Read This First!
This is the time of year when many people start to consider purchasing a sailboat or powerboat. Many people, however, are unaware of the significant loss exposure this creates, and some people mistakenly believe that there is coverage available under their personal auto policy. The auto policy, however, does not provide any liability or physical damage coverage for boats. Other people may look to their homeowners policy for coverage. Most homeowners policies, however, only cover certain low-valued or low-powered boats. Thus, you should contact your agent before buying a boat to discuss the proper insurance protection for it. The following tips will assist you in this process.
- If you purchase a 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 boat owners policy is necessary to cover boats over this value.
- If you are considering the purchase of a sailboat, inquire about its length. If the length is 26 feet or more, there is no liability coverage under your homeowners policy. For motorboats, there are severe horsepower restrictions for liability coverage. For example, only boats with outboard motors of 25 horsepower or less have liability coverage under most homeowners policies. Yet normally any type of powerboat will have a motor with horsepower way beyond this amount. This liability restriction also necessitates the purchase of separate watercraft insurance.
- Talk to us about the types of boats you are considering. For example, some insurance policies decline to insure personal watercraft such as jet skis and wave runners, since some of these craft can reach speeds of 60 mph. The United States Coast Guard reports that personal watercraft account for a disproportionately high number of accidents. Many insurance underwriters also refuse to cover houseboats, homemade or kit boats, competition bass boats, and speedboats. You may need specialty coverage to insure these types of craft, but no worries, we can help you determine best available option for your boat.
- Be wary of purchasing older watercraft. Many underwriters reject boats over 15 or 20 years of age because they normally account for more losses than newer boats. Here again, we can help with coverage for boats of all ages including classics.
- If you do purchase an older boat, consider ordering a marine survey or inspection of it prior to the sale. This survey will point out deficiencies in the boat that may cause you to reconsider the purchase or renegotiate its price.
- Ask us about procuring a personal umbrella policy in addition to a watercraft policy, particularly if you purchase a speedboat, a boat designed for water skiing, or some other craft with a higher potential to cause damage or loss of life. The personal umbrella policy provides excess liability limits above those offered by a watercraft policy. It is usually best to use the same insurance company that writes your homeowners and personal auto policies for your personal umbrella policy.
Finally, call us at 401-846-9629 to discuss! As fellow boaters we can help you to navigate watercraft coverage options and we’ll always do what’s best for you!
Copyright, International Risk Management Institute, Inc.
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