Navigating Marine Insurance Options

NavigationBoaters know that there is much more to safely operating a watercraft of any size than simply driving a car down the road—and often there is much more at stake. And so it is with marine insurance, there are numerous factors to consider when determining the optimal policy for your watercraft. The following is a list of some important factors that can influence the type of boat insurance coverage that best suits your needs.

  • Personal vs. commercial use – It’s a simple idea, but identifying whether your watercraft is for personal or commercial use will help guide the insurance policy you require.
  • Is it a boat or a yacht? – For most cases, a boat is defined as a vessel that is 26′ or smaller while a yacht is classified as 27′ and larger. Policies vary between the two and clearly identifying what type of vessel you need coverage for will determine the specifics of your policy.
  • Boat Liability Insurance – Liability coverage helps protect you in the event you are responsible for property damage other than your own boat or bodily injury to someone other than a family member. The amount of liability coverage needed will depend on your specific situation.
  • Agreed Value vs. Actual Cash Value – Agreed value policies pay a predetermined agreed value of the watercraft when it’s involved in a loss, while covered losses in actual cash policies are subject to deprecation.
  • Medical Coverage – In the event of bodily injuries sustained in association with your boat, yacht or other watercraft, the medical coverage included in your insurance policy will help cover resulting medical expenses.

Glossary of Marine Insurance Terms:

Agreed Value: The insurer agrees to pay the amount stated on the declarations page in the event of a total loss, without any deduction for depreciation.

Captain or Crew: The promise to employ a certain number of crew as specified in the policy and to inform the company prior to any changes. The insured must also notify the company prior to a change in Captains and provide a copy of the Captain’s License and resume to the company.

Charter: A contract between a vessel owner and another party for the use of the vessel for one or more voyages or for a specified period of time.

Consequential Loss: A loss that is not directly caused by an insured peril but which occurs as an indirect result.

Electronics: Generally means electronic devices that are designed specifically for marine navigation or marine communication.

Exclusions: Policy exclusions are specific perils that are not covered by the policy. Typical exclusions, but not all inclusive are: Wear and Tear, Gradual Deterioration, Intentional Acts, Marine Life, Vermin, Insects, Marring and Denting, Osmosis, Blistering, Manufactures Defects, Mold, Ice and Freezing, etc. Please read the policy carefully for all exclusions.

Lay Up: Requires that the boat will be laid up and out of commission during a specified period of time. If the vessel is used during that period, then coverage is voided. Many companies apply a premium credit for the layup period.

Named Storm: A storm system that has been declared and named by the U.S. National Weather Service and/or the U.S. National Hurricane Center.

Named Storm Deductible: Companies often mandate a Named Storm Deductible which is higher than the standard deductible if a boat is navigated in a coastal area. The Named Storm Deductible applies if the vessel is damaged by a named storm.

Navigation: The specific territory the boat will be operated in; if the vessel is operated outside of this area, there would be no coverage.

Private Pleasure Use: The vessel will not be used for any purpose other than private pleasure use. If the vessel is used for Chartering, Business or Commercial Use, etc., there would be no coverage.

Protection & Indemnity (P&I): A broad form of liability that protects a vessel’s owners and operators against claims for bodily injury and third party property damage.

Restrictive Endorsements: A restrictive endorsement usually contains special wording which covers a specific situation and limits the policy coverage. For example, some companies will restrict the navigation area during hurricane season to prevent a vessel from being in a hurricane area.

Seaworthy: The inherent warranty that the boat will not be used in a known unsafe (un-seaworthy) condition. If it is, coverage can be voided.

Survey (C&V): A physical inspection of a boat and subsequent detailed written report by someone certified by the National Association of Marine Surveyors or the Society of Accredited Marine Surveyors. The surveyor will assess and document the boat’s condition and value (both market value and replacement value).

Warranties: A warranty is a promise by the insured person that he/she will or will not do certain things. If those promises are not kept then coverage is excluded

As sailors ourselves, we at D.F. Dwyer are experts at navigating marine insurance options. Call us today at 401-847-9629, and we’ll work with you to charter the best course of coverage for your boat.

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