by Elizabeth Altick | ask the expert
covering Up Insurance expert Eric Kinney explains how to choose the best, most economical coverage for your floating asset. LB: Why can’t a boat simply be added to a homeowners insurance policy? Kinney: It can, and many boaters do. Adding a boat or watercraft to your homeowners policy has many benefits, including the potential for multi-policy discounts. However, not all policies have the same coverages and underwriting guidelines. Watercraft and boat policies attached to homeowners policies generally are Actual Cash Value, meaning they pay losses after a depreciation is applied. For the most part, these policies also have limited coverage for towing, medical, pollution and other exposures we have as Great Lakes boaters.
LB: Are there other ways to save money? Kinney: Yes! Do not over-insure your vessel. If you have a boat policy, both depreciation and your deductible will be applied prior to reimbursement at the time of loss. If you have a yacht policy, your premium is based on the Agreed to Value determined by you, your agent and the company underwriters. If you have a layup period, be sure to get the proper credits. Most companies offer discounts for U. S. Coast Guard and Power Squadrons classes. Equipment credits include bow and stern thrusters, radar, GPS, automatic fire suppression systems, carbon monoxide detectors, and fume detectors.
conTAcT Frankenmuth Insurance One Mutual Ave. Frankenmuth, MI 48787 989-652-6121
LB: What kinds of coverage do I need? Kinney: That depends on the kind of boat and your specific risks and exposures. One rule of thumb is if your boat is 26 feet or larger, you more than likely need the additional coverages of a yacht policy. If you have a watercraft or boat in excess of 26 feet and $25,000 in value, purchasing an Agreed to Value policy could be your best option. Very few boat policies include pollution liability coverage, while almost all yacht policies do include this important protection.
LB: How much will insurance cost? Kinney: Proper coverage is, of course, the higher priority. But Great Lakes boating offers inherent cost savings. We benefit from not having the theft, saltwater exposure and hurricane activity of other regions.
LB: How high should the deductible be? Kinney: Use the highest practical deductible. For the most part, watercraft and boat policies have a flat deductible of $250, $500 or $1,000. Yacht policies, however, use a fixed percent of the hull. For example, a $150,000 vessel with a 2 percent fixed percentage would have a $3,000 deductible. In the Great Lakes, 1 to 2 percent deductibles are most common. Your deductible should be whatever you can afford. Don’t be afraid to test your policy premium with some variations to your deductible. You may find you receive a nice credit for a 1.5 percent deductible, but there may not be enough savings to justify a 3 percent deductible.
LB: Do I have to pay for coverage when my boat is in storage? Kinney: It not only is a prudent thing to do, your lender and storage facility require proof of insurance. Storage facility fires and theft may occur. High winds and deteriorating storage cradles also create winter boat claims activity. I recall a case where, in a well maintained marina, a snowplow hit a sailboat. Keep in mind the agreements you sign for summer and winter storage include “hold harmless” language that make your watercraft, boat and yacht policy the primary coverage.
fmIns.com
LB: What if a boat is stored outside? Kinney: If your vessel is bubbled and stored afloat, you will require endorsements. Make sure (and then make sure again!) your boat is properly winterized, and that batteries are stored in a heated facility. Covers or shrink wrap should be durable enough to handle strong winds and heavy rain, sleet and snow. All trailers must be locked. LB Eric B. Kinney is the marine business manager for Frankenmuth Insurance and has held various positions in the marine industry over the past 25 years. His passion for the Great Lakes began in 1972 when he served as a deckhand on the 1,000-foot iron ore freighter Stuart J. Cort. Frankenmuth is Rated “A” (Excellent) by A.M.Best. To locate an independent Frankenmuth Agent in your homeport, use the “Agency Locator” at fmIns.com.
jUne 2014
Elizabeth Altick specializes in recreational marine, cultural and humaninterest subjects. She was formerly executive editor of a recreational boating magazine.
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