"Your Boat Needs Insurance, Too!"
   by David Williams of Berg-Williams Insurance

There are a number of specific items to look for when selecting an insurance policy. In random order, they include the following:

The Company

Price should only be a minor consideration when purchasing insurance for your boat. Of primary concern should be the rating, experience in yacht insurance, and financial stability of the insurance carrier, "the company".

The rating should be "A" or better and the company should be admitted to conduct business in your state. The company’s assets should total around the hundred of millions if not the billions, and the company should have a proven track record of at least 10 years of experience insuring yachts.

Some companies see yacht insurance as attractive and jump into the market for a year or two until they realize that because of their inexperience in the field they’re losing money and jump out quickly. Although there are no guarantees, if the company has been conducting yacht insurance business in your area for at least 10 years, you should have some confidence. If not, look elsewhere.

Price

In this business, if it sounds too good to be true, it probably is. Don’t buy price, buy quality. Quality will be remembered long after price is forgotten.

The Agent

Your agent is the most important factor in the marine insurance equation and you should ask your agent these questions:

How long have you (agent) been boating? (Many years is good.)

How long has your agency been in business? (Many, many years is good.)

Will you personally handle any claims I have? (Yes, is good.)

Do you deal directly with the insurance companies or do you deal through a managing general agency? (Dealing direct is very good.)

In other words, buy a quality insurance policy from an agent who is a long-time boater, has been in business for a period of years you feel comfortable with, an agent who gets involved with claims processing, and an agent who deals directly with the company and not a middleman.

There are some items to look for when selecting an insurance policy. In random order they include the following:

Insuring Agreement

Remember that an ‘insurance policy is a contract. So ask yourself, "Under what conditions does the insurance company agree to insure me?" This is usually very straightforward, but look out for words like "reasonable care" and "due diligence." These are terms you’re apt to find in "cheap" insurance-that is, a policy that insures you on the condition that you never screw up.

Cause of Loss

The key question to ask yourself here is "What can happen to my boat that the policy does not cover?" Ideally, you should be buying an All Risk yacht policy. An All Risk policy doesn’t restrict you to Names Perils - that is, your coverage isn!t limited by a list of what is covered. Instead, it covers you for everything except that which is specifically exluded.

For example, suppose you bought a Named Peril policy that included a seemingly innocuous exemption, which stated that your yacht is not covered in the case of a "collision with a motor vehicle." What’s to worry about? you chuckle to yourself. How could that happen? Well consider this scenario. Your boat is hauled out for its annual bottom painting. The yard’s forklift backs into the braces supporting your yacht, and your twin-hulled love crashes to the pavement suffering substantial damage. That’s an onshore, vehicular accident. Are you and boat covered or not? Under an All Risk policy, you’re covered.

Exclusions

There are going to be a few things that your All Risk policy does not cover. For example, every marine insurance policy includes standard exclusions pertaining to damage that is confined to, or results from, or results from,

the following: wear and tear, gradual deterioration, marring, denting, and scratching. In other words, the company will not buy you a new engine simply because the original one eventually wears out. Nor will the policy reimburse you for hull fittings that are eaten away by electrolysis, or compensate you for the cost of hiring someone to clean your hulls or buff out gelcoat scratches.

However, when checking the wording of a policy’s exclusions, be on the lookout for the term "indirectly." If you find that term, consider it a warning bell as to the true extent of the policy’s coverage. Read the rest of the policy very, very carefully, as it is more likely to contain other warning-bell terms such as "damage caused by mechanical breakdown" or (hard to believe, but I’ve seen this exclusion in a boating insurance policy) "water damage!" In my opinion, neither of those should qualify as exclusions.

Subsequential Loss

What this means is that you will be covered if one part of your boat suffers damage due to the failure of another part of the vessel. For example, if a swage fitting fails and that leads to the mast collapsing, do you want to be reimbursed just for the swage fitting or for the entire collapsed mast? And what about the damage sustained by the sails and the deck due to the failed mast? If you don’t specify Subsequential Loss as part of your policy, it’s quite possible that the policy you’ll be sold will only cover the swage fitting.