As an experienced boater, you probably know a thing or two about boat insurance policies. For instance, when buying boat insurance, you’d likely ask whether the policy pays the agreed value or the actual cash value of the boat. Also, you may know about a trend similar to auto insurance in which boat insurers now offer 24/7 on-water and on-road towing services—but these may not be right for every boater.
But how can you know what you don’t know?
Here’s a list of uncommon boat insurance policy waivers and riders not typically included in basic policies. These items may add cost to your insurance, but they might also save the day if you ever need them. We’re not saying you need them, nor do we assert that this is a complete list. We simply want to arm you with knowledge of what to ask for when buying boat insurance.
Let’s say a storm deposits your boat in a marsh hundreds of yards from a road or the water. Since equipment can neither be driven nor floated over to the boat, and because of environmental regulations, retrieving the boat, which might be basically unharmed, can be costly. Consider this coverage even if you want to purchase a basic liability policy to simply meet the requirements of your marina and have no interest in insuring the value of your boat—this is also a consideration for boaters in flood-prone storm areas. Insurers recommend salvage-coverage dollar limits that are separate from your hull coverage but equal to it. That’s because some companies limit salvage coverage to a small percentage of the policy’s hull value, in essence making the boater pay for more salvage costs out of pocket.
Federal law makes boaters responsible for fuel spilled for any reason. It could be that oil in the bilge from a sloppy oil change gets discharged when your bilge pump kicks on, or maybe the boat sinks in the slip, and fuel or oil leaks as a result. Whatever the reason, it can happen and environmental damage assessments levied for fuel spills can range to almost $1 million, and the cost of cleanup may be charged as well—a fee that may dwarf the fine. Fuel-spill coverage should be considered even if seeking a basic liability policy, but it can be better to have separate coverage because it will likely cover more. Fuel-spill coverage is a consideration for all boaters whose vessels have fuel tanks, but those who boat near sensitive ecosystems such as wetlands might want to give fuel-spill coverage an even closer look.
Tragedies such as a sinking often happen due to some small part failing. We all know the stories—some may have experienced it firsthand—of torn sterndrive bellows or broken through-hull fittings causing boats to sink. Some policies, while they cover the sinking, will exclude coverage if it happens as a result of consequential damage such as a failed bellows or seacock. Coverage for consequential damage that results in a sinking or other big tragedy is something you want to ask about. Note that some insurance companies’ consequential-damage coverage only applies to total losses, so ask about that. Other examples of consequential-damage situations include dismasting, collision, stranding, fire, and explosion.
Uninsured Boater Coverage
This boat-insurance coverage likely rings familiar for boaters with automobile insurance because it is similar to the uninsured motorist coverage some auto drivers purchase. For the uninitiated, this provides additional coverage for bodily injuries aboard your boat caused by a collision with a hit-and-run boater, where the other boater either takes off without being caught or is operating without insurance, as the name implies. Note that many boats and boaters are uninsured because boat insurance is not required in most places.
Medical Payments Coverage
Medical payments coverage provides for out-of-pocket expenses not covered by the injured person’s health insurance—things such as co-payments and deductibles. It provides a per-person limit of coverage for any injury that occurs aboard the insured boat, regardless of liability. Many insurers cap the payout of this coverage at $1,000, but some offer higher limits for a higher premium. Medical payments coverage might best warrant the attention of boaters active in watersports, such as waterskiing or wakeboarding, or other boating activities wherein injuries might more likely occur.
Boat Trailer Coverage
If you were to get into an accident while trailering your boat, your boat policy may pay for any loss-related repairs to the trailer (check—it is often separate coverage and not included), but any damage caused by the trailer to other persons or property would be up to your tow-vehicle insurance to cover. Naturally, this coverage is best considered by trailer boaters. Also, be sure to find out if there are any geographical limits to the coverage.
Partial Loss Depreciation Waiver
If you are a boater who owns an older boat, one that is, say, 15 or 20 years old, you’ll want to know about this coverage and decide whether it is for you or not. Many insurers depreciate major items such as canvas, engines, or generators at a steep rate after two years. That means as your boat ages, the “new for old” financial-advantage benefit of some insurance coverage is lost. What a partial loss depreciation waiver does, if you add it on, is essentially stop the clock and continue to pay “new for old” claim rates on these items.
Dinghy/Marine Electronics Endorsement
Insurance policies for expensive vessels often carry high deductibles. If the boater has separate coverage for the dinghy and electronics, the decision to file a claim for a lost dinghy or stolen marine electronics can be easier to make. Some might think this is just for large boats, but we can say that, because of testing so many new boats, many boats as small as 23 or 25 feet are often equipped with $15,000 in electronics. If you cruise far and wide or boat in an area where crime is high, you might want to think about purchasing a dinghy or marine electronics endorsement.
Like an angling endorsement, expensive equipment is provided with higher-limit coverage, and entry fees into tournaments might be reimbursed if you must miss out for a covered reason. This coverage can be bundled, combining actual cash value for boards, skis, and scuba or snorkel gear with increased medical payments coverage and entry-fee reimbursement for competitive wakeboarders or water skiers.
If you own lots of expensive fishing gear and/or you fish competitively in tournaments, give an angling endorsement a look. It is often offered as a bundle of fishing-gear coverage, tournament entry-fee reimbursement, and tournament liability coverage. For the gear, higher limits are placed than on policies without the angling endorsement. Also, should a claim—such as for an on-the-road accident or a stolen boat—cause you to have to withdraw from a tournament, this coverage will reimburse your entry fee. Ask if your insurer caps this amount, as some insurers may do so. As a side note, it’s important to understand that many fishing tournaments will require you to carry $500,000 in liability coverage as an entered angler.
Three Types of Insurance Policies
The coverages listed prior are often optional. Before you even begin to select them, you must choose from one of three basic policy types listed here.
Agreed Hull Value:
An agreed hull value policy is the most common one, and with this policy you and your insurer agree to the value to be paid on the vessel in the event of a total loss. Boaters of all types might like an agreed hull value policy.
Actual Cash Value:
This differs from the agreed hull value in that if the boat is a total loss, it pays out based on the market value of the boat at the time and may have more depreciation on partial losses. These cost less and appeal to frugal boaters or boaters willing to shoulder more cost in a loss.
This policy pays for the damage caused to others, including bodily injury (people) and property. It does not cover the insured boater’s boat. Better liability policies include oil-spill and full-salvage coverage. Not concerned with hull value coverage? Select liability only.
In conclusion, make sure your boat insurance needs meet your financial requirements as well as your tolerance for risk. Questioning the coverage proposed to you is smart shopping. Hopefully, this article helps you to do just that. Contact us for your upcoming seasonal boating coverage needs.