Is the Protection You Have for Your Watercraft Underwater?

However, most homeowners policies only insure losses from certain low-valued or low-powered boats. So, you should Contact Us before buying a boat to discuss the proper insurance protection. You do not want to be “underwater” regarding the appropriate watercraft insurance.

Consider the following tips to assist you in this process.

• If you purchase a motor boat or sailboat valued over $1,500, you probably need proper coverage under your homeowners policy for physical damage losses to the ship. A separate watercraft or boatowner policy is necessary to cover the physical damage to boats over this value.
• If you are contemplating the purchase of a sailboat, inquire about its length. If the length is 26 feet or more, do not look to your homeowners policy for liability coverage. There are strict horsepower restrictions under the homeowners policy for liability coverage for motor boats. 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 old because they experience higher loss frequency than newer boats. You may have trouble finding insurance coverage for older boats or paying an extremely high premium.
• If you purchase an older boat, consider ordering a marine survey or inspection of it before 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 and a watercraft policy, mainly 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 concerning 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 the interaction between policies and coverage concerns.

Source: International Risk Management Institute, Inc.