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Many boaters cover their boat insurance needs by declaring the boat on their homeowner’s insurance policy. This may or may not be a good idea!

Having your boat under the ‘Umbrella’ coverage’s of your homeowner’s policy tends to provide you the security and safety of a large liability policy normally associated with a homeowner’s policy. It affords you a degree of ‘Cross Risk Insurance’ where the risks associated with the boat are so different than other, homeowner’s risks that the likelihood of claims from more than one risk hitting simultaneously are very low. If you are in the enviable position of having very significant assets to protect, it may be a good idea to have a separate boat owner’s policy as well as having the liabilities related to your boat declared on your homeowner’s policy.

Standard property and casualty (P & C) insurance companies that provide most of the homeowner’s coverage tend to not understand the marine issues, values and considerations of a boatowner. Their claims adjusters, for example, are typically not aware of the many intricacies related to repairing or replacing a damaged or lost boat. Most specifically, they tend not to understand the damages caused as a consequence of the sinking of a recreational boat. There can be very serious and expensive electrical and mechanical problems resulting from a boat being submerged, many of which won’t show up for quite a while after the boat has been dried out, freshened up and restored to service. Electrical contacts can corrode and cause short circuits as well as exacerbating any electrolysis issues in the boat. These are very subtle and normally not understood by adjusters without marine background or experience. Marine insurers, on the other hand, deal with boating issues regularly and their adjusters are savvy to the problems and values of the boat business. Many marine insurers use the services of marine appraisers to do their claims adjustment work. They are true professionals who are dedicated to the marine industry and serve the boat owner well.

In my experience as a marina operator, there were several occasions in which, for one reason or another, one of our customer’s boats was damaged or sunk by collision, carelessness or nature. Forgetting to put the plug in before launching was number one on the list. At times, a customer would leave his/her boat tied to a dock without a cover and when enough rain entered the boat to cause the bilge pump to run long enough to drain the battery, the boat would then fill up and sink. When the P & C insurance adjuster would come to assess the damage, they would only see the water damage to the upholstery, etc. and would value the cosmetic items that were lost or damaged. We were never able to convince them of the hidden electrical and mechanical and fuel system damages involved and there frequently was bitter disputes between the boat owner and the insurance company for months before resultion.

Conversely, whenever an adjuster from a marine insurer would come to assess the damage, they would first evaluate the systemic electrical and mechanical issues and often gave us the authority, on the spot, to perform the extensive electrical system diagnostics, hull evaluation, and mechanical item replacement (all fluids, filters, anodes, etc). We never knew of a dispute between the boatowner and the marine insurer.

Another issue that few people consider is the insurance of the boat while it is stored and not operational. Most people assume that the insurance of the marina or boat storage facility will cover their boat while it is stored there. That is only partially true. If the marina operator were to drop your boat or otherwise cause damage by negligence, their liability insurance would surely cover this. On the other hand, if a hurricane, fire, flood, or other natural disaster were to cause damage to the boat while it is stored, the insurance of the boatowner would be responsible. Many boatowners who lost their boats when Hurricane Katrina ripped through the Gulf of Mexico were very surprised to learn that the marina’s insurance did not cover their boats. Many were a total uninsured loss.

Some marine insurers even offer a discounted rate for times of prolonged storage vs the assumption that the boat is operated year round. Many times a boat is really only used for 5-6 months of the year during the summer season and then it is stored at a marina or in the garage for the remainder of the year. You might check with your marine insurer to see if they offer a notification system wherein you can report the boat in a storage status and receive a reduction in your liability rate and premium as a result.

Be sure to investigate the cost and coverage’s of boat insurance offered by marine insurers and compare those to those of your homeowner’s policy before singing up. Be certain to ask about the marine qualifications of the adjusters used by the carrier. This will be critical should you happen to have a claim.

Like most things, it pays to do your homework!

By: Don Seibert