You can become a more informed consumer of yacht insurance and choose the right policy for your boat if you don’t believe some of the myths. Here are two myths debunked by BoatUS: Myth No.1: If you understand home or auto insurance, you’ll understand boat insurance.
Most consumers are familiar with standard home or auto insurance policy language, so it’s easy to shop for price as long as each insurance company has about the same service. Then when you have to file a claim, each company will treat the loss in the same manner, right?
Not true with boat insurance, because each company can include or exclude whatever coverages it desires. That means that one company’s policy could cover damage if your boat sinks, for example, while another could exclude the same loss attributing it to simple ‘wear and tear.’
Generally, a marine specialty insurer will offer better coverage when compared to adding your boat to your homeowner’s insurance policy. For example, true ‘boat specialty’ policies will have 24/7 emergency response operations to not only take the first report of a claim, but are able to dispatch resources needed to immediately recover and repair the boat, which can also reduce the boater’s exposure to fines and penalties if their boat is sinking and leaking fuel.
In another example, after a hurricane some homeowner’s insurance companies’ primary focus is to process claims for home damage, leaving boat insurance claims a distant second priority. And the longer you wait, the greater the chance the boat could incur more damage.
Myth No.2: Most companies that specialize in boat insurance have similar coverage, so it’s best to shop on price.
Again, even among marine specialty insurers, all policies are not the same, so the first task is to review the ‘exclusions’ to see what losses are not covered. A fairly standard exclusion usually starts with wording such as, ‘any loss caused directly or indirectly by wear and tear, gradual deterioration, rot, corrosion, etc.’
The second task is to then see if the policy has a provision to add back ‘consequential damage’ coverage. Consequential damage coverage appeals to many boat owners because it covers the ‘consequences’ of a loss that was the result wear and tear, deterioration, rot, or corrosion. In plain English: if consequential damage is not covered in your policy, almost every sinking or fire could be excluded.
Lastly, some boat policies limit salvage coverage, or combine salvage expenses with other repair expenses in the same ‘pile’ of money to handle the claim. This means if your boat sinks and the combined cost of salvage and repair surpass your policy’s limits, you’ll be on the hook for the rest. Not good. Most boaters need a policy that treats salvage and repair expenses separately. For example, if you boat is insured for $400,000, you should have up to the full value of the policy ($400,000) for salvage efforts and another $400,000 available for repairs or replacement.
BoatUS – Boat Owners Association of The United States – is the country’s leading advocate for recreational boaters providing over half a million members with government representation, programs and money saving services. The information above comes from BoatUS’s marine insurance department, and you can get a free quote online, www.BoatUS.com/insurance
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