Your Boat Insurance: Some Key Points to Consider
Do you know what your boat insurance covers? I just found out that mine doesn’t cover environmental damage/clean up charges. If there is damage done to the environment from your boat in any way ( spills or collisions or whatever ), the government, whether they clean it up or bring in a private contractor, will bill the owner of each boat involved. Under the Marine Liability Act the responsibility for costs associated with spill clean up resides strictly with vessel owners. And that can be expensive.
My wake up call about environmental coverage serves as a reminder that it is a good thing to review the coverage you have on your boat.
The following are some of the points you might want to consider. But remember these are general points only. You must discuss and confirm you have the coverage you want and need with your insurance provider.
If something happens to your boat how much money can you expect?
There are two types of policies generally available. Actual Cash Value and Agreed Value. Which type you have will determine how your insurer will calculate the payout in the event of a total loss. Actual Cash Value means that depreciation will be applied to determine the settlement amount. The depreciation will be determined by the condition of the vessel prior to the damage, the resale value of the vessel and the normal life expectancy of the vessel. Agreed Value means that the insurer will pay the full value listed on your policy; so no depreciation. Note that if the boat is 20 years or older a survey will likely be requested by the insurer to re-establish the value to keep it on the Agreed Value terms.
During repairs do you get new parts or aftermarket or rebuilt parts?
This will be addressed in the Basis of Claim Settlement Clause – verify what is specified and who makes the arrangements for repairs. Note that many insurers will not pay more for repairs than the boat value specified on the declarations page. That means if the boat is insured for $20,000 they will not pay more than that for repairs. The boat will be written off.
If your boat sinks or has an accident and leaks oil and gas into the water you are not only responsible for the recovery of your boat but also the environmental clean up. This is covered in the Protection & Indemnity Liability coverage portion of your plan. Definitely worth checking if you have this coverage for clean up and boat recovery and to what extent.
Can you use your boat for watersports?
Be sure to ask your insurer if you have Watersports Liability coverage included in your policy. There can be restrictions depending on what type of vessel is being used and what activities you are doing, for example PWCs can have different coverages.
And ask about Uninsured Boater Coverage.
You should know that boat insurance is not mandatory in Ontario. So what happens if an uninsured boater hits you and you are injured or unable to work? Your compensation would be limited to the other boaters ability to pay. And that will likely not be enough. It would be a good idea to consider having uninsured boater coverage.
Other coverages to clarify and consider are theft coverage and emergency towing.
We have touched on a number of items. There are a myriad of policies out there and the coverage provisions are different. The important thing is to have a fulsome discussion with your insurer to make sure you know what is covered under your policy and that you have the coverage you need and want. So discuss with your insurer the types and amount of coverage you should have – especially with regard to the various liability coverage categories. Most insurance companies recommend $2,000,000 liability coverage in each of the liability categories.
Be especially vigilant if your marine policy is attached to other policies ( i.e. your home policy ) to ensure that claims on your marine policy wont impact your home policy premiums and that liability coverages you want are in place. Apparently many marine policies attached to home policies don’t have the environmental liability coverage. That was the case in my situation.
Remember too to check with your insurer if others can operate your boat under your policy. At the very least you will have to ensure they have proof of competency ( i.e. a Pleasure Craft Operator Card) and must be unimpaired. Your coverage could be limited or voided entirely depending on the circumstances if these conditions are not met.
Its important to deal with companies that are knowledgeable about marine insurance so you get the coverage you want. Rice Insurance is, and they provide a discount to GBA members.