Do You Have the Proper Boat Insurance?

Boat insurance is quite different from auto and home insurance, and is not always examined closely by the those who purchase it. It is imperative boat owners understand the policy they are buying. This became essential for Minneapolis contractor Kevin Cook when he totaled out his boat one day last summer. The accident ruined the trailer, but only made a small dent in the middle of his boat. What followed was a major headache for Cook, who soon found out that he had truly misunderstood the policy he had purchased.

“What I needed to get was a policy that provided full replacement value for my boat,” he recalled. “When I went in to transfer my policy, the insurance agent asked me to give him a value for my boat, my motor, and my trailer.” Cook complied, but when it came time to claim his loss from the damage to the shell of the boat, things got complicated.

“My trailer was toast. I had given my trailer value at $1500. A new one costs $5000.” Even a used one had gone up in price to $3000. Since the trailer had come with the new boat at no cost, finding proof of its worth was impossible.

“The motor wasn’t affected, but do you know how expensive it is to take an in board motor out of a boat? And insurance doesn’t cover that.” He searched in vain to find a used boat that was identical to his. “Mine was worth $11,000, but a new one was $22,000. Well, I didn’t get nearly enough to replace my boat at all.”

Boat insurance can be written different ways. Owners who drive their boat around from one water site to another should have their agent use an Inland Marine Form. This form protects the boat even when it is not in the water.

Not every insurance company offers a full replacement policy. The policies offered are expensive, but the extra money pays for itself if there is a loss. Not only that, Full Replacement Value Coverage is only for new boats. If you buy a used boat, this coverage isn’t available at all. That is logical, because otherwise people could go around buying old boats and damaging them just to get a new one.

Cook advises anyone who buys insurance to read over their coverage thoroughly. He also offered simple advice to boat owners. “Ask your agent this: ‘If something happens to the hull of my new boat, will my coverage allow me to get a new one?” If the answer is not ‘yes,’ then perhaps it is time to see if you can better insure that craft.