Getting the lowest price on boat insurance may mean you are also buying the minimum coverage, so it pays to do some homework before you put your money down. Comparison shop, read the policies and ask lots of questions.
The insurance landscape has changed quite a bit in the last few years. Insurance companies that sell auto and homeowner's insurance have always insured boats less than 26 feet, which they see as an appendage of the car (similar to a camping trailer). They offered attractive savings by simply adding the boat to an existing policy. Recently, however, these same companies also began marketing policies for larger cruising boats.
The problem here is that these policies may not do what you expect them to do. While auto and home insurance is heavily regulated by state and federal laws, boat insurance policies are less so and coverage can vary widely. Any savings you realize can be lost if you have to make a damage claim, because add-on policies often limit, or simply don't provide, coverage for normal marine events, such as salvage recovery.
The bottom line is that you want a proper marine policy, written by a company that understands boats and how to insure them and can explain what they are selling in understandable terms. Do you need fuel spill coverage? Hurricane haul-out assistance? What about coverage for lightning damage? A good marine insurer will be expert in all of these things.
Here are some of the major factors you want to consider:
First, look at agreed value versus cash value. These are the two main choices for boat insurance and depreciation is what sets them apart. An agreed value policy costs more, but it also pays more. It will cover the stated value of the policy in the event of a loss. For example, a total loss on a $50,000 agreed-value policy would pay you $50,000. More importantly, a partial loss on an agreed-value policy replaces most items on a "new for old" basis, with little or no depreciation. If you have a new boat, or even a late-model vessel, this may be your best bet.
A cash-value policy costs less, but depreciation is factored in on all losses. It will only pay the actual value of the property at the time it was lost. This type of policy is better suited to less expensive boats, or situations in which you are not concerned about a total loss.
Another consideration is salvage coverage. That covers the amount that may be paid to a salvage expert to save your boat from peril and bring it safely to a repair yard. If you have an agreed-value policy, stay away from those that limit salvage coverage (many add-on policies do this). You want a policy that provides salvage coverage up to the same amount as the boat's agreed value, and does not subtract the salvage dollars from the total amount available to fix the damage.
The reason is that the law says that the salvage expert is often entitled to the total value of the vessel. For example, a $50,000 agreed-value policy should have $50,000 available to salvage the boat from the rocks or the bottom of the ocean, and then also pay up to $50,000 for repairs. Otherwise you would end up short when replacing or repairing the boat because the courts may require you to use your repair funds to pay the salvage costs first.
Another area to be wary of is hurricane deductibles. Some policies carry deductibles that are significantly higher for salvage and repairs related to named storms or hurricanes. Be sure that the dollar amount on your policy is acceptable to you, or you could come up short.
One major factor that can impact premiums is your own boating experience. To keep policies affordable, insurers need to keep claims to a minimum. Insurance statistics show that the vast majority of claims come from new boaters in their first two years. The result is that boaters with less than three years of experience may encounter difficulties.
Of course, the boat matters too. When it comes to insurance, one size does not fit all. An older classic wooden sedan cruiser has entirely different requirements than an aluminum fishing boat, a fiberglass racing sailboat or a steel mega-yacht. And the insurance companies are acutely aware of these differences.
Some marine insurance companies will simply not insure boats more than 30 years old. Others will steer clear of wooden boats, unless they belong to a very select group of clients, made up of experienced boaters who own true classic yachts.
The best strategy is often to tailor your search to include companies that handle your particular needs, and then comparison shop. Blue Water Insurance Co. sells coverage for cruiser's that is expandable to cover foreign countries when you want to go offshore. Heritage Marine Insurance Company and Hagerty Marine Insurance understand classic wooden boats. Average boaters, using their fiberglass vessel only in U.S. waters, and occasionally in Canada or the Bahamas, might begin looking for a policy at Boat US Insurance.
When you shop, be sure to check up on the insurance carrier, which is the company underwriting company the coverage (as opposed to the company selling it). You can check this at AM Best. Look for an A rating or better.
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Capt. Alan Hugenot is a naval architect and marine surveyor based in San Francisco, where he operates an 81-foot motor yacht converted from a Navy patrol boat. His column appears here weekly.
