WWW.HOUSEBOATMAGAZINE.COM JANUARY | FEBRUARY 2018 37
Are You Covered?
Insurance tips for houseboaters
By Roy Sparks
When it comes to buying anything—including a new or
used houseboat—the advice is always the same: “Research, re-
search and shop around.” This sage advice could not be more
valuable when it comes to marine insurance. Whether you’ve
made the decision to invest a huge sum of money in a recre-
ational tool or living quarters, you need to protect
that investment as best you can. While the
subject of marine insurance can appear
complex, if an accident ever does
occur, knowing exactly what type
of coverage you’ve paid for will
become crucial.
There are hundreds of
choices to be made when
insuring your vessel;
with a little research and
preparation, you can
easily make the right ones.
However, signing up for
the cheapest or easiest
policy isn’t always the best
way to go.
The first step in your
search for answers is to find the
experienced and knowledgeable
marine insurance agent. With such
a huge variety in policy coverage out
there, it’s important to enlist the help of an
agent who knows something about the houseboat
industry.
There are two basic forms of coverage: Agreed Value and
Actual Cash Value.
There are two items to consider when speaking about
Agreed Value and Actual Cash Value. The first is how the policy
pays in the event of a total loss. The Agreed Value policy simply
pays the amount the boat was insured for. The Actual Cash
Value will determine the value of the houseboat at the time of
loss. The real issue with Actual Cash Value policies and a total
loss is if the boat was insured for $40,000 8 years ago, on an
Actual Cash Value policy the boat’s value might be $25,000. If
you are insured on an Actual Cash Value policy, you need to
make sure you have the boat valued correctly each year.
The second is how the policy responds in the event of a par-
tial loss. With Actual Cash Value, the policies are always sub-
ject to depreciation. Labor is not depreciated but the materials
are. So if you have a four-year-old stern drive and hit a sub-
merged object, with Actual Cash Value, you could be looking
at ten percent depreciation on the replacement cost of the
stern drive or part. With Agreed Value, the stern drive will be
replaced new for old with no depreciation. It is important to
point out here that this would be specific per insurance com-
pany and their policy terms and conditions. Boat insurance
policies are different from company to company. Some compa-
nies will provide replacement cost coverage for that stern drive
for ten years; others would be five or even two years.
Others still may tell you that this loss is not cov-
ered. That’s right! Some policies specifically
exclude losses to machinery, props, shafts
and engines unless the loss is caused by a
named peril such as stranding, burning,
sinking or collision with another water-
craft. A grounding may not necessarily
be interpreted as a stranding.
Marine insurance policies contain
coverage mainly for hull and ma-
chinery physical damage, liability
coverage, personal effects and
medical coverage.
Hull and machinery coverage
is for damage repair resulting
from any accident (so long as it’s
not intentional) and the liability
coverage is to pay for all expenses
that you become legally responsible
for as a result of your operation or
ownership of the insured vessel. In
some cases, liability coverage follows
you around from boat to boat, just so
long as you are the one operating it.
Generally speaking, personal wa-
tercrafts are not considered boats and
hence your liability coverage is not following
you around when you run them.
Watercraft Liability insurance, or Protection and Indemnity
coverage (again depending on what you buy), is always includ-
ed in the main package of coverage but you have to select the
limits best for you. This will depend on a variety of factors that
are usually personal and these should be discussed in detail
with your marine agent in the first call that you have together.
Everybody wants to know how much it’s going to cost to in-
sure a boat; it depends on a variety of factors and options, the
main one being the value of the hull. As hull value increases, so
do insurance costs. The next is going to be the location. Moor-
ing in a hurricane-prone area will require a larger premium—
geographical risks substantially impact premium. A higher
deductible drops the premium, and a lay-up period during the
winter drops it some more. There are other variables that af-
fect the premium such as your claims history, your experience
and the age and make of your boat. Some insurance companies
like BoatU.S. offer discounts to captains who have completed
safety courses.
By taking time to understand the details and obtain the ap-
propriate policy, you’ll have far more peace of mind to concen-
trate on what really matters: having fun. Q