Understanding Boat Insurance
Every company has the same insurance coverage, right? Although this may apply to many types of insurance, it does not necessarily apply to ship and yacht insurance. Marine insurance companies that provide boat and yacht insurance provide a wide range of insurance coverage suitable for the company’s professionalism, underwriting preferences, and the type of customers they want to attract.
In this article, we will describe the basic insurance coverage under the boat and yacht insurance policies and the items that should consider before selecting the policies. We will also point out the underwriter contemplates that marine insurers consider when determining charges to customers. We hope this will help you make a more informed decision when buying insurance for your boat. Only you can decide the right combination of insurance coverage and cost to suit your needs.
Start with the foundation.
Here we will start by explaining the two basic parts of a typical boat or yacht insurance policy. Physical damage and liability. Physical damage includes accidental loss or damage to the boat and its machinery. This includes not only the hull and engines but also the sails, personal property, and other equipment required to operate the ship on board.
The liability part, sometimes called protection and compensation, covers your legal obligations to third parties. This legal liability may arise from personal injury or loss of life or damage to the property of others caused by the ownership or operation of the boat. Liability insurance also helps pay for your legal defense if you are sued for an event that may be covered in your ship insurance policy.
What losses can cover with Physical damage coverage?
Physical damage insurance usually covers the cost of necessary repairs to your boat due to damage caused by various perils. The best insurance policy provides “all risks” insurance. Typical causes of loss covered include weather-related risks such as rain, wind, hail, lightning, and wave action; Fire; Loss or damage because of theft or vandalism; And collision with docks, underwater or floating objects or other ships. It is advisable to choose an insurance policy that continues to cover your ship while it is located on land or transported on land by a trailer.
Owners are responsible for maintaining their boats. So normal wear and tear are usually not including under the boat or yacht policy. The number and type of physical damage exclusion differ from company to company. Therefore it takes time to compare to avoid accidents in the future.
Settlement of lost- Agreed value and actual cash value
When we consider physical damage insurance coverage, the most specific difference between boat or yacht insurance policies is whether the insurance coverage depends on “agreed value” or “actual cash value” (ACV) loss settlement. If the ship is considered a total loss, the agreed value policy usually pays the amount shown on the policy. Under the policy, losses caused by partial losses are usually paid at replacement cost (old and new) less your deductible. This means physical depreciation is not a fact to consider in determining the value of lost or damaged items. But certain items with a high number of normal wear and tear, such as canvas, sail, trailer, and some machinery, may need to consider depreciation in case of the insured loss.
The actual cash value policy provides less coverage than the agreed value policy, but usually at a lower cost. Taking into account depreciation and other potential factors, the ACV policy provides insurance up to the current market value of the ship in the event of a total loss. Payments for partial losses are usually reducing based on the actual depreciation of lost or damaged items, and policy deductibles apply.
Your insurance professional can help you understand and decide which policy is right for you.
Personal property and emergency towing and assistance
Two additional coverages commonly found in boat and yacht insurance policies are personal property insurance and emergency towing and assistance insurance. Personal property insurance covers items such as clothing, personal belongings, sports, and fishing equipment when loaded/unloaded and while aboard your boat. Same as physical damage insurance, different companies have different exclusions, so it is worth comparing.
When your ship needs emergency assistance and you and your ship are not in immediate danger, the emergency towing and assistance insurance will compensate you for the expenses incurred. Few examples of emergency services you may need include: towing the vehicle to a place where it can repair. Delivery of fuel, oil, or parts; Or carry out emergency labor during navigation. Check-in advance to determine whether the deductible is applicable to the insurance coverage or whether there is a maximum annual limit for multiple towing claims.
Liability – other significant coverages.
The liability part of the comprehensive boat insurance policy provides many insurance coverages that are important to the shipowner. Insurance coverage for the removal or disposal of wreckage is important. Especially when the wreckage is considered to be a hazard to navigation. The owner may also be responsible for any containment and cleaning costs arising from oil pollution or pollution caused by his ship. It is important that your boat or yacht insurance policy cover your liability for these clean-up costs. As under the Oil Pollution Act 1990, the liability of the shipowner does not exceed the statutory limit (currently US $939800).
If you intend to borrow another owner’s ship, please confirm that your liability coverage or responsibility extends to another ship. This is known as “non-owned” or operating other ship liability insurance. At last, shipowners who employ paid crew should ensure that their policies cover crew responsibilities under the Jones Act and the general maritime laws.
A good insurance policy will also provide different insurance for your liability under the Federal Longshore and harbor workers’ Compensation Act. This insurance policy will cover legal liability to temporary shore workers. Workers such as mechanics or dock employees if they are injured on your ship.
Most ship and yacht insurance is not included when your ship is leased to others or used to carry passengers for a fee. Where appropriate, a good marine insurance company may extend your coverage to these situations. Therefore, please first ensure that you will get proper protection.
You should confirm that your policy has sufficient medical payment insurance limits. Medical insurance will pay for first aid, ambulances, hospitals, and other expenses incurred due to injuries on the boat, even if you are not legally liable. It is important to determine whether the insurance coverage is applicable when boarding or disembarking. Also when being towed behind the ship (such as water skiing). Check to ensure that injuries to you and your family are also covering by this insurance. If the insured amount is equal, “per person” insurance may be preferable to “per accident” insurance.
Uninsured or under-insured boat insurance
As long as ship liability insurance is not compulsory, many ships operate without liability insurance. Uninsured boatman insurance is created to compensate for injuries caused on board by the operator of another ship without liability insurance.
Factors influencing the cost of insurance
The carrier must consider many factors to determine the ship’s insurance rate. The most common determinants are the value, size, and age of the ship; Ship type (i.e. power, sail); Engine type; Mooring location; Expected navigation area; Previous boating experience and claim history of the owner; and deductibles. Insurers also consider the owner’s automobile driving record and whether they have taken a safe boating course. Many ways to deduct the cost of ship insurance. The most common method is to select the maximum deductible you are fine with. Generally speaking, the deductible for physical damage starts from about 1% of the insured value of the ship and can sometimes increase to 5%. Each higher deductible will reduce your premium. Think about how much money you can take out of your pocket if there is a loss.
Several yacht policies include a hold period, which is the time when yachts are usually out of use. Such as winter months in a cold climate. Usually, the insurer will provide a discount for each month when the yacht is decommissioned. The owner can generally reduce the premium by requesting the longest possible hold period, which is reasonable for your country.
Consider where you will operate your ship. If you have been navigating near your home port, you should ask strategically whether a more limited navigation area can save you money. This means, when you operate your boat only in Maine, you may not need to cover the entire east coast of the United States.
The condition of your ship is also considering as a rating factor. If you own an old ship, the insurer may need a recent marine survey of your ship before insuring.
Finally, installing certain safety devices on your ship can sometimes decrease the insurance premium you will pay. Several marine insurance companies will provide credit for the following safety projects. Automatic fire extinguishing system in the engine room, smoke, or steam detectors at the bottom of the cabin. Some anti-theft alarm or tracking devices.
Looking for marine insurance experts
Now that we have introduced some key elements of boat and yacht insurance policy, we hope you can better ask the right questions when purchasing marine insurance. It is also wise to work with a company that fully understands boat and yacht insurance. This is important not only when you apply for insurance, but also when you have a claim in unfortunate circumstances. Chubb Recreationalmarine insurance has the expertise to help you at every step.
We would love to hear about your ideas, suggestions, and questions. So feel free to contact us.