay for first aid treatment, ambulance,
hospital and other costs that result from someone being
injured on your boat, even if you are not legally
responsible. It is important to ascertain whether the
coverage also applies while someone is boarding or
leaving boat, and while being towed behind your boat,
such as while water skiing. Check to make sure that
injuries to you and your family are also included in
this coverage. Given equal amounts of insurance,
coverage on a "per person" basis may be preferable to
coverage on a "per accident" basis.
Uninsured Boater Coverage
Since boat liability insurance is not mandatory, there
are many boaters operating without liability coverage.
Uninsured Boater coverage is designed to compensate you
for injuries to persons aboard your boat that are caused
by an operator of another boat who has no liability
insurance. If you are legally entitled to recover
damages from the other uninsured boater, or if you or
your guests on your boat are the victims of a
hit-and-run boater who cannot be identified, this
coverage can help ease the financial impact of those
injuries.
Factors Affecting the Cost of Insurance
The underwriter must consider many factors when
determining the rate (or premium) to charge for a boat
policy. The most common determinants are: value, length,
and age of boat; type of boat (i.e. power, sail); type
of engines; mooring location; intended area of
navigation; previous boating experience and claim
history of the owner; and deductible amount. Sometimes
the underwriter will also consider the automobile
driving record of the owner(s), and whether they have
taken any safe boating courses.
There are several ways that you can reduce the cost of
your boat insurance. The most common way is to select
the highest deductible amount that you are comfortable
with. In general, physical damage deductibles start at
around 1% of the insured value of the boat, and can be
increased to sometimes as much as 5%. Each higher
deductible amount reduces your insurance premium. Think
about how much you could affordably pay out of pocket if
a loss occurred.
Think about where you will actually be operating your
boat. If you consistently navigate close to your home
port, you should inquire whether a more limited
navigational area on your policy can save you money. In
other words, you may not need coverage for all waterways
when you only operate your boat locally.
The condition of your boat was also mentioned as a
rating factor. If you own an older boat that is around
26 feet or larger, the underwriter may request a recent
marine survey of your boat before quoting or insuring
it. The better the condition, the greater the likelihood
of its being approved for insurance and your receiving a
competitive quote. Anything that you can do to update
and repair critical systems prior to the boat being
inspected may improve the results of the marine survey
and leave a better impression with the underwriter.
Lastly, installing certain safety devices on your boat
can sometimes reduce the premium that you will pay. Some
marine insurers will give credits for such safety items
as: an automatic fire extinguishing system in the engine
compartment, a fume or vapor detector in the bilge, or
certain anti-theft alarm or tracking devices
Top of Page
|
