Watercraft Policy Coverage Options and Exclusions: Summertime Tips for Agencies

With summertime fast approaching, more of your clients will likely be adding coverage for various types of watercraft. However, because your agency might not write these types of policies all but once a year, and that policyholders are relying on you to guide them toward the coverage they need in order to protect their investment, now is a good time to refresh your watercraft insurance know-how. 

The fact is, boat policies are often as diverse as the watercraft they insure. As a result, clients might be uncertain as to what is and isn’t covered and opt for the most basic of policies. As an agent, the last thing you want is for a claim to occur and for a policyholder to find out they don’t have coverage or were only partially covered for their loss. The following are important key coverages and policy exclusions that are typically not included in a standard boat or watercraft policy but are too important to leave out of the conversation with your insureds.  

Optional coverages and special endorsements

Fuel-spill liability. Not typically included in most standard boat and watercraft liability policies, this provides coverage for claims involving the cleanup or third-party damage due to the accidental discharge of fuel or oil. Some examples would be a boat catching fire, colliding with another object, becoming grounded, or simply sinking and causing a spill. With stricter federal and state environmental laws holding boaters liable for the containment and cleanup, this type of coverage has become increasingly vital.

Emergency service coverage. Much like roadside service for a vehicle, this optional coverage provides coverage for towing, medical services, and mechanical labor if a boat becomes stranded.

Equipment coverage. Provides coverage in the event a boat sinks or is involved in a collision in which accessories and equipment such as fishing and safety gear or a pricey fish-finder or navigational system are damaged or lost.  

Repair cost endorsement coverage. For pricier watercraft, standard boat policy limits might not be enough to cover custom upgrades, modifications, or specialized motors and equipment. Many carriers offer an endorsement that provides additional coverage above what the policy offers for repairing and even replacing equipment in the event of a loss. 

Common policy exclusions

While most coverage for boats remains rather standard, there are more-common policy exclusions that you’ll want to review with your clients. 

  • Wear and tear. Because water (particularly saltwater) is damaging to a vessel, deterioration is a common factor in the normal wear and tear of a boat and isn’t typically included in coverage.
  • Coverage for competitions or racing events. Boating races typically involve high speeds and are subject to risks involving collisions and injuries. Some carriers offer supplemental insurance for this type of risk.
  • Boat trailer liability. The liability of towing a boat trailer is covered under an auto policy — never under a boat policy. However, the trailer is only considered eligible for liability coverage under a vehicle policy if it is designed to be towed by a motor vehicle, and only if it’s owned by the named insured on the towing vehicle’s auto policy, or it is permanently attached to the towing vehicle.
  • Damage to the boat or equipment from marine life. Typically, boat insurance won’t cover damage to a vessel caused by sea creatures. If clients indicate that they might be headed into waters where there could be an exposure to hazards involving marine life, you might want to discuss adding additional insurance to ensure they have coverage. 

Additional claims tips

Avoiding all claim situations is impossible. However, there are ways to lessen certain risk exposures. In addition to reminding policyholders to always report a claim as soon as it occurs, the following are other good claim mitigation tips for your boating clients.   

  • Remind them that if they decide to sail out of their specific navigational area, they must notify your agency.
  • Warn about the dangers of underwater collisions when exploring new waterways or when boating in murky water conditions.
  • Advise clients to maintain a detailed inventory of their boating equipment (pictures, serial numