Has the length of this past winter left you dreaming of hot summer days sitting on the bay or lake in your boat? As you get ready for the season, plan to take a few minutes to review the level of protection offered by your boat insurance policy.

A boat policy in many respects is similar to an auto policy; conceptually the same potentials for loss apply.  You have an exposure to liability whether you are carefully maneuvering your boat around a marina slip and bump another boat, or racing along the shore line and run over a swimmer. You have the potential for someone being injured while on your boat or being towed (tubing) when an incident occurs. Those injuries would likely be covered by your medical payments coverage. The cost of a boat today leaves few prepared to absorb the costs if that boat, and all that you have on it, were lost. Fires on boats arise when a bilge pump shorts out; gasoline vapors build up in the engine compartment; or when someone carelessly discards a cigarette. Boats sink when someone fails to properly install the bilge plug, heavy rains fill the boat, or your boat is exposed to stormy seas. The most common source of boat damage is contact with a submerged object such as a rock. These are all examples of what physical damage coverage applies to. But the physical damage part of a policy is further divided into coverage for the boat itself, commonly known as hull coverage, and the contents or personal belongings coverage.

Each boat insurance policy will have a little different definition of what is included with the hull coverage. In addition to the core structure, your hull policy usually includes equipment normally required for the operation and maintenance of your vessel such as sails, motors, drive shafts, fuel tanks, furniture, dinghies/tenders, outboard motors and some include navigation equipment.

I’m always amazed at how boaters can fit every comfort of home into their boat. Generally, contents are your personal property considered portable such as life jackets, water skis, ropes, fishing gear, clothes, depth finder, 2 way radios, stereo system, and special computer navigation equipment.

How your loss will be valued when you have a loss must be determined at the start of your policy: When writing your insurance policy, you determine how your insurance carrier will pay in the event of a total loss. Policies are written based on Replacement Cost, Agreed Value, and Actual Cash Value. A replacement cost policy simple means that if your boat is determined to be a total loss, the insurance company must pay you the cost to replace it. Generally, replacement cost coverage is only offered for a new boat and for the first 2-3 years.

Boats depreciate very quickly with values varying dramatically where you live. After 2-3 years the value of your boat compared to another nearby could be dramatic. Most commonly the insurance company will stipulate that they are going to insure your boat for the actual cash value of the boat at the time of a loss. Similar to a total loss on an auto, the insurance company must pay you the average retail price for the make, model and year of your boat. The problem in using that method of valuation is that it fails to recognize the difference in use and upkeep of the boat.

A person whose boat is hauled to a lake 6-10 times each summer, then stored in a garage is likely to have a much higher retail value than one that spent a few summers moored on Salt Pond in Galilee. Establishing an agreed value between you and the insurance company assures that in the event of a total loss, you will be paid the agreed to value for the boat.

After a partial loss you are also challenged by how your policy is written. The best policy provides for replacing damaged parts with new parts without deducting for depreciation. Most policies are written where they replace with new parts, then take depreciation based on the age of the old part in determining how much they will pay you, commonly known as “depreciated value”.

In the event of a contents loss, they will be valued based on replacement cost or actual cash value; replacement cost will be better for you.

Why do I need Towing Coverage?  How you get your boat out of the water after a mechanical failure or other disabling event can be extremely expensive. Whether automatically included, or offered as an option, towing coverage is an important coverage. Some policies reimburse you up to a specific limit while others include membership with a sea towing service. If you operate on a local lake the expense reimbursement coverage is likely best. While out on the bay, the towing service companies will bring you fuel, oil, batteries, and parts– the cost of which you pay for. They provide emergency labor and towing back to the nearest place where necessary repairs can be made. There are usually salvage and environmental services offered with these plans as well.

How can you lower your boat insurance rates? When driving down the road it’s pretty easy to spot an inexperienced driver. The same is true of a boater. They usually pay little regard to the no wake zones, have no idea where the underwater hazards are, and are quickly given away when they cut in front of a sailboat. Their lack of knowledge jeopardizes the safety of the whole boating community. Whether you are a beginner or advanced boater, you can improve your knowledge of boating by successfully completing an approved Coast Guard Boating Safety course. The insurance companies reward you for completing such courses with discounts.

Having features like a security system, automatic bilge pump, depth gages and gas fume detection alarms can also serve to reduce your insurance costs.

Enjoy a safe relaxing boating season.