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CHOOSING THE RIGHT BOAT INSURANCE©
By Rich Johnson & Capt. Al Mott

This week, I’d like to continue our journey in getting your boat on the water so you can experience the boating opportunities unique to Long Island living. This is by no means an “end all” in the vast world of boat insurance, but is meant to be more of a helpful guideline, so you can make an intelligent decision. Let’s examine the market options available to you in the world of boat insurance.

As far as the law is concerned, there is no mandatory statute that requires a boater to have insurance as it does on the roads of this country in auto insurance. However, if you have a vessel of any substantial means, I think it would be crazy not to have boater’s insurance. The boat I sold so I could move up in class, I bought for $250 from an angler’s driveway. With a used engine and new lights, the value of the boat was increased to a whopping $1,000. Not much in the world of boating I would say. I never ventured more than a few miles from the ramp and saw no reason to have insurance on that particular boat. The only real gamble of the situation was from a liability point of view. Now that I’ve moved up into the real world of boating, it is time to seriously look at the world of boat insurance.

POLICIES. I called several marine insurance brokers and my car insurance broker. There are a few major details to look at when choosing a boat insurance company. There is an Agreed Value Policy and an Actually Cash Value (ACV) policy. In the Agreed Value policy, the amount paid on a total loss is the amount stated in the policy. There is no depreciation or discussion. If it is agreed that the boat is valued at $10,000, then that is the amount paid in a total loss claim, no more no less. In the event of a partial loss, a replacement value policy will pay the actual cost of replacing the item less your deductible. If the your radio is stolen and it costs $600 to replace it, the company will pay $600 less your deductible

In an ACV policy, the amount paid is the market value of the item at the time of loss. Most companies do not apply deductibles if a total loss is paid. Actual cash value means replacement value less depreciation. For example, say the same radio is valued at $600 and has a life expectancy of 12 years. If it was stolen when it was 6 years old, the company will pay one-half its value ($300) less your deductible.

When it comes to claims, every company is different. In my call to Al Mott Marine Insurance, Al informed me that every boater starts with a discount for not having any claims against the policy. Some may raise your rates after making a claim though. You may lose your “automatic” discount when you make a claim, even if it’s your first. This depends on the company. If for example, you are unlucky enough to have four pieces of electronics stolen from your boat, this should go against your policy as one occurrence, not four. You also need to ask what is a depreciable item. On most boat policies' canvas & batteries are usually depreciated. You must clarify this before you sign on!

DISCOUNTS? When shopping for a boat policy, several other things come into play as well. First and foremost, everyone loves to save money. There are some ways to do this. If you take any of the safe boating classes available you’ll save money on your insurance premiums. Some companies will give you up to 10% off! Safe boating courses are given by the Power Squadrons on the Island and by the Coast Guard Auxiliary. If you take a captain’s course, you’re likely to save some decent money on an insurance policy as well.

Other ways to keep the cost of a boat insurance policy down is to make sure you don’t grossly overestimate the worth of your vessel. Insure the boat for what it’s worth, no more no less! Take a close look at your deductible. Look realistically at what you can afford to take out of your pocket in case something does happen. Can you afford $250, $500 or even $1,000? You can lower your premium by increasing your deductible.

BUYER BEWARE! Al Mott also pointed out some warning flags that you should be on the lookout for. While they may not jump up and bite you, they definitely should be on your mind when shopping for boating insurance. For instance, is your policy a pleasure boating policy? If it is, you won't be covered if you’re doing commercial work with it. If you plan on using your boat for commercial work specify so.

Make sure you ask what is depreciated and what isn’t. Some companies depreciate everything! Look for the replacement value. On some policies, only the boating equipment is covered for loss. Fishing tackle, diving tanks and so forth may not be. Are they covered under the term “personal effects,” or are they covered on your home owner's policy. Check it out! You may however, ask for and receive a “rider” to your policy to cover this kind of equipment & loss for an additional charge. These charges are minimal to the policy and should be investigated.

Beware of policy limitations according to geography. It may sound ridiculous, but some policies are only good if you sail in a particular region, Long Island Sound for instance. Make sure you ask! Is your policy subject to “lay ups?” That is, the policy may cover you for 12 months in a year, but the boat can’t be in use on the water during certain times of the year. Some policies require the boat not be used a certain portion of the year and be put out of commission, whether it’s your yard or a professional’s. Strange but true. Since my boat is on a trailer, I plan to use it year round and said so. I’m now covered for all 12 months.

Are you taking your boat to Florida for the winter? Make sure your policy says you can. There’s nothing more drastic than having an accident and not be covered because you didn’t ask a simple question. My policy covers me anywhere in the United States & Canada. These are things you have to ask.

No matter who you choose to do business with, this article is meant to inform you on the questions to ask. “There is nothing to be afraid of when buying boat insurance. You need to be educated and ask some questions that may sound stupid, but in reality are not. They will save your money, grief and above all, make your time spent on the water as enjoyable as it can be and free from worry,” he said. I would have to agree