Having insurance is smart. Knowing how to minimize premiums is even smarter.
Insurance is a gamble, of sorts. Insurers are betting nothing will happen (and they just collect premiums), and policyholders are betting something will happen (and there will be remuneration). The higher the value of the asset — or the risk of exposure — the more we’re ready to take that gamble. So why are 40 to 50 percent of boaters uninsured? Scott Croft, vice president of public affairs at BoatUS, points out that few of us would drive a vehicle or own a home without insurance, but for some reason, when it comes to boating, that all changes. “People on the water are woefully under-protected,” he said. Certainly, premium costs are a factor in why so many boat owners are uninsured, so here are several ways to lower insurance premiums and erase that as a factor.
1 | INCREASE THE DEDUCTIBLE
Like with all insurance, the deductible and premiums have an inverse relationship. If one’s goal is to minimize the upfront monthly cash outflow, he should raise the deductible and cross his fingers that all will be well and he’ll never have to face the deductible. In this way, policyholders are effectively sharing the risk with the insurance company.
2 | MULTIPLE POLICIES
Most insurance carriers provide discounts to policyholders who keep policies with them for more than one asset — car, house, boat, PWC, etc. Some companies will also give a discount to homeowners (house or condo) even if that policy isn’t carried with them.
3 | PAY IN FULL
Some insurers will provide a discount to insureds who pay the year’s worth of premiums upfront instead of in quarterly or monthly installments. Consumers whose cash-flow status will allow it should pay the whole bill. Anyone who sells the boat midyear will receive a reimbursement.
4 | ORIGINAL OWNER
If an owner is the only person to ever have owned the boat, she’ll likely receive a break too. It should be clear to the insurer that it is a new boat, but just in case, ask about the “original owner discount.”
5 | HAVE A GOOD RECORD
A clean driving record (both car and boat) with no moving violations in the past three years will likely result in a discount. Continuing to be a safe boater could result in additional discounts at renewal.
6 | CREDIT SCORE
In some instances, a good credit score will help build one’s credibility as a responsible citizen. Boat owners with stellar credit should try to impress the agent and see if there’s a reward in the form of lower premiums.
7 | TAKE A COURSE
Completing a boating safety course can enhance one’s status as a safe boater. It’s possible to save up to 10 percent on premiums by completing a state-approved program. Check the National Association of State Boating Law Administrators (NASBLA) for resources. The U.S. Coast Guard Auxiliary and U.S. Power Squadron offer onsite classes, and BoatUS has free online courses.
8 | JOIN THE CLUB
In some cases, membership in a program such as the U.S. Coast Guard Auxiliary and U.S. Power Squadron will also qualify boat owners for a 10 percent discount.
9 | BOATING AREA
No boat owner should overpay for a larger coverage area if he never really leaves one lake. The time of year and the navigational territory will define the risk an owner is asking the insurance company to take. For example, a boat owner in Florida coastal waters in August will pay a higher premium due to a potential threat of hurricanes. Owners should assess their boating needs realistically and whittle down the area they need.
10 | BOATING STYLE
How many boat owners were once avid anglers with lots of gear? How many had kids who owned every kind of wakeboard but now they’re grown and gone? Insurance premiums can decrease if gear is reduced and boating needs simplified. Policyholders need only pay for what they need and what they actually do.
11 | TAKING A BREAK?
“Port Risk” insurance is lower for boats that are not in use, so anyone who won’t be boating for a while and will have the boat stored ashore may qualify for reduced insurance costs.
12 | TRICK IT OUT
Some insurance companies will take note of additional equipment aboard and offer discounts accordingly. For example, an automatic fire-suppression system (rarely found on small boats) can qualify. Some vessel-monitoring products that allow the boat to communicate with its owner via Wi-Fi in case of intrusion, engine start or high-water alarm qualify the boat for a discount. A geo-fencing system that is a GPS-based security/recovery plan will also help, and many are affordable and simple to install.
13 | SHOP AROUND
Insurance is complicated. So shoppers should first educate themselves and then shop around to find hidden discounts. For example, Progressive Insurance offers a “disappearing deductible” as a retention benefit. If a policyholder sticks with the same policy/company over five years, her deductible will decrease 20 percent until she has no deductible at all. Another feature is “small claim forgiveness,” where the company may pick up the tab on small items such as gelcoat and cushion damage if the owner isn’t at fault and her record is clean.
14 | REVIEW HULL VALUE
Boats are depreciating assets that lose value over time. Paying premiums on the same “agreed hull value” policy an owner requested five years ago may no longer be serving his best interests. He should check to see what his boat is worth now and insure for less, if needed. An owner who financed his boat should be sure to cover any outstanding boat loans as a minimum.
15 | OPT FOR LIABILITY ONLY
Boats that are not financed and not terribly valuable still need to be insured, but the premiums can be much less with “liability only” coverage. Just as with an older car, owners need to protect themselves against third-party damages in case of an accident (or sinking). But it’s not just the value of the physical assets that’s important. The medical coverage and environmental cleanup protection one needs if a boat sinks — the costs to raise and remove it and clean up the oil slick it leaves behind — won’t be insignificant. A policy should cover salvage and include liability limits that will keep insurance costs affordable. Depending on the boat and other circumstances, liability coverage may cost as little as $100 per year.
As Progressive’s boat product manager, Rick Stern, said, “Boating is not about how we get away but how we reconnect.” So, with that at stake, how much are you willing to bet to make sure your time on the water is all it can be?
TO THE WEB
NMU.com (National Marine Underwriters)
USPS.org (U.S. Power Squadrons)