Fact Or Fiction
Get peace of mind for your family by learning to separate the truth from the myths when it comes to boat insurance.
By Graham Garrison
January 28, 2008
T
he sinking feeling comes because your boat is taking on water, but it’s also in your gut.
It’s the same type of feeling you get from a car accident, but this time it’s on the water, and you
know it’s going to cost something. Bumping into the dock. Hitting a rock while running in shallow
water. Engine troubles or leaky hulls. You hope for the best, but prepare for the worst should
something happen — not only with safety gear on board, but also with boat insurance, which brings
peace of mind.
However, it’s not as simple as signing on the dotted line. Many boaters discover too late that boat insurance doesn’t necessarily encompass all boating mishaps. The problems are usually rooted in assumptions boaters may have that boating insurance is the same as other types of insurance.
Boating World recently spoke with representatives of insurance companies about the leading boating insurance myths and how boat owners can stay educated — and insured.
Myth: Boat insurance policies are similar to automobile policies.
Automobiles and boats are both vehicles, but the similarities in use and coverage end there. Because automobile coverage insures a much larger segment of the population, the policy offerings are well-known and generally standardized.
Mark Zadrick, director of Travelers Boat and Yacht Division, says boaters shouldn’t make the mistake of assuming boat insurance has an all-encompassing policy approach. “ Home or automobile insurance is more uniform because of state requirements,” Zadrick says. “Boating insurance policies can differ. States give boat insurance writers more flexibility on how they can construct their policies from a coverage perspective.”
That’s because there are so many different scenarios affecting a boat insurance claim. This is where boaters can fine-tune their insurance policies to meet their specific needs.
• Fuel spill — Will your policy cover fuel leakage and cleanup?
• Wreckage — If your boat has sunk or left debris at the dock, you’ll most likely have to foot the bill. Does your insurance policy cover it?
• Liability — Have you checked to see if your insurance policy sublimits accident claims related to things such as watersports accidents?
“Just like all boats aren’t the same, boat policies can differ from insurance company to insurance company and from state to state,” says Zadrick.
Zadrick says there are two types of policies to look at for boat insurance: Actual Cash Value and Agreed Value. With Actual Cash Value policies, all losses depreciate with the boat’s age. In an Agreed Value policy, the total loss is paid at face value of the contract, and many types of partial losses are not subject to depreciation. An Actual Cash Value policy is usually less expensive than an Agreed Value policy.
Myth: Adding a boat to a homeowners policy will give the same protection as a stand-alone boat insurance policy.
It’s understandable to want to have all of your insurance under one company’s roof, and this practice may very well save some bucks. However, assuming a homeowners policy covers your boat could cost you in the long run. “There is some coverage, but it’s not the same as a specialized policy,” says Dominic Mediate, Progressive Insurance’s boat product manager.
According to Mediate, a homeowners policy would be less specific in scenarios such as fuel spills and wreckage removal. It may not even offer coverage or the same cash value for the boat if it’s off property, like jewelry may not be if it’s stolen at a party that isn’t held on the homeowner’s property.
“Homeowners policies provide very little, if any, coverage for your boat,” says Jeff May, Powersports, Specialty Product Lines, Allstate Insurance Co. “Homeowners liability rarely extends to your boat once it leaves your home. Only boat insurance policies protect your boat and motor while they’re being hauled and while out on the water.”
Myth: Your boat is covered anywhere you go.
Say you live in Charleston, S.C., and want to take a fishing trip down to Florida. You hitch up your center console and head for the Sunshine State, secure in the notion that your boat is covered because it’s yours, not because of where you live.
“One of the leading myths people have is the belief that they’re covered anywhere in the country,” says Mediate. “That’s not always the case.” Some boat insurance policies have limitations, such as only allowing coverage within 100 miles of your mailing address or along one stretch of water. “It’s definitely according to your lifestyle,” says Mediate.
Location is also important for certain parts of your claim. For example, boaters in San Diego or Miami wouldn’t need to worry as much about winter damage from freezing temperatures, while boaters on the Great Lakes would be wise to include weather-related items in their policies. “Some policies have ice and freezing exclusions, and some don’t,” says Zadrick. “Some require that vessels are laid up ashore. If you’re required to have your boat laid up, and the boat is in the water, the insurer has the right to decline the claim.”
Myth: The claim process for boats is standard.
When you file a boat claim, you expect the insurance company to have adjustors who specialize in this particular field. However, it might be a good idea to see if the company’s adjustors have a boating-specific background.
