It’s a Matter of Policy
Insurance Basics to Keep in Mind for Boat Show Season
Is boat insurance mandatory?
No, boat insurance is not mandatory. If,
however, a buyer takes a loan for the
boat, the lender will most likely require
that they carry insurance on the boat as
a condition of the loan.
Even though law does not require
insurance, it just makes sense to carry at
least liability coverage on a boat investment. Should a loss occur, or in the
event of an accident, the owner’s other
assets (home, stocks, bonds, etc.)
become exposed to a liability claim.
As a marina owner/operator you may
want to make it mandatory that your
clients have insurance when their vessel is
on your property, whether it’s for mooring, service work or for storage. If something goes wrong, you want to make sure
that your exposure to loss is limited.
Are all insurance policies the same?
What type of coverage is available?
Not all boat insurance policies are the
same. There are two distinct types of
insurance coverage that are available: 1)
Agreed Value Coverage; and 2) Actual
Cash Value Coverage.
An Agreed Value policy will provide
coverage in the event of a loss based on
the agreed value amount that is stated on
the policy with no depreciation. An
Actual Cash Value policy will settle the
loss by taking the amount of insurance
stated on the policy and applying a
depreciation factor that is determined at
the time of loss. The age and condition
of the boat at the time of the loss will
determine the amount of depreciation
that is applied.
This is the buyer’s first boat. Will a
lack of boating experience affect
their ability to get boat insurance?
The less boating experience an individu-
al has, the fewer insurers will be willing
to insure them, because they may not
trust a new owner’s ability to safely oper-
ate and navigate a boat.
Are there limits to where an owner
can operate their boat?
Most marine insurance policies sold
in Canada have limitations on where
boaters can navigate with their vessel. A
standard navigation area that is used by
a lot of carriers will include.
• The inland waters of Canada and the
U.S.A., not south of 40 degrees north
• The waters of the Great Lakes and
tributaries including the St. Lawrence
River, and the Hudson River above the
George Washington Bridge
• The Pacific coastal/tidal waters of the
Vancouver Islands and mainland
British Columbia including Puget
Sound and the Strait of Juan de Fuca
not west of Cape Flattery; at no time
are you to proceed more than 20
nautical miles offshore or on the
Fraser River east of the mouth of the
Sumas River
• East Coast limited to not north of 52
degrees north and not south of 40
degrees north within Canadian
and US coastal waters only; at no
time are you to proceed more than
100 nautical miles offshore
If a client is using his vessel outside
the prescribed limits, they will need to
get a special extension to extend the cov-
erage and insure that they will be cov-
ered if a loss occurs.
Are there limits to when a boat can
be used?
Due to the extreme weather that we have
in parts of this country, most if not all
marine policies will have a lay-up period
when the vessel is expected to be out of
the water and properly winterized to
prevent freezing damage. A common
lay-up period is from November 30th
at noon to April 1st at noon inclusive.
The insured’s vessel must not be used or
inhabited during this period of time. In
many cases the freezing warrantee will
also indicate that a qualified professional must do the winterization. (Note to all
those DIY’ers out there: You may be
voiding your coverage if you winterize
your own own vessel.)
Do you need a marine survey to
insure an older boat?
Insurers do require surveys on older vessels. The rule that most insurers follow is
that any vessel older than 15 years of age
will require an out-of-water marine survey that is performed by a qualified
marine surveyor.
Surveys are a necessary tool that the
insurance industry needs to use in order
to understand the condition of the boat
they are insuring. The better and more
detailed the survey the easier it is for the
insurance company to sign off and
accept the risk. Every dealer that is trading in the older boat market needs to
have a good working relationship with a
competent qualified surveyor.
