One of the worst days I’ve ever had on the water was the morning I walked out to the dock to see my dock line had slipped overnight and the wind switched directions, leaving my brand new boat with a plethora of deep scratches from an exposed dock pole. Although tears had literally filled my eyes, I quickly reminded myself “that’s why you carry insurance,”. In the matter of a week, my boat was repaired, looking good as new. Being an independent insurance agent who specializes in outdoors related insurance products, I’ve taken the time to research and thoroughly understand marine insurance coverages. As a result, clients of Woods & Water Insurance and most recently myself, have enjoyed the peace of mind that our watercrafts carry adequate insurance coverages. In this article, I’d like to share with you a few specific items that you may find helpful when you decide to insure your next boat or review your current boat insurance coverages.
Isn’t all boat insurance coverage the same?
Contrary to what some insurance carriers would like you to believe, not all insurance companies offer the same watercraft insurance coverages and it’s important to understand what coverages exist in your policy. Watercraft insurance policies are typically available through 3 different types of coverage; Actual Cash Value, Agreed Value, or Total Loss Replacement coverage. Actual Cash Value policies offer repair or replacement of your watercraft minus depreciation. Agreed Value policies offer repair or replacement of a partial loss at no depreciation and pay market value of the watercraft up to the coverage amount listed on the policy in the event of a total loss. Total Loss Replacement offers agreed value on repairs or a new boat entirely in the event of a total loss. It’s recommended that you read your policy thoroughly or speak with your agent directly to understand exactly how your boat will be covered in the event of a claim. It should be noted that not all insurance carriers treat Agreed Value and Total Loss Replacement coverage the same. For instance, certain insurance carriers utilize an Agreed Value settlement method that pays the lowest of the amount necessary to replace the stolen or damaged property, or the amount necessary to repair the damaged property to its pre-loss condition. This can result in aftermarket or used parts which could have an adverse effect on your boats performance, resale value, or potential issues with voiding the warranty.
Chain Reaction” Type Losses:
There’s nothing worse than cutting a day on the water short due to a break down or equipment malfunction. What’s worrisome is that some insurance carriers will only cover a portion of a watercraft loss in the event a “chain reaction” of damages occurs within the scope of the claim. It’s important to seek out a policy that provides coverage for indirect physical loss, in addition to direct physical loss. Damaging your lower unit by striking a rock is an example of a claim that would constitute direct physical damage since the loss is directly related to the object it came into contact with. This type of coverage is the basis of which most watercraft insurance policies are written. What is not covered under most marine insurance policies are indirect physical losses. For an example, a boat’s impellor sucks up some weeds, which then causes damage to the impellor. Any further damage that derives from the damaged impellor such as damage to a water pump or worst case scenario a powerhead, would not be covered under insurance policies that only cover direct physical losses. Since the damage to the water pump or powerhead in this particular scenario would be considered an indirect physical loss, only the impellor would be covered.
Fishing Equipment Coverage:
If you’re anything like me, you have enough fishing tackle that would rival a small tackle shop and your significant other has now idea how much all that “junk” is worth. Undenounced to some, this particular coverage is a highly contested coverage issue that leaves most anglers unpleasantly surprised after a claim occurs. It’s important to understand that most insurance carriers only cover fishing equipment when the said equipment is physically onboard the watercraft. In the event fishing equipment is damaged or stolen in your garage, motel room or vehicle, coverage is not available through most watercraft insurance policies. Instead it would need to be claimed under your homeowner’s policy which is typically susceptible to a $1,000 or more deductible and an increase on your home insurance rates for the next 3-5 years.
Living the Dream:
I think a majority of us anglers would love fish for a living, but the reality is very few individuals are fortunate enough to do so. This leaves most of us anglers fishing the occasional tournament or guide trip with hopes that one day we can make this dream a reality. What’s concerning is that under some boat insurance carriers, any act that is deemed for profit can result in coverage being denied, which would result in a large coverage gap. Surprising to some, not all insurance carriers allow tournament pursuits under their policy either. They consider it a commercial use of the watercraft since the boat is being used for a monetary gain. Insurance claim adjusters are increasingly keen on social media and the internet as a basis of gathering information for claim purposes and a simple tournament results sheet with your name on it could constitute coverage being denied if tournament use is excluded on your policy. In addition, most personal boat insurance policies exclude guiding pursuits, although a select few insurance carriers do allow this to be added by means of a policy endorsement for a nominal fee. If you’re engaging in these activities, it’s always a good idea to have this discussion with your agent to make sure you’re property covered when engaging in these activities.
In conclusion, reviewing your boat insurance policy and having a conversation with a knowledgeable agent regarding your insurance coverages should be high on your list this boating season. As an insurance agent, spending a few minutes to review your coverages to ensure your possessions are properly coverage is the best advice I can give.
-Justin Schneider, Woods & Water Insurance