Houseboat Magazine — January 2018

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