A Guide to Boat Insurance by Daigle & Travers, Darien, Connecticut (203) 655-6974
Every year there are thousands of boating accidents. These accidents can occur due to going too fast, poor weather conditions, driving under the influence of drugs or alcohol, not adhering to marine rules and regulations, and inexperience on the water.
If you own or are thinking about purchasing a boat, having appropriate insurance coverage is a must!
What is protected under my watercraft policy?
Different types of watercraft require different types of coverage. Some vessels are often covered under homeowner’s insurance policies, such as canoes, small sailboats, or motorboats that travel under speeds of 25 miles per hour.
However, larger and faster vessels, as well as personal watercraft (e.g., Jet Skis & Wave Runners) require a separate policy. The type of coverage you need will depend on the size, type, and value of your particular vessel, as well as the type of water you use it in.
Typically, watercraft insurance policies will cover physical loss and damage to your vessel. This includes damage to the hull, machinery, fittings, furnishings, and equipment that is permanently attached to your boat. It will also usually cover injury caused to another person, damage to someone else’s property, liability for your passengers, medical payments for injuries sustained to boat owners and passengers, theft, and also pollution liability from fuel spills or leaks.
When selecting coverage, there are two claim coverage payment options: actual cash value (market value) and agreed value (stated amount).
Actual Cash Value
This type of protection will cover replacement costs less depreciation at the time of a covered loss. In determining how much a policyholder will receive, insurers will look to used boat pricing guides along with other resources to determine the proper market value of your boat.
For partial covered losses, policies will typically include the cost of repairs, with a deduction for a percentage of the depreciation at the time of the loss.
Agreed Amount Value
An agreed amount value policy means that you and your insurer have come to an agreement regarding the value of your vessel.
This means that if there is a total covered loss, you will be compensated for that agreed amount. If there is a partial covered loss, old items on your craft will be replaced with new ones. There will also not be any deduction for depreciation under this type of policy, including lower units and outdrives. Additionally, under and agreed value policy, mechanical breakdown coverage is available.
What is not covered under a watercraft insurance policy?
These policies typically will not cover wear and tear, deterioration over time, damage from animals, marring, denting, scratching, defects in manufacturing or design, osmosis, blistering, electrolysis, and damage from ice and freezing.
Also, under a yacht policy, exceptions to coverage might include damage to sails, canvas, batteries, outboards and sometimes outdrives. All of these items are depreciated by insurers.
Do I qualify for any discount under my boat insurance coverage?
Certain mitigation measures might enable you to qualify for discounted premiums under your boat insurance policy.
Ask your insurer about discounts if you have any of these features:
- Diesel-powered engine (as these are less likely to explode than a gas-powered engine)
- Coast Guard approved fire extinguishers
- Ship-to-shore radios
- Depth finder
- 2 years of experience using your vessel without submitting a claim
- Multiple policies with the same insurer (such as car, home, umbrella policy, etc.)
- Completed approved boating courses such as the basic Coast Guard boater’s safety course. (Required in CT to operated boats, yachts and personal watercraft of any size.)
Many boat owners also only use their craft for several months out of the year, while the rest of the time they keep it in storage. Try asking your insurer if you qualify for a “lay-up” discount. This allows you to pay a discounted rate for the months that your boat is in storage.
You should also note that the navigational territory for your boat will cause variations in rate. For instance, using the boat only on inland waterways and lakes is less expensive than if you use the boat on coastal waters. It is also important to note that some policies contain navigational warranties that limit the waterways and bodies of water in which you can operate your boat, so you should be sure to carefully read your policy and to speak with your insurance agent about any concerns you may have regarding navigational limitations.
Other Watercraft Insurance FAQs
Who can operate my vessel?
Typically, anyone with permission from the owner is allowed to operate your vessel for purposes of a watercraft policy. However, there may be exceptions. For example, if you own a high-performance boat or a personal watercraft such as a Jet Ski, you might have operator limitations. State or local laws may also impose limits on who may lawfully operate a watercraft. Be sure to review your policy and to let your insurance agent know if you have questions or concerns about who may operate your boat.
Also, be aware that sometimes your coverage might require you to pay increased premiums if you have too many people listed on your insurance as operators of your vessel. The motor vehicle records of operators will also impact your rate. If an operator has speeding tickets, you can expect to pay more.
Are there any deductibles I should be aware of?
Most policies include deductibles for property damage and theft claims. Typically, these deductibles can be as low as $100 to $250. Many boat and yacht insurers also utilize a deductible based on a percentage of the boat’s hull value. These usually range from 1% to as much as 5%. In hurricane prone areas, it is not uncommon to find special named storm deductibles that could be as high as 10% of the hull value of a boat.
Example: A boat valued at $62,000 could have a 2% ($1,240) basic deductible, but also a special named storm deductible of 10% ($6,200) that applies in lieu of the basic policy deductible when a named storm causes boat damage.
What is the difference between boat and yacht coverage?
Boats are generally classified as being 26 feet and under, while yachts are 27 feet and over.
Yacht protection is typically broader and more specialized. This is because yachts generally travel farther distances and also have more unique features and equipment compared to smaller crafts.
What should I cover in a yacht policy?
If you are an owner of a yacht, having appropriate protection is a must. When it comes to choosing a policy, there are several options.
First, you can purchase hull insurance. This will cover you for the agreed amount of your yacht in the event of covered damage to the hull of your vessel. You can also purchase a true yacht policy. This type of policy includes replacement cost coverage on partial losses, meaning that you can receive new equipment for old.
You also have the opportunity to purchase protection and indemnity insurance. This type of policy is very broad, and because maritime law is unique, it is important to have coverage that is designed to address the types of exposures your vessel may face.
Protection and indemnity insurance gives you the opportunity to purchase coverage for harbor workers, longshoreman and also for your crew. It is very important to include these individuals in your policy. In fact, not doing so could end up resulting in hundreds of thousands of dollars of fees in the event of an accident.
Find a policy that works for you
Your coverage should cover the amount that it would cost for you to replace your boat, along with any additional equipment that you have acquired for it. Some policyholders might also want to insure their craft for the additional tax dollars paid during the purchase.
Be aware of actual cash value. In the event of a total covered loss, this type of protection will provide you with the value of replacing your vessel, but will subtract for depreciation.
Speak with your insurer if you are not certain whether you have an actual cash value policy or agreed amount value coverage.
Another option is for you to purchase an umbrella liability policy. This will provide you with additional liability protection for your boat, home and car. Also consider “All Risk” protection. This is a type of coverage for all types of losses, except those specifically excluded in the policy.
Would you settle for less?
If you find your current insurance agent is unable to offer you an acceptable watercraft insurance policy, it’s time to find a new agent.
Read over your policy very carefully. Spend time comparing all aspects and not just the prices. Make sure it suits your needs and will help you find the coverage that works for your specific situation.
Here at Daigle & Travers, we can help you find appropriate watercraft coverage for your situation. We work with highly rated insurance companies, and together we can find quality, competitively priced solutions for your insurance requirements. Give us a call today at (203) 655-6974. We have conveniently located offices in Westport and Darien Connecticut.