Getting a Handle on Boat Insurance
Five Buying Tips
Understanding boat insurance can be confusing. But the smart boater can make the right insurance choice with these "Top Five Tips for Buying Boat Insurance" from BoatU.S., the nation's largest recreational boat owners association:
#5 Know thy insurer:
Boat insurance can be "added on" to a homeowner's policy or purchased from an independent insurance agent or directly from a marine insurance specialist. Buying a policy through a reputable agent or directly from a marine insurance specialist is the best way to go. "Adding on" to your homeowner's policy may be convenient, but when there's a claim you will appreciate a company that knows more about boats than homes. Homeowner's policies often limit or don't adequately provide some of the marine related coverages like salvage or wreck removal.
Ask experienced boating friends for their insurance recommendations and check on the insurance "carrier," - the company that will actually be providing your coverage - at http://www.ambest.com/ratings. A.M. Best ratings are the industry's benchmark for assessing an insurer's financial strength; look for an "A" rating (excellent) or better. State insurance regulatory agencies are also a good reference and can be found online.
#4 Agreed Value vs. Actual Cash
These are the two main choices for boat insurance and depreciation is what sets them apart.
An "agreed value" policy costs more up front but it potentially pays more - it will cover the stated value of the policy in the event of a total loss. For example, a total loss on a $50,000 agreed value policy would pay you $50,000. More importantly, with a partial loss an agreed value policy replaces damaged boating equipment on a "new for old" basis with no depreciation. Hence, a claim for a stolen four-year-old GPS would get you a new, comparable replacement GPS. Some repairs, however, are subject to depreciation, such as paint, canvas and aging machinery.
"Actual Cash Value" policies cost less but only pay up to the actual cash value at the time the boat or property was lost - depreciation is factored in on all losses. Actual Cash Value policies are better suited to less expensive boats or to situations where you are more concerned with liability protection and defense against lawsuits than you are with boat damage.
#3 Know the salvage truth:
If the worst happens and your boat needs to be salvaged, you want to ensure that your policy covers salvage costs up to 100% of your boat's insured value. If it covers anything less, you could end up paying salvage costs out of your own pocket. Unfortunately many homeowners and some marine insurer policies limit salvage coverage to a percentage of the boat's total value.
For example, if you have chosen a $50,000 "agreed value" policy, you want salvage coverage up to the same amount as the boat's agreed value - $50,000. You should not have to subtract these "salvage" dollars, or the policy's deductible, from the total amount available to fix the damage. An actual cash value policy should have the same, with the dollar salvage limit being equal to, but separate from, the actual value of the vessel.
Some policies also have "hurricane deductibles" - a significantly higher deductible for damage to your boat caused by a hurricane. Be sure that this dollar amount is acceptable to you.
#2 Speak to me in a language I
Don't treat boat insurance like other insurance. Make sure you understand exactly what is covered as well as what isn't covered. If the policy doesn't make sense, ask for an explanation in laymen's terms.
#1 One size doesn't fit all:
A bass boater may need fishing gear and tournament coverage as well as "cruising extensions" if they trailer their boat far from home. If you're in the hurricane belt, hurricane haul-out coverage makes the decision to safely store your boat ashore that much easier as a storm approaches. If you have a fuel tank aboard, you should be concerned about fuel spill containment and clean-up coverage along with 24-hour assistance to get it done immediately, especially in light of today's environmental protection laws. A good insurer will tailor your coverage to fit your needs, so there will be no surprises if the unexpected happens.
BoatU.S. - Boat Owners Association of The United States - is the nation's leading advocate for recreational boaters and provides its 590,000 members with a wide array of consumer services including a marine insurance program that insures over 240,000 vessels. For more information or for a free quote, visit http://www.BoatUS.com/insurance or call 800-283-2883.