“Does the carrier use a homeowners or automobile adjustor to handle your boat claim, or do they have a dedicated, boat-knowledgeable, marine claims staff?” Zadrick asks. “Travelers uses dedicated, boat-knowledgable claims adjustors. We don’t use our automobile adjustors to handle our boat claims.”
An adjustor with boating knowledge is likely to give a more accurate assessment of the losses, says Chantal Cyr, vice president of Travelers Boat and Yacht Division. According to Cyr, the claim also has a chance of being completed sooner.
Boaters in regions with shorter boating seasons, such as New England or Minnesota, would want the claim process to go faster so they can get back on the water quickly. “The benefit of having a marine-knowledgeable boat claim adjuster handle the claim is that they get claimants back in the water much sooner than auto adjustors, who are not familiar with boating losses,” says Cyr.
Myth: Hurricanes and natural disasters in one area of the country will affect your premiums, even if you live in another region.
Mediate says this is a common myth. “If I have a boat in Ohio, there is a misconception I will be paying higher premiums because of a hurricane somewhere else,” he says. “For Progressive, that’s not the case. It’s based off experience with a particular state.”
Myth: If your boat isn’t worth much money, or if you don’t use it often, you don’t need insurance for it.
May says boat owners should strongly consider liability coverage when considering boat insurance. “One of the biggest risks of boat ownership is the liability you can face when out on the water,” he says. “Boat insurance helps to cover you against damages you could face if someone is injured on your boat or if you hit someone while out on the water.”
Boats also aren’t susceptible to loss only on the water and during boating season. “Damage to boats can occur any time of year,” May says. “Storage facilities can catch fire or be damaged by storms. Expensive electronic equipment can be stolen off your boat. Sometimes, boats are stolen out of storage. Boat insurance policies can help protect against these kinds of losses.”
Boat Insurance Resources
Allstate • (800) ALLSTATE, www.allstate.com
Boat U.S. • (800) 283-2883, www.boatus.com/insurance
Progressive • (800) PROGRESSIVE, www.progressive.com
State Farm • (877) SF4-BANK, www.statefarm.com
Travelers • (800) 952-8699, www.travelers.com
However, it’s not as simple as signing on the dotted line. Many boaters discover too late that boat insurance doesn’t necessarily encompass all boating mishaps. The problems are usually rooted in assumptions boaters may have that boating insurance is the same as other types of insurance.
Boating World recently spoke with representatives of insurance companies about the leading boating insurance myths and how boat owners can stay educated — and insured.
Myth: Boat insurance policies are similar to automobile policies.
Automobiles and boats are both vehicles, but the similarities in use and coverage end there. Because automobile coverage insures a much larger segment of the population, the policy offerings are well-known and generally standardized.
Mark Zadrick, director of Travelers Boat and Yacht Division, says boaters shouldn’t make the mistake of assuming boat insurance has an all-encompassing policy approach. “ Home or automobile insurance is more uniform because of state requirements,” Zadrick says. “Boating insurance policies can differ. States give boat insurance writers more flexibility on how they can construct their policies from a coverage perspective.”
That’s because there are so many different scenarios affecting a boat insurance claim. This is where boaters can fine-tune their insurance policies to meet their specific needs.
• Fuel spill — Will your policy cover fuel leakage and cleanup?
• Wreckage — If your boat has sunk or left debris at the dock, you’ll most likely have to foot the bill. Does your insurance policy cover it?
• Liability — Have you checked to see if your insurance policy sublimits accident claims related to things such as watersports accidents?
“Just like all boats aren’t the same, boat policies can differ from insurance company to insurance company and from state to state,” says Zadrick.
Zadrick says there are two types of policies to look at for boat insurance: Actual Cash Value and Agreed Value. With Actual Cash Value policies, all losses depreciate with the boat’s age. In an Agreed Value policy, the total loss is paid at face value of the contract, and many types of partial losses are not subject to depreciation. An Actual Cash Value policy is usually less expensive than an Agreed Value policy.
Myth: Adding a boat to a homeowners policy will give the same protection as a stand-alone boat insurance policy.
It’s understandable to want to have all of your insurance under one company’s roof, and this practice may very well save some bucks. However, assuming a homeowners policy covers your boat could cost you in the long run. “There is some coverage, but it’s not the same as a specialized policy,” says Dominic Mediate, Progressive Insurance’s boat product manager.
