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View Full Version : Why Boat and Homeowners Insurance shouldn't be combined.



insurancegoddess
01-16-2009, 01:37 PM
I see it at least onece a month; someone calls me for a quote, tells me their boat is "attached" to their homeowners policy and they are paying some ridiculously low rate for it. The first thing I try to do is educate the person on why it is not a good idea to have those two items on the same policy. I realize that many of you can't insure your boat on your house because of the speed etc. but there are many people who do it.

I find that many boatowners have not been fully educated by the insurance industry as to the pros and cons of adding a boat to your homeowners policy and are really putting themselves on the line by doing so. Most captive insurance agents (not all) know more about selling home and auto insurance than anything... it's what they are trained to do. Boat insurance is definitely not their forte which could potentially leave you as the policyholder, short on coverage and left footing the bill.

I am absolutley 100% AGAINST putting your boat onto your homeowners insurance.

There are many coverages that you are missing when you endorse your boat onto a homeowners policy. Important coverages such as Fuel Spill Liability, Towing and Uninsured boaters.

insurancegoddess
01-16-2009, 01:37 PM
However, here is an article that discusses the pros and cons of each way written by Don Seibert. It has some helpful information:

Many boaters cover their boat insurance needs by declaring the boat on their homeowner's insurance policy. This may or may not be a good idea!

Having your boat under the 'Umbrella' coverage's of your homeowner's policy tends to provide you the security and safety of a large liability policy normally associated with a homeowner's policy. It affords you a degree of 'Cross Risk Insurance' where the risks associated with the boat are so different than other, homeowner's risks that the likelihood of claims from more than one risk hitting simultaneously are very low. If you are in the enviable position of having very significant assets to protect, it may be a good idea to have a separate boat owner's policy as well as having the liabilities related to your boat declared on your homeowner's policy.Standard property and casualty (P & C) insurance companies that provide most of the homeowner's coverage tend to not understand the marine issues, values and considerations of a boatowner. Their claims adjusters, for example, are typically not aware of the many intricacies related to repairing or replacing a damaged or lost boat. Most specifically, they tend not to understand the damages caused as a consequence of the sinking of a recreational boat. There can be very serious and expensive electrical and mechanical problems resulting from a boat being submerged, many of which won't show up for quite a while after the boat has been dried out, freshened up and restored to service. Electrical contacts can corrode and cause short circuits as well as exacerbating any electrolysis issues in the boat. These are very subtle and normally not understood by adjusters without marine background or experience. Marine insurers, on the other hand, deal with boating issues regularly and their adjusters are savvy to the problems and values of the boat business. Many marine insurers use the services of marine appraisers to do their claims adjustment work. They are true professionals who are dedicated to the marine industry and serve the boat owner well.
In my experience as a marina operator, there were several occasions in which, for one reason or another, one of our customer's boats was damaged or sunk by collision, carelessness or nature. Forgetting to put the plug in before launching was number one on the list. At times, a customer would leave his/her boat tied to a dock without a cover and when enough rain entered the boat to cause the bilge pump to run long enough to drain the battery, the boat would then fill up and sink. When the P & C insurance adjuster would come to assess the damage, they would only see the water damage to the upholstery, etc. and would value the cosmetic items that were lost or damaged. We were never able to convince them of the hidden electrical and mechanical and fuel system damages involved and there frequently was bitter disputes between the boat owner and the insurance company for months before resultion.

Conversely, whenever an adjuster from a marine insurer would come to assess the damage, they would first evaluate the systemic electrical and mechanical issues and often gave us the authority, on the spot, to perform the extensive electrical system diagnostics, hull evaluation, and mechanical item replacement (all fluids, filters, anodes, etc). We never knew of a dispute between the boatowner and the marine insurer.

Another issue that few people consider is the insurance of the boat while it is stored and not operational. Most people assume that the insurance of the marina or boat storage facility will cover their boat while it is stored there. That is only partially true. If the marina operator were to drop your boat or otherwise cause damage by negligence, their liability insurance would surely cover this. On the other hand, if a hurricane, fire, flood, or other natural disaster were to cause damage to the boat while it is stored, the insurance of the boatowner would be responsible. Many boatowners who lost their boats when Hurricane Katrina ripped through the Gulf of Mexico were very surprised to learn that the marina's insurance did not cover their boats. Many were a total uninsured loss.

Some marine insurers even offer a discounted rate for times of prolonged storage vs the assumption that the boat is operated year round. Many times a boat is really only used for 5-6 months of the year during the summer season and then it is stored at a marina or in the garage for the remainder of the year. You might check with your marine insurer to see if they offer a notification system wherein you can report the boat in a storage status and receive a reduction in your liability rate and premium as a result.

Be sure to investigate the cost and coverage's of boat insurance offered by marine insurers and compare those to those of your homeowner's policy before singing up. Be certain to ask about the marine qualifications of the adjusters used by the carrier. This will be critical should you happen to have a claim.

Like most things, it pays to do your homework!

Resources: Don Seibert is a veteran of the U.S. Coast Guard and has operated a large marina and boat dealership for the past 10 years. Don has been boating for more than 50 years.

insurancegoddess
01-16-2009, 01:41 PM
I've attached a copy of a section of a homeowners policy that specifically excludes pollution.

For those with boats added to their homeowners policies, it's all in what and how you ask your current agent.

If you ask your current homeowners agent, "Am i covered if my boat sinks?" they can answer YES and be correct. Sure, the boat is covered.

BUT (as evidenced by the attachment) homeowners policies have Pollution exclusions!

Now, the correct questions for you all to ask your homeowners agent is:

"Is there a pollution exclusion on my policy?" (if there is, ask to see it)

"Will my LIABILITY be covered for cleaning up the fuel that spills out of my boat in the event of an accident" If he/she answers yes, ask for them to show you specifically the language in the policy that supports their answer.

If they are confident and know what they are talking about, they should be able to show you where this is in the policy right away.

You can trust your agent and that is a great thing, but if they can't show you where the answer they are giving you is, in black and white, then your trust in them doesn't matter. When it comes to getting paid on a claim all that matters is the black and white that you signed onto and agreed to when you paid your premium.

cigdaze
01-16-2009, 02:25 PM
Very informative. Thanks a bunch for putting that together.
:)

stecz20
01-18-2009, 10:43 AM
great info

Geronimo36
01-19-2009, 04:28 PM
Thanks for the info.

Wow, I didn't even know you could put a boat on a homeowners policy.. Only thing weird I ever heard was if someone had a boat stored at a house and either the house or the boat burned, the companies would duke it out on who would be liable for pay-out.

I'm under a completely seperate policy with the same insurance company.

Sea-Dated
01-19-2009, 05:58 PM
Good info. We have the house and boat on seperte policies with the same company as well....

insurancegoddess
01-19-2009, 07:41 PM
Keeping them on separate policies is the best practice. :) The policies can be with the same carrier just no boats on a homeonwers policy as an endorsement. That's bad news. :)