Is Your Watercraft Protection Underwater?
Spring is just around the corner. Before you know it, flowers and lawns will be blooming with beautiful and vivid colors. Springtime is also when boat enthusiasts often start to consider purchasing a sail boat or power boat. Many consumers, however, lack an understanding of the myriad and multi-faceted loss exposures associated with boat ownership. And boat lovers may mistakenly believe that coverage applies under their homeowners policy for these loss exposures.
Most homeowners policies, however, only insure losses arising from certain low-valued or low-powered boats. Therefore, you should contact us before buying a boat to discuss the proper insurance protection for it. You do not want to be "underwater" when it comes to the proper watercraft insurance. Consider the following tips to assist you in this process.
- If you purchase a motor boat or sail boat valued over $1,500, you probably lack proper coverage under your homeowners policy for physical damage losses to the boat itself. A separate watercraft or boatowners policy is necessary to cover the physical damage to boats over this value.
- If you are contemplating the purchase of a sail boat, inquire about its length. If the length is 26 feet or more, do not look to your homeowners policy for liability coverage. For motor boats, there are strict horsepower restrictions under the homeowners policy for liability coverage. For example, only insureds who own or lease boats with outboard motors of 25 horsepower or less have liability coverage under most homeowners policies, yet most power boats have motors with horsepower far exceeding this amount. This liability coverage restriction also necessitates the purchase of separate watercraft insurance.
- Ask us about the types of boats you are considering. Some insurance companies, for example, decline to insure personal watercraft, such as jet skis and wave runners, since some of these crafts can reach speeds of 60 or 70 miles per hour. The U.S. Coast Guard reports that personal watercraft account for a disproportionately high number of accidents. Many insurance companies also refuse to cover houseboats, homemade or kit boats, competition bass boats, and speed boats. You may have to pay an extra premium through a specialty insurance company to insure these types of craft.
- Be wary of purchasing older watercraft. Many insurance companies reject boats over 15 or 20 years of age because they tend to experience higher loss frequency than newer boats. You may have trouble finding insurance coverage for older boats or end up paying an extremely high premium.
- If you do purchase an older boat, consider ordering a marine survey or inspection of it prior to the sale. This marine survey website may prove helpful. Marine surveys point out deficiencies in watercraft that may cause you to reconsider the purchase or renegotiate its price.
If you do not already have one, purchase a personal umbrella policy in addition to a watercraft policy, particularly if you buy a speed boat, a boat designed for water skiing, or some other craft with a higher potential to cause damage or loss of life. Umbrella policies are relatively inexpensive, and since most forms do not have limitations with respect to watercraft, they will provide excess limits above the liability coverage in the watercraft policy.
In addition, the watercraft liability limits should meet the underlying limits requirements of any applicable personal umbrella policy. Lastly, use the same insurance company that writes your homeowners and personal auto policies for your personal umbrella policy. This approach will alleviate many potential issues in interaction between policies and coverage concerns.
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International Risk Management Institute, Inc.