Questions To Ask About Boat Insurance

Summer's almost here and millions of Americans will be taking to the nation's waterways in boats. However, before they back down ramps at lakes, rivers and at coastal communities, boaters should be aware of an additional concern other than seals, fuel systems, GPS units, live wells, fishing tackle and engines. That would be insurance. There's boat insurance and then there's better boat insurance.

The Boat Owners Association of America lists five questions boaters need to ask before purchasing an insurance policy. Making sure a policy covers these basic questions could save a boat owner thousands of dollars and lots of worry. The answers also could reveal whether or nor a current policy has much value.

The first question to ask a boat insurance agent is does his company pay salvage costs or does the policy put that burden on the policy-holder's shoulders? Most people purchase insurance to cover big-ticket items, such as the total loss of an automobile or home because of a wreck or natural disaster. In these days, with tornadoes flying around the South like pinballs, nothing could be more important.

In the case of boats, the most common catastrophic insurance claims involve sinkings or devastating wind storms such as hurricanes or tornadoes. They can destroy a boat, sink it or lift it into the next county and leave it in small pieces. In any of these cases, a policy's "salvage" coverage should pay to hoist the boat from the bottom of a body of water or from a neighbor's property. An effective policy should have separate and full salvage coverage up to the policy limits for the costs to remove the boat that isn't less than or limited to a percentage of its hull value (the part of the policy that reimburses for actual loss of the boat).

A less-than-adequate policy could reimburse for the loss of the boat but could make a boat owner pay some salvage fees out of his own pocket. Another question to ask an insurance agent is how much help will his company provide when a claim is filed?

In other words, insurance companies have two schools of thought when it comes to handling claims. One is a hands-off approach that makes the claimant do all the work. With a large claim, one type of insurance could make the boat's owner responsible for finding a salvage company, a crane company or barge and trucking company. The policy then would reimburse the policy holder for submitted expenses.

On the other hand, a hands-on company - usually a specialty marine insurer - has access to these services and knows how to negotiate pricing, hires and pays contractors, and can arrange for and guarantee repairs. A third question to ask is does a boat insurance policy contain consequential damage coverage? In the boat insurance universe, catastrophic losses such as fire, explosion, sinking, de-masting, collision and stranding are classified as a consequence. For instance, if a boat sinks because its hull fittings are rusted and break off, that's a consequence of the broken-through hull. Good boat insurance policies include consequential damage clauses that cover such specific catastrophes. More simply, if consequential damage isn't covered in a policy, expenses caused by a sinking or fire could be excluded totally because of a finding of wear and tear.

A fourth question involves how much involvement a boat owner needs to supply after an incident occurs. A good insurance policy offers immediate emergency claims response that can step in with resources needed to prevent further damage.

In the case of boat owners living in a hurricane-prone area, such as the North Carolina coast, the policy should share the cost of a haul-out to move a boat to high ground or pay a captain to move it to a safe place.

The last question to consider is what an insurance company does over time for a boat owner who doesn't have any claims and regularly makes premium payments. A good insurance policy should give such an owner credit for not having claims and offer diminishing deductibles for each year the boat owner files no claims. A boat owner who isn't satisfied with his agent's answers to these questions should start shopping for a better policy.