Does your insurance policy cover this? It all depends on the fine print.
A Sleepy Subject That Could Keep a Boater Awake at Night
important things to know about the fine print on your boat’s insurance policy
While it’s a subject not often discussed, knowing what’s in your
boat’s insurance policy could mean the difference between having to pay
significant costs out of pocket for a claim or coming away from the claims
experience in good shape. What do you need to know? Boat Owners Association of
The United States (BoatUS) takes a look at
the fine print on seven of the most important coverages.
consequential damage fine print: Half of all sinkings occur at the dock when
some small part below the waterline fails. However, these parts that include
such things as an rubber outdrive bellows, for example, most often fail due to
“wear, tear, and corrosion” or a lack of maintenance, so the policy won’t pay for
a new bellows. But here’s the rub: As a consequence of the failed bellows, your
boat has now sunk and a total loss. Who pays for that? Check your policy now
for “consequential damage” coverage that pays for these losses that often start
with a failed part that may be excluded under the policy. In this case, the
failed bellows may not be covered – but the rest of the repairs or total loss
(sunk boat) will be. One caveat: This consequential damage coverage often
applies only to major or total losses. It’s typical, for example, to cover the
immediate consequential damage resulting from any fire, explosion, sinking,
demasting, collision or stranding.
fuel-spill liability fine print: In addition to your policy’s standard
liability coverage for physical damage or bodily injury to a third party,
fuel-spill liability protects you from claims for cleanup or third-party damage
from the accidental discharge of oil or fuel that can occur in a sinking, fire,
collision or grounding. Some policies just pay the costs associated with a fuel
spill up to the policy’s set limit of boating liability coverage. A better
policy separates out fuel-spill liability and provides coverage up to the
maximum amount you can be held liable for under federal law, which today is a whopping
on-water towing fine print: Many boat insurance policies today offer some
kind of on-water towing endorsement that provides a level of towing and
assistance for routine breakdowns or soft ungroundings. Know how you will be
able to use that coverage including who provides the service and does the
company have 24-hour dispatch service? Also know when you will have to pay for
a tow out of pocket and be reimbursed.
salvage coverage fine print: When fires, sinkings, a marina shed roof
collapse or running up on a shoal damages your boat, you end up with a salvage
situation. If the boat is not a total loss and needs to be recovered and
brought to a repair facility, costs can escalate quickly. Most boaters assume
the cost of raising or moving the boat to safe location is covered by their
policy, but some marine insurers will subtract salvage costs from the insured
value of the boat, reducing the funds available to repair the boat or the
amount paid in the event of a total loss. With some policies on a total loss
you may receive a check for the boat’s insured value, but only get a small
percentage of that insured value – perhaps just 5 to 10 percent – to pay for
salvage costs, again forcing you to pay more out of pocket. Better policies provide
salvage coverage that is separate but equal to the boat’s hull-value coverage.
After all, isn’t that why you insure your boat in the first place?
boat trailer fine print: Not all boat insurance policies automatically
provide boat trailer coverage so be sure to check. Also find out if there are
geographic limits on where you may trailer the boat. Note that if you have an
accident while towing, it is your boat policy that pays to repair or replace
the trailer, but any third-party damage your trailer causes to property or
injuries to people is covered under your auto policy.
liability-only boat policy fine print: If you opt for a liability-only policy,
ensure that it provides not only coverage for property damage and bodily injury
to others, but also that it provides coverage for salvage and removal of a
wreck, and that separate coverage is available for fuel-spill incidents.
a coverage but a concern: Do you have the experience to be able to
salvage your own boat? Most boaters do not, even for a simple salvage
operation, let alone after a major catastrophe. Boaters deserve an insurance
provider that can arrange for the salvage as quickly as possible, potentially
negotiating with crane operators, truckers, storage facilities, local government
officials, marina staff and more. The only way to find out if you’ll be left
holding the bag or will get the help you need is to ask around for other
boaters’ claims experiences.
insurance specialists at BoatUS (800-283-2883) can help you review your current
policy. Free quotes are available at BoatUS.com/insurance.