According to Mediate, a homeowners policy would be less specific in scenarios such as fuel spills and wreckage removal. It may not even offer coverage or the same cash value for the boat if it’s off property, like jewelry may not be if it’s stolen at a party that isn’t held on the homeowner’s property.
“Homeowners policies provide very little, if any, coverage for your boat,” says Jeff May, Powersports, Specialty Product Lines, Allstate Insurance Co. “Homeowners liability rarely extends to your boat once it leaves your home. Only boat insurance policies protect your boat and motor while they’re being hauled and while out on the water.”
Myth: Your boat is covered anywhere you go.
Say you live in Charleston, S.C., and want to take a fishing trip down to Florida. You hitch up your center console and head for the Sunshine State, secure in the notion that your boat is covered because it’s yours, not because of where you live.
“One of the leading myths people have is the belief that they’re covered anywhere in the country,” says Mediate. “That’s not always the case.” Some boat insurance policies have limitations, such as only allowing coverage within 100 miles of your mailing address or along one stretch of water. “It’s definitely according to your lifestyle,” says Mediate.
Location is also important for certain parts of your claim. For example, boaters in San Diego or Miami wouldn’t need to worry as much about winter damage from freezing temperatures, while boaters on the Great Lakes would be wise to include weather-related items in their policies. “Some policies have ice and freezing exclusions, and some don’t,” says Zadrick. “Some require that vessels are laid up ashore. If you’re required to have your boat laid up, and the boat is in the water, the insurer has the right to decline the claim.”
Myth: The claim process for boats is standard.
When you file a boat claim, you expect the insurance company to have adjustors who specialize in this particular field. However, it might be a good idea to see if the company’s adjustors have a boating-specific background.
“Does the carrier use a homeowners or automobile adjustor to handle your boat claim, or do they have a dedicated, boat-knowledgeable, marine claims staff?” Zadrick asks. “Travelers uses dedicated, boat-knowledgable claims adjustors. We don’t use our automobile adjustors to handle our boat claims.”
An adjustor with boating knowledge is likely to give a more accurate assessment of the losses, says Chantal Cyr, vice president of Travelers Boat and Yacht Division. According to Cyr, the claim also has a chance of being completed sooner.
Boaters in regions with shorter boating seasons, such as New England or Minnesota, would want the claim process to go faster so they can get back on the water quickly. “The benefit of having a marine-knowledgeable boat claim adjuster handle the claim is that they get claimants back in the water much sooner than auto adjustors, who are not familiar with boating losses,” says Cyr.
Myth: Hurricanes and natural disasters in one area of the country will affect your premiums, even if you live in another region.
Mediate says this is a common myth. “If I have a boat in Ohio, there is a misconception I will be paying higher premiums because of a hurricane somewhere else,” he says. “For Progressive, that’s not the case. It’s based off experience with a particular state.”
Myth: If your boat isn’t worth much money, or if you don’t use it often, you don’t need insurance for it.
May says boat owners should strongly consider liability coverage when considering boat insurance. “One of the biggest risks of boat ownership is the liability you can face when out on the water,” he says. “Boat insurance helps to cover you against damages you could face if someone is injured on your boat or if you hit someone while out on the water.”
Boats also aren’t susceptible to loss only on the water and during boating season. “Damage to boats can occur any time of year,” May says. “Storage facilities can catch fire or be damaged by storms. Expensive electronic equipment can be stolen off your boat. Sometimes, boats are stolen out of storage. Boat insurance policies can help protect against these kinds of losses.”
Boat Insurance Resources
Allstate • (800) ALLSTATE, www.allstate.com
Boat U.S. • (800) 283-2883, www.boatus.com/insurance
Progressive • (800) PROGRESSIVE, www.progressive.com
State Farm • (877) SF4-BANK, www.statefarm.com
Travelers • (800) 952-8699, www.travelers.com
related articles:
Purchasing Power: Finding the perfect boat for you and your family is a simple process with the 2008 Buyer's Guide.Power Play: Shattering previous standards for marine engine technology, the class of 2008 boating power is truly in a class of its own.
Prime-Time Boat Buying: Get the most out of your boating budget by knowing the right time of year to purchase.
Shopping For A Fire Extinguisher: 2008 Buyer's Guide: Accessories
Shopping For Boat Cleaners & Waxes: 2008 Buyer's Guide: Accessories
Shopping For A Cooler
