By: David Weil, Esq.
I just renewed my homeowner’s insurance policy and it reminded me that I have never seen an earthquake insurance policy offered for a boat. I know that homeowners have to take out separate earthquake policies through the California Earthquake Authority to get coverage. Are boat owners eligible for anything similar? If my boat suffers damage during an earthquake — whether it’s in dry storage, on a trailer at home or tied to a dock at a crowded marina — will my marine insurance policy cover it?
Generally speaking, the limits and exclusions of any insurance coverage will be spelled out in the language of the policy document that is issued by the insurance company.
Here, the reader is referring to a requirement of California law (section 10081 of the California Insurance Code) that provides that no policy of residential property insurance may be issued in California unless the named insured is offered coverage for loss or damage caused by earthquake.
The law in its current form was enacted in 1994 after the Northridge earthquake. Prior to that event, insurance companies were required to include earthquake coverage in residential insurance policies, but no provision was available to offer the insurance under a separate policy. After the Northridge earthquake, many insurance companies pulled out of California entirely, rather than being forced to include coverage in their standard residential homeowners’ policies.
The new law offered a compromise. Insurance companies may now exclude coverage for earthquake damage, so long as they offer a separate policy to the homeowner that does provide the coverage. The separate earthquake policy is therefore only required if the homeowners’ policy itself excludes coverage for earthquake damage. This helps the insurance companies because they may charge competitive rates for the homeowners’ policy without regard to the risks associated with earthquake coverage. The separate earthquake policies may better target the risk by charging substantial premiums, and requiring a deductible of up to 15 percent of the value of the insured structure.
Like homeowners insurance, the coverage and exclusions of a marine insurance policy will be spelled out in the language of the policy document. Marine insurance policies vary widely in the scope coverage offered, but they do not typically exclude damage caused by earthquake. However, even if such an exclusion were included in a policy, the insurance company would not be required to offer separate earthquake coverage, since the law that requires the coverage does not extend to marine insurance.
The reader asked whether his marine insurance policy would cover earthquake damage to his boat under various scenarios, such as in dry storage, or on a trailer or in a marina. The answer is that the damage may be covered, or it may be excluded if his insurance policy does list a specific exclusion for earthquake damage, or it may be excluded by some other provision of the policy that has nothing to do with earthquakes.
Unfortunately, there is no simple, universal answer to this question. The reader will need to review the language of his policy, to determine the scope of coverage offered by the policy and the exclusions and other limitations (such as geographic limitations) that may apply. A maritime attorney experienced in insurance coverage issues should be consulted for more specific information.
David Weil is licensed to practice law in the state of California and, as such, some of the information provided in this column may not be applicable in a jurisdiction outside of California. Please note also that no two legal situations are alike, and it is impossible to provide accurate legal advice without knowing all the facts of a particular situation. Therefore, the information provided in this column should not be regarded as individual legal advice, and readers should not act upon this information without seeking the opinion of an attorney in their home state.
David Weil is the managing attorney at Weil & Associates (weilmaritime.com) in Long Beach. He is an adjunct professor of Admiralty Law at Loyola University Law School, is a member of the Maritime Law Association of the United States and is former legal counsel to the California Yacht Brokers Association. He is also one of a small group of attorneys to be certified as an Admiralty and Maritime Law Specialist by the State Bar of California. If you have a maritime law question for Weil, he can be contacted at (562) 438-8149 or at firstname.lastname@example.org.