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I have noticed several threads on the site discussing insurance policies, mostly around premium paid. Being in the insurance business I would like to point out some areas that everyone should consider when looking at an insurance policy as they can very different and when it really matters at time of claim you may not have the coverage you thought you had.
The first thing everyone should consider is the reason for insurance. The first reason clients always give for insurance is to replace their “stuff”. While replacing your “stuff” is one reason for insurance, losing your “stuff” will not financially devastate most people. On the other hand, how well can you financially deal with a bodily injury lawsuit with a judgment of $500,000 and 3 years of legal fees? I am going to go out on a limb and say that the lawsuit will be a much more difficult thing to deal with then the loss of your “stuff”.
These boats are made for sports that can be inherently dangerous, throw in the other people around you who may not be as responsible as you and those who think alcohol and boating are a great idea and you have all the ingredients for something bad happening.
I would recommend that everyone look at the bodily injury and property damage limits before worrying about the property coverage limits on the policy. Increasing your liability limits from $300,000 CSL to $500,000 CSL is inexpensive. Hopefully you never need to use the coverage but if you do need it you will want every dollar you can get. Along with the limit understand if claims reduce your limit for any other claims during the policy period, also known as an aggregate limit, or if the full limit is available for each claim. Out of the five carriers we represent, only one has an aggregate limit.
Consider carrying uninsured coverage, that way you can access your policy when some moron hits you and does not carry insurance. Make sure the uninsured coverage limit is the same as your liability limit. No reason to insure the rest of the world for more than you insure yourself. The coverage is very inexpensive.
Be sure the policy provides coverage for wreckage removal and environmental damage. Most stand-alone boat policies provide this coverage but be sure to read the exclusions for limitations to the coverage. Along the same lines, do not insure your boat on your homeowners policy, normally coverage is inferior to a stand alone marine policy and a claim on the boat may count as a claim on your homeowners policy, you do not want that!
For physical damage coverage, to the boat, understand what limitations are imposed on replacement cost and agreed value.
For replacement cost every carrier has a set number of model years they will provide replacement cost for. For instance, are carriers range from no replacement cost coverage out to 10 models (so long as you purchased it new). Along with the model year limitation be sure to understand if there is a limit to the amount they will pay for replacement cost. One carrier has a max replacement cost of $100,000, that may leave a few people here a little unhappy. Also understand what happens after the replacement cost coverage expires some carriers go to agreed value while others switch to actual cash value.
When it comes to agreed value be careful of the actual cash value limitation for partial losses. Most policies institute actual cash value coverage on items like motor, outdrive and other operational components after a set number of years. So, your 10 year old boat will, most likely, not have replacement cost coverage for a number of very expensive items in a partial loss situation.
Just like liability be sure to look at the exclusions. I read one policy that excludes coverage for Named Windstorms if your boat is more 100 miles from the garaging location listed on the declarations page unless you have prior written permission from the carrier. Or the exclusion for damage if intoxicated or under the influence of non-prescribed drugs, could this allow the carrier to deny coverage for use of over the counter cough medicine? That would be up to a court.
Hopefully this is helpful and prompts people to review their policy or talk to their insurance agent about their coverage. No need to find out there is a limitation or exclusion at claim time!
The first thing everyone should consider is the reason for insurance. The first reason clients always give for insurance is to replace their “stuff”. While replacing your “stuff” is one reason for insurance, losing your “stuff” will not financially devastate most people. On the other hand, how well can you financially deal with a bodily injury lawsuit with a judgment of $500,000 and 3 years of legal fees? I am going to go out on a limb and say that the lawsuit will be a much more difficult thing to deal with then the loss of your “stuff”.
These boats are made for sports that can be inherently dangerous, throw in the other people around you who may not be as responsible as you and those who think alcohol and boating are a great idea and you have all the ingredients for something bad happening.
I would recommend that everyone look at the bodily injury and property damage limits before worrying about the property coverage limits on the policy. Increasing your liability limits from $300,000 CSL to $500,000 CSL is inexpensive. Hopefully you never need to use the coverage but if you do need it you will want every dollar you can get. Along with the limit understand if claims reduce your limit for any other claims during the policy period, also known as an aggregate limit, or if the full limit is available for each claim. Out of the five carriers we represent, only one has an aggregate limit.
Consider carrying uninsured coverage, that way you can access your policy when some moron hits you and does not carry insurance. Make sure the uninsured coverage limit is the same as your liability limit. No reason to insure the rest of the world for more than you insure yourself. The coverage is very inexpensive.
Be sure the policy provides coverage for wreckage removal and environmental damage. Most stand-alone boat policies provide this coverage but be sure to read the exclusions for limitations to the coverage. Along the same lines, do not insure your boat on your homeowners policy, normally coverage is inferior to a stand alone marine policy and a claim on the boat may count as a claim on your homeowners policy, you do not want that!
For physical damage coverage, to the boat, understand what limitations are imposed on replacement cost and agreed value.
For replacement cost every carrier has a set number of model years they will provide replacement cost for. For instance, are carriers range from no replacement cost coverage out to 10 models (so long as you purchased it new). Along with the model year limitation be sure to understand if there is a limit to the amount they will pay for replacement cost. One carrier has a max replacement cost of $100,000, that may leave a few people here a little unhappy. Also understand what happens after the replacement cost coverage expires some carriers go to agreed value while others switch to actual cash value.
When it comes to agreed value be careful of the actual cash value limitation for partial losses. Most policies institute actual cash value coverage on items like motor, outdrive and other operational components after a set number of years. So, your 10 year old boat will, most likely, not have replacement cost coverage for a number of very expensive items in a partial loss situation.
Just like liability be sure to look at the exclusions. I read one policy that excludes coverage for Named Windstorms if your boat is more 100 miles from the garaging location listed on the declarations page unless you have prior written permission from the carrier. Or the exclusion for damage if intoxicated or under the influence of non-prescribed drugs, could this allow the carrier to deny coverage for use of over the counter cough medicine? That would be up to a court.
Hopefully this is helpful and prompts people to review their policy or talk to their insurance agent about their coverage. No need to find out there is a limitation or exclusion at claim time!
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