Insurance:
By: Captain James Clausen

What can you tell me about your boat's insurance policy without peeking at it?

Physical Damage Insurance: Describes the Yacht with a specified dollar value placed on hull damage, and also describes a deductible from that value. Our policy says we have $300,000.00 on our boats hull, with 2% deductible, $6,000.00.
But which type of coverage do you have? Is it a "replacement value policy", that will pay you the previously declared and agreed replacement hull value of $300,000.00. Or is it an "agreed value policy" (ACV) which will pay you the average value of a similar boat, Perhaps only $255,000.00 . If it’s an agreed value policy remember, you must be "made whole" after the loss. Beware, there are many ways to value a boat after a substantial loss, and you may have to fight to get what you consider a fair settlement. A replacement value policy, where you both agree to a previously declared value, before a loss, is usually much better.

Liability: Many policies are sold with $100,000.00 liability, the brokers I've spoken to agree that this is just not enough. It could cost from $3. to $25. to get to up to the preferred $300,000.00 coverage. When asked about Liability coverage, many owners and agents say a million dollars coverage is needed. It was suggested that an umbrella policy from the agent who provides your homeowners is the preferred way to go for coverage in the Million Dollar range and above. It cost less and covers more. A boater I’ve spoken to was under the impression that his boat could be covered under a umbrella policy alone, this is not the case, you must have a boat policy. Does your policy cover wreck removal? If it doesn’t, and your boat sinks, you are liable to remove it. And if you policy limits the wreck removal cost to $5,000.00 or 5% of the hull coverage and your boat sinks in a fresh water drinking reservoir of 200’ depth, you will be the one paying the additional cost of removal. What about fuel spill liability, does your policy cover it? Environmental cleanup costs have become sky high, and in some cases clean up can continue for years. Can everyone say Exxon Valdez. Will the insurance pay for the salvage cost of your boat if lost? Do these salvage costs deduct from the liability coverage amount, or are they in addition to it? Our policy will pay “IN ADDITION TO THE AGREED HULL VALUE”, very important words, “the necessary salvage cost up to, but not to exceed the agreed hull value.”

Medical Payments: Medical payments are sometimes limited to $1,000.00, more typically $5,000.00 per incident. Payments in excess of this are usually covered under your homeowner's policy or umbrella policy. As a point of information, 95% of all medical claims are under $5,000.00. The cost to increase your Medical Payments from $1,000.00 to $5,000.00 is usually $2.00 to $15.00. But you have to ask for it.

Uninsured boater: What does your policy say as to your coverage and your rights? Some policy's mimic the value of the liability coverage, others have their own declared limits. You should have at least $250,000.00 in uninsured boater coverage. We have opted for $500,000.00

Navigation Limits, Home Port: Marine Insurance policy’s have specific navigation limits in which you can operate the vessel. Ours is stated as, “Eastport Maine, to Cedar Key Florida including the Bahamas.” To which we have expanded to include Canada and Inland Rivers, by endorsement, at a modest additional premium. Your boat permanent location is a determining factor in your premium, (cost).

Policy Extras: Read your policy, we found we have $500.00 to cover towing, fuel drop, or mechanical repairs, and it included at no additional cost to us, we pay up front for the service and the insurance company pays us back. And we have a $500.00 per incident "Named Storm" expense included. Which states that the insurance company will pay to haul us out, and/or have our canvas removed and/or have extra lines installed up to $500.00 total, to protect our boat from storm damage. None of the above is subject to a deductible. Our policy also raises our deductible from 2% to 3% for any damage from a named storm or tropical depression, not great, but acceptable to us.
For an extra $25.00 I can add a Club Program, which raises my towing to $1,000.00 per incident and adds $150.00 for on road assistance for my boat trailer and gives discounts at numerous marinas. Sound familiar?

Survey: Regarding Insurance, how old does your boat have to be to require a survey for the insurance company? The answer is normally 10 years or older. Insurance and appraisal surveys cost about 8 to 10 dollars a foot, + cost to haul. VS a condition and value survey, which is typically 12 to 15 dollars a foot. A mechanical survey is also available but insurers generally do not require it.

Getting Quotes: Get your auto and homeowner agent to offer quotes on your boat insurance, there may be a discount on multiple interlocking policy’s. Look at Allstate, State Farm, Progressive, NBOA, GEICO, and who ever else is recommended to you. BUT beware, boat insurance is a small world, if you ask you local agent to quote you, they may go out to a company like Royal. And NBOA may go out to Royal also, Royal, like many insurers usually will not bid the second request for the same boat. You might want to make copy’s your present policy, be sure to blank out the premium and your present insurance company’s name and policy number, then pass them out at your next big boat show and ask for quotes.

Policy Discounts: If you're insured with BoatUS and take their online boating course, you will receive a 10% discount on your premium, It's a 30 minute online deal, and well worth your time! Other insurers will discount their policy if you have taken the USPS, United States Power Squadrons boaters safety course. Having a US Coast Guard Captains License also rates a discount with many insurers. And the biggest discount is to be a proven safe boater, with multiple years and no claims, yes your claims history is checked.

Lay Up: If your policy is for 12 months of operation and you "Lay Up" unexpectedly, typically for a 6 month period, you can receive a rebate. Seasonal 6 month policies are also available at a reduced cost and are typically used up north.

Miscellaneous: Can a wooden boat be insured; sure but there are fewer and fewer companies who will do it. Can a Grey market boat be insured in the US, sure but you need to call quite a few companies to find one who will, and the survey will be intense and you may be required to update the boat based the surveyors findings. Can a boat older that 25 year old be insured, again sure, many of these boat are antiques in superior condition, but some are dry rotted hulks. A survey will normally be required and the premium will reflect the condition of the vessel and the value of the boat. Boats refused insurance are refused for good reason, would you want them next to you at your dock?
Insuring just before the storm; Once a storm is named, you cannot get insurance for that storm, nor can you increase your coverage for that storms damage.

Equipment Listed: This is the part of your insurance application where you list the number of Bilge Pumps, GPS, Compass, VHF, Etcetera. While it does not effect your premium costs, this is where you should list the serial number on your equipment. Its just smart to do now and here’s the perfect place to record it.

Omissions and Errors: Your agent is a licensed professional, he carries insurance too. He has an Omissions and Errors policy which covers him in case he does something inappropriate. This could be as simple as transcribing the wrong hull number on to you policy. It could be he wrote you with a bad or failing insurance company. It could be the policy it coverage and options were not properly explained to you. The chance of you ever needing to know this or use this is slight, but again, knowledge is power. Ask, educate yourself, don't just listen, read the policy and ask questions. Shop your boat policy, you will be amazed at the different policy's and prices.

In Conclusion: Ask your agent about what you don’t know or understand, if you are still unsure about the answers you receive, send a letter to your agent, and ask for a response in writing. Feel free to ask your question again and include what you though their response was and ask if you understood their answer. Its your money. And its better to ask questions now that to argue later after a loss.

About the author; James has boated in power and sail for over 35 years, he has a USCG Captains license, Private Pilots license, boated extensively in the Bahamas and Caribbean and done the 6300 mile great Loop of America, in 2000-2002. He is a member of American Boat and Yacht Council, Great Lakes Cruising Club, and Maxumowners.org