It’s Time To Boat Again In New England!

It’s that time of year again in New England. Boaters across the northeast are revving up the engines and racing for the nearest open water to take advantage of boat season while they can. As such, it’s an important time for us to remind you that boat or yacht insurance – while not necessarily required – is important coverage to carry to offset the risks that come with boat ownership.

There are a number of items to consider when purchasing coverage for your boat or yacht. Only you can decide on the right combination of coverage and price that suits your needs, but we are here to lend a hand through that journey.

Start with the Basics

There are two basic sections of a typical boat or yacht insurance policy: physical damage and liability. The physical damage section covers accidental loss or damage to the boat and its machinery. This not only covers the hull and the engine(s), but also the sails, personal property, and other equipment on board that is required to operate the boat.

The liability section, sometimes referred to as Protection & Indemnity, covers your legal obligations to third parties. This legal liability can arise from bodily injury or loss of life, or damage to someone else’s property, as a result of the ownership or operation of your boat. Liability coverage also helps pay for your legal defense if you are sued for an occurrence that may be covered under your boat insurance policy.

What Losses are Covered Under the Physical Damage Section of A Policy?

Physical damage coverage generally pays for repairs to your boat that are necessary as a result of damage caused by a wide range of perils. The best policies provide “all-risk” coverage, which means that if the cause of loss is not specifically excluded, it is covered. This is also known as silent, non-affirmative coverage.

 Typical perils that are covered include:

• Wind
• Rain
• Hail
• Lightning
• Wave action
• Fire
• Loss or damage caused by theft or vandalism
• Collisions with docks, submerged or floating objects, or other boats.

It is wise to select a policy that continues to cover your boat while it is stored on land, or while you transport your boat over land by trailer. The number and type of physical damage exclusions vary from company to company, so ask us to compare them for you to avoid surprises later.

Loss Settlement – Agreed Value vs. Actual Cash Value

When comparing physical damage coverage, the most significant difference that can be found among boat or yacht insurance policies is whether the coverage is based upon “Agreed Value” or “Actual Cash Value” (ACV) loss settlement. Agreed value policies normally pay the amount shown on the policy if the boat is considered to be a total loss. Under such a policy, damage resulting from a partial loss is generally paid for on a replacement cost basis, less your deductible; that is, physical depreciation will not be factored into determining the value of the lost or damaged items. However, some items that are subject to higher amounts of normal wear and tear, such as canvas, sails, trailers, and some machinery, may be subject to the allowance for depreciation in the event of a covered loss.

An Actual Cash Value policy provides less coverage than an Agreed Value policy, but generally at a lower cost. An ACV policy provides coverage up to the current market value of the vessel in the event of a total loss, taking into account depreciation and potentially other factors. Payments made for partial losses are usually reduced based upon physical depreciation of the lost or damaged items, and the policy deductible is also applied.

Boat Liability Coverage and Other Important Coverage Areas to Consider

The liability section of a comprehensive boat insurance policy provides many coverages that are important to boat owners. Coverage for the removal or disposal of the wreck of your boat is important to have. Boat owners may also be responsible for any containment and clean-up expenses resulting from oil pollution or contamination caused by their vessel. It’s important that your boat or yacht insurance policy covers your liability for those clean-up expenses because vessel owners are liable under the Oil Pollution Act of 1990 up to the statutory limit, which is currently set at $939,800.

Since boat liability insurance is not mandatory, there are many boaters operating without liability coverage. Uninsured Boater coverage is designed to compensate you for injuries sustained aboard your boat that are caused by an operator of another boat who has no liability insurance. We recommend this coverage as a part of a comprehensive policy.

Additionally, there are many coverage extensions that may be required if you use your boat for work, have employees on your boat, or charter your boat to passengers. Make sure to ask us about these extensions and what may be required of you to ensure your coverage in these situations is appropriate.

We are Marine Insurance Specialists

Now that we’ve described some of the key elements of boat and yacht insurance policies, we hope that you are in a better position to ask the right questions when buying marine insurance. As lifelong inhabitants of the South Shore, we understand boating and the risks that it presents. We are happy and qualified to assist you with your purchase of boat or yacht insurance coverage. You can call us today, or contact us through our website.