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Smooth Sailing: The Ins and Outs of Boat Insurance

Trevor Campbell, president of Insurance Services Group, writes a monthly article for a local magazine. For May’s edition of Edmonds Living Local, Trevor dives into boat coverage - what it is, how it works, and why it matters.

Enjoying the water is a way of life in this community – whether it’s taking a stroll along the Edmonds waterfront, getting the kayak out for an evening ride, or dropping a fishing line in the Puget Sound, once spring is here boating season is close behind.

To ensure boat owners experience smooth sailing this time of year it’s important to understand the ins and outs of watercraft insurance. Protecting your boat can get a little tricky, there is no standard policy and a number of things must be considered in order to find the very best coverage. This is where working with an independent agent – someone who specializes in boat and yacht insurance and represents multiple carriers familiar with these polices - can help.

Boat insurance can be broken down into two categories:

  • Property Coverages - Damages occurring to you, your passengers or your property

  • Liability and Pollution Coverages - Damages occurring to other people or their property

Property: The boat itself is a large part of the property policy. Also included can be the engines (inboard, outboard, IO), electronics, sails, trailers, sporting equipment or other personal belongings. Different carriers provide various options for each of these.

It’s important to think about not only what is covered but also how the policy will pay for losses. Replacement Cost (New for Old), Actual Cash Value (ACV/Depreciated Value) and Agreed Value are all common valuations in policies but what each valuation pays after a loss is entirely different

An example: some carriers will offer Agreed Value or ACV for the boat but engines up to 5-years-old might qualify for Replacement Cost. This is a significant coverage advantage for those who have newer boats or repower an older vessel. If a loss occurs, the Replacement Cost valuation might provide $10,000 or more in additional settlement per engine!

Liability: Like car insurance, liability coverage provides coverage to other boaters and boat owners in the event you are at-fault for an accident on the water. This coverage will pay to repair or replace the other boats, docks or property of someone else as well as for their medical care, lost wages, attorney fees, and other costs incurred as a result of a boating accident for which you are at-fault.

The liability section of the policy should also include some coverage to pay for wreck removal and fuel spill coverages. One well-known national carrier only provides wreck removal coverage as part of its hull coverage policies. This is a huge problem as the costs associated with removing a wreck diminish the dollars available to replace your boat!

Several years ago, a Puget Sound area boat owner sank his boat and was forced to remove the wreck. The owner’s policy paid to remove the wreck but the hull limit was exhausted and the boat owner was left with no money to replace the boat.

Every boat need is unique, and every company does things a little different. Your agent should explain the options available, make recommendations, and provide some examples of claim experiences. It's critical the correct options are made in the beginning so if a claim occurs, the right things happen. Taking the time to review your policy and coverages is the only way to ensure your time on the water is as it should be, worry-free.