Know the ropes: 5 ways to reduce risk and 5 coverage considerations for boat owners

Millions of boaters in the U.S., particularly those who have been suffering through an unusually harsh winter, are looking forward to the approaching spring season. As boat owners prepare to take their boat out of winter storage and launch it in the water for another season, insurance advisers have an opportunity to help their clients properly protect their prized possessions, keep their families safe and maximize their time on the water. So before your clients launch for the season, use the following as a guide to make sure their boats and their insurance policies are properly tuned up.

Reduce risk between bow & stern

By spring, many boats have been sitting idle for at least three or four months, some exposed to salt air and extreme temperatures. Such inactivity after a long winter hibernation can actually accelerate wear and tear by drying out hoses and other rubber parts, or even contribute to rust and corrosion.

Prolonged periods of inactivity during the previous boating season also creates additional risks. For example, one Chicago family’s yacht sunk while secured to its mooring in early September. Unfortunately, a drained battery resulted in a pump failure, leaving the boat no chance to compete with the massive rainfall that inundated the Midwest that weekend. Like many losses, this one could have been prevented.

Now is the time to help clients be sure their vessels are ready for the open waters. Encourage them to be sure the boat’s registration and numbering are up to date and:

1. Review the owner’s manual. Even if clients have historically relied on a marina to de-winterize their boat and get it back in the water, there’s a good chance the boat may not have received all of the recommended scheduled maintenance, as suggested by the manufacturer.

2. Check batteries and fluids. If the boat has been inactive for several weeks or more, it is critical to check battery strength and fluid levels. Boat electronics such as a stereo, GPS, radio and radar can drain a battery. Be sure to leave the battery switch in the “OFF” position whenever your battery is not in use. And remember, a battery that’s 4 years old needs to be replaced. Inspect battery cables for rust or corrosion, and if necessary, use a wire brush for a good, clean connection.

3. Consult a maintenance checklist. There are a variety of very comprehensive checklists available. Here’s one.

4. Prepare for a Vessel Safety Check. Ensure that the boat is equipped with working fire extinguishers, distress signals like flares and a horn, ample life jackets that have been approved by the U.S. Coast Guard, proper ventilation, and navigation lights with working bulbs.

5. Enroll in a boating safety course. Taking boating safety courses will help your clients become more skilled captains and, likely, help lower their premiums.

Conduct a coverage check-up

Talk to your clients about their coverage to ensure it properly reflects their needs, especially because they may have changed in the off-season. Consider:

1. Coverage limits. Is the boat insured on an ‘agreed value’ basis?  If so, is it reflective of the boat’s current fair market value? New outboard motors and other improvements can significantly increase the market value of a boat. For larger watercraft, ensure that the survey is up to date.

2. Lay-up warranties. Does the boat policy include a lay-up warranty? This type of warranty precludes boat owners from navigating their boats during a specified period—usually in return for a premium reduction. It’s not uncommon to see watercraft policies issued in the Northeast, Midwest and Mid-Atlantic states feature a lay-up warranty, typically from November through April.

3. Navigational limits and restrictions. Every boat policy has a navigational limits warranty. Often, those limits are applied based on where the boat is moored, or where the policyholder previously advised the carrier where the boat will be navigated. Policyholders should check their policy to be sure navigational limits remain current, in case they plan to chart a new course this year.

It is equally important to be well aware of any other restrictions on a vessel’s usage. For example, does the policyholder plan on competing in any sailing races other than club boat races, which are typically covered? Do they plan on using their boats for any business purposes or fishing charters? Or, will any newly licensed household members or new captain or crew be operating the boat this year? It’s important to look closely at the policy to avoid any situations where loss may not be covered.

4. Personal excess liability. Is the boat listed on the policyholders’ personal excess liability policy or umbrella policy?  If so, are the underlying limits on the boat’s policy adequate to meet the required underlying limits on a personal excess policy?

5. Deductibles. It’s not uncommon for boats to have special deductibles, for example, one that is applied in the event of a hurricane or windstorm. Make sure the client is up to speed on which deductibles apply to them so that they aren’t taken by surprise at the time of a claim.

Mar 04, 2015 | By Billy Johnson

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