Before you set out on your next sailing adventure, it’s important that you have proper and adequate boat and marine insurance. Whether you’re shopping for a new policy or you’re considering switching insurers, there are five key questions to ask your insurance agent before the boating season begins. The answers could inform you as to whether your current or future policy is worthwhile or worthless.
1. Am I expected to pay salvage costs that should be paid by the insurance company?
In most cases, people purchase insurance for protection in the event of a “big thing.” In terms of boating, the most common types of catastrophic claims are claims following a hurricane, which can destroy your boat and leave it in pieces in your neighbor’s front yard or sinkings, which can happen to anyone.
Whether your boat sustains damage in the aftermath of a hurricane or sinks, it is your policy’s “salvage” coverage that pays to remove the vessel from your neighbor’s yard or the bottom of a lake. Look for a policy that has separate and full salvage coverage. This will take care of the costs associated with removing the boat as long as it does not exceed a percentage of the “hull” value, or the part of your policy that reimburses you for the actual loss of the vessel. Inadequate policies reimburse you for the loss of your boat but could make you pay some out-of-pocket fees for salvage. However, isn’t that why you’re purchasing boating insurance in the first place?
2. When I have a claim, how much help will I receive?
When an insurance company handles a claim, there are two ways they can do so: “hands-on” or “hands-off.” A hands-off insurance company typically believes that the policyholder should do all of the work. With a significant claim, that could include finding a trucking service, barge, crane company and salvor all by yourself and then seeking reimbursement for your expenses. Conversely, a hands-on insurance provider — typically a specialty marine insurer — has 24/7 access to these unique services. The insurer can wisely negotiate pricing, hire and pay the contractors for you and arrange for repairs to your vessel.
3. Does this policy have coverage for “consequential damage”?
In the world of boat and marine insurance, catastrophic losses that include stranding, collision, demasting, sinking, explosion or fire are considered a “consequence.” For instance, if your boat sinks because a rusted, through-hull fitting broke off, the sinking is a direct consequence of the broken through-hull. Good boat insurance policies include coverage for these types of catastrophes. In other words, if you don’t have “consequential damage” coverage in your policy, the insurance company could declare that nearly every fire or sinking is ineligible for coverage due to normal “wear and tear.” By asking the agent ahead of time, you can make sure you and your vehicle are adequately protected against unscrupulous insurers.
4. Will I be out of harm’s way?
Look for an insurance policy that offers a 24/7 emergency claims team that can step in right away with the resources necessary to prevent additional damage. Also, if you live in a hurricane zone, the best policies will pay a captain to move it to a hurricane hole or share the cost of a haul-out to move your vessel to higher ground.
5. Will I receive any rewards or discounts through the life of the policy?
A smart insurance policy will credit you for not filing claims and reward you with benefits such as diminishing deductibles that lower your deductible for every year you remain claims-free. You may also be eligible for discounts or savings for participating in education or training programs. Ask your agent about other ways you can save money on your boat insurance policy.
If you aren’t satisfied with the agent’s responses to these five questions, it’s time to shop around for a better policy. Never jump into a policy without knowing exactly what is covered and the damages for which you will be responsible.