A Simple Boat Insurance Guide

Finding the best basic boat insurance or discovering just what your boat insurance policy really covers is about as much fun as having a heart attack during a game of charades. I have written this basic guide to help you understand why boat insurance is so important and why the cheapest boat insurance is not always the best. To help me, I enlisted the help of an expert, who provided answers that help to clarify some of the finer points of boat insurance. 

Your sailboat (or motorboat) is probably one of your most cherished and precious possessions. Unfortunately, a boat can also be exposed – to theft, accidents, hurricanes, collisions, etc. Boat insurance coverage not only protects you, your passengers, and your boat but also provides peace of mind.

Some things to consider when shopping for boat insurance:

• Stability – Search for a financially stable boat insurance provider. 
• Customer Service – When a claim happens, you’ll want to be treated justly and swiftly. Choose a boat insurance company with an extensive network of insurance agencies, offices, claim centers, emergency services, and helpful representatives to serve you in your time of need.
• Reputation – Get your insurance from a quality boat insurer. Choosing a company with high standards and a solid reputation is a great place to start.
• Coverage options – Your boat’s insurance needs are individual to you; make sure the insurance provider has a wide selection of options.
• Price – Although the price is important, you will need to understand your marine insurance policy and services behind it.

Boat insurance renewal time?

Let’s be honest here. When the notice comes through saying your boat insurance renewal is due most of us become as inventive as the man who named the “fireplace”. All we want to see is that beautiful paragraph saying, “If you do nothing your boat insurance will continue“. Occasionally we may ask other sailors what company they are insured with, but usually, that is as far as it goes. 

If we are insured with a reputable company, we tend to stick with them and don’t even consider looking at other boat insurance quotes. Why do we do this? Why are we not trying to find a boat insurance company with better rates, better cover or ideally both? Because mostly, it’s too much hassle. Images of a boat survey and the additional costs come floating into the mind as well as trying to prove you have “X” number of years with no claims to the new company. 

Now if a boat insurance company said, “No survey, the price is lower, and the cover is better” we would jump at it, wouldn’t we?

Check the small print in the insurance policy.

If the price of our renewal has not risen dramatically, then the chances are we don’t read the small print to see if the cover has changed. We would rather be out sailing.

What we should be doing is thinking of boat insurance as a hospital gown. It may cover most things, but it can also leave you very exposed in the end. That is why it so important to not only check the small print but thoroughly understand the wording and what it means to you.

Why is the best boat insurance so important?

We want the best boat insurance, not a cheap one that does not cover us.

For most of us, our boat is not only our home or vacation home but part of the family. We learn about everything aboard and how to fix it if it does go wrong because, at some point, it will. It is a massive investment in not only money but time as well, and that investment needs to be protected. That is why getting the best boat insurance should be paramount.

So, let us have a look at a few of the more essential parts of an insurance policy and what they mean.

What Will my Boat Insurance Policy Cover?

Does your boat insurance fully cover you!

What is Covered? (Comprehensive policy).

• Damage or total loss: from collision, fire, lightning, theft, and vandalism.
• Damage to a boat and permanently attached equipment: such as masts, rigging, sails, and anchors.
• Bodily injury liability: covers someone injured on your boat.
• Property damage liability: pays for damage you may cause to someone else’s property.
• Guest passenger liability: pays for legal expenses of someone helming your boat with permission.
• Medical payments: expenses for you and your passengers on your boat.
• Accommodation or repatriation in the event you cannot stay.

What Isn’t Covered.

• Wear, tear, depreciation or gradual deterioration
• Gradual breakdown
• Corrosion or electrolysis
• Intentional acts of carelessness or recklessness under the influence of substances such as alcohol or drugs.

Third-Party Insurance.

In general terms, your policy will cover you for damaged and injury caused by you to other property, but your boat will not be covered. This makes it far cheaper than the other two options, but again you may be taking a big gamble with your most valuable asset. Your own boat.

Check Your Boat’s Policy Carefully.

Do you Need Additional Cover?

These are, of course, very general points and not all may be included in a boat insurance policy or quote. If in doubt, ask the insurance broker. If they are not easy to get hold of or do not answer you, then think about changing your broker. A good broker can also add additional cover into a boat insurance policy tailored specifically for you. 

Other Important Points to Check:

Actual cash value

This means the insurance company will look at the market value of your boat at the time of the incident. Then, the settlement you get may turn out to be far lower than your own estimate.

Agreed Value

You make an agreement with the marine insurance company beforehand on the price of your sailboat, yacht, motorboat, or superyacht. If it becomes a total loss, the agreed amount is paid out (minus any deductibles). This type of boat insurance will also tend to have a new for old clause incorporated in it, but again that is something to check.

Obviously, one policy will be cheaper than the other but do you really want to take that gamble?

Consequential Damage

Should your engine or other significant part fail on your boat when in a precarious position some policies will cover what they call “consequential damage”. Others won’t.

Consequential damage is basically where one thing leads to another, which may be catastrophic. It may be a through-hull fitting (figures suggest through-hulls are the cause of 18% sinking’s at sea and almost 50% of sinking’s in a marina). It may be engine failure at sea, but what if was because you had not serviced or even checked the engine for several years? That may fall into another category which is referred to as due care and diligence and may be the excuse the insurance company needs to not pay on your claim.

Pricing

You can check with many brokers/insurance companies/websites and get wildly different quotations for the same boat. The priority should always be to get the best boat insurance cover possible. For example, I would not want a policy that enabled the insurer to replace my boat. That is because they will go with a boat of their choice in the event of a total loss rather than pay me the insured value. You should also avoid insurers who can avoid a claim if you have a mechanical failure. 

Imagine an engine failure whilst motoring with no wind, and you finish up on the rocks! There are other potential traps if you don’t have the best cover. You can get the best cover for a competitive premium. Yes, you do get what you pay for, but you needn’t pay too much!

Over-Insuring

Over insurance is when the owner has bought so much coverage that it exceeds the actual cash value (or the replacement cost) of the boat insured.

It is customary for insurers not to insure for more than the purchase price paid plus improvements. They base this habit on bad experiences in the past where ships were deliberately sunk for the insurance payout.

Premium Calculation

There are both formulas and minimum premiums. These formulas are based on the claims experience of underwriters over many years insuring different models and types boats in different parts of the world. The ultimate decision is normally left to a human who will use his/her experience to assess and price of a risk. Sailing experience is very important, and it can influence premiums. At the end of the day, the premium is usually around 1.5% of the insured value. Check out this page to get a quote.

Basic Boat Insurance – Summary

I have only just scratched the surface when it comes to answers about the best boat insurance, and there is so much I have not mentioned. It is a subject where you may need the advice of an expert. If you have found this quick guide on boat Insurance useful or if you have any questions, why not leave a comment below.

Most owners think they are insured for everything, but even the best policies have exclusions. Every insured should check these on their policy as some boat insurers make unreasonable exclusions. Read your policy and if you are in doubt about anything, get a written answer from your insurer.

Always remember to disclose everything when applying for boat and yacht insurance for your own protection and peace of mind. You don’t want to end up like this lawyer.

Find a balance between peace of mind, financial security, and price. Make sure you understand your policy. The lowest price is almost always not the best protection when you are looking for a basic boat insurance.