Boat
show season is upon us. Shopping,
drooling and deal making are at a feverishly pitch pace during a boat
show. And like many people, it’s a time
that I forget the basics and make decisions based on emotion. If you are a boat
show buyer in the colder regions of the country where visions of wake jumping
are still in your head, you are at a greater risk for emotional buying. Snow and ice create an urge to be boating
that sometimes influences your purchase plans.
Don’t let the dismal weather outside put you at a disadvantage inside
the boat show.
One
major expense that most people leave to the last is insurance. Talking about insurance can be boring, but it
is a necessity. Sure you can call the
agent that insures your car if you want limited coverage for your boat. But you
should really start your insurance search with a marine insurance specialist,
especially when you start operating bigger and more expensive boats. A
dedicated marine policy will have special coverage for boats such as stated or
agreed values, coastal territories and extras coverage that an auto or
homeowner’s policy just can’t provide.
So
before you make a decision about your fun on the water, let’s review a few
insurance topics that can affect your new purchase.
Marine
underwriters look at a number of factors when they figure insurance
premiums. These factors include the size
of the boat, the location of the boat during storage and use, extra equipment,
and the experience of the boat owner/operator.
If you are new to boating, you will probably want to stay below 26 feet
for your first purchase. The 26-foot market is significant not only for coast
guard safety requirements but also from an underwriter position on experience
and the covered territories. Most marine
insurance companies will cover a 26-foot boat up to 50 miles from the coast and
will provide insurance for new owners without any special requirements.
If you
are based on the coast, the bigger the boat the further from shore you can
travel. The bigger the boat, the more
stringent the experience and training requirements become. For example, you may
not be able to get insurance as a new owner on a 40-foot boat if you have never
owned a boat in the 30-foot range. There
may be requirements to obtain additional training or to hire a professional
captain to operate the boat with you for the first year. Oh, and then there are the survey
requirements. Many of the smaller boats
will not require a survey before the underwriter will start coverage, but if
it’s over 26 foot, almost always, unless it is brand new, a survey (and usually
out of water) will be required prior to coverage being started.
Look
for a marine insurance policy that has an insured value of the vessel based on
an “Agreed Value” compared to a policy that uses “Actual Cash Value”. With Agreed Value coverage, the boat owner will be paid the insured value
of the boat (minus a deductible) in the event of a total loss. The insurance company will not depreciate the
value of the boat at the time of the loss.
Whereas in the event of a total loss with “Actual Cash
Value” coverage, the boat owner will receive the insured value of the boat or
the actual cash value (depreciated value), whichever is less. For example, if you have your boat insured
for $75,000 and have a total loss, the depreciated value of your boat may only
be $65,000 and the insurance company will pay the lesser amount.
A few
other items to look for are:
Separate
Watercraft Liability coverage. Don’t rely on liability coverage that is an
extension of the liability coverage on your homeowner’s or auto policy. You want liability coverage for
bodily injury and property damage that you (the insured) are found
liable for when operating your boat.
Medical Payment coverage for the insured and any friends or
family who get injured while they are on board the boat, boarding the boat, or
departing from the boat.
A couple of optional coverage's that are nice to have
include:
Uninsured Boater coverage.
Uninsured Boater Coverage will pay for damages sustained from the
actions of an uninsured boater. There
are a few variations of what is covered, typically it covers bodily injury, but
sometimes it can also cover property damage.
Towing
Coverage applies to any service charge the insured may incur by
receiving marine assistance. This may
include coverage for a service charge for towing due to engine failure,
mechanical breakdown, grounding and delivery of fuel.
Personal
Property Coverage is for clothing, personal effects, fishing gear and sports
equipment owned by you, your family or guests on board your boat. Money, jewelry, traveler's checks and other
valuable papers or documents are not included for this coverage.
This is just a brief highlight of marine
specific insurance; there is a lot more information that needs to be discussed
in a marine policy. Each company has
different definitions and limits on their coverage. Contact a qualified marine agent to explain the
coverage’s in more detail. And remember, even if you take all the precautions,
accidents still happen. Make sure you can get or have the right coverage for
your boat before you buy.
Additional tips:
- Get out there and boat. Experience moves you up the boat ladder and helps your insurance rates and requirements.
- Plan on getting a survey whether the insurance requires it or not, it is just a good practice. Plus it helps determine a value for the boat.
- Participate in training programs Coast Guard or others.
- Regular maintenance can help reduce the cost of ownership and risk of problems. Inspect or have your boat inspected by a qualified marine mechanic at least a couple of times a year.
- Fix things that are broken or in need of repair before someone gets hurt or you get stuck on the water and you have to make a claim. Claims will affect your rates and ability to get insurance.
- Have a plan to protect or move your boat if bad weather is heading your direction. If bad weather is winter, lay up the boat. Most underwriters offer reduce rates for boats that are not used year round.
- Securely store your boat by installing theft prevention devices on electronics, outboard engines, out drives, trailer hitches, etc.
- Install alarm and safety systems to protect against high bilge water levels, fires, vapors and theft.
- Keep your supply of charts and data cards current and plan your routes to avoid accidental grounding and bad weather.
- Be a responsible boater and use appropriate Personal Flotation Devices; don’t drink and boat and follow the "rules" of the waterway.
Labels: Boat claims, Boat Insurance, boat maintenance, Boat shows, boating, boating safety, Insurance, power boats, sailboats, watercraft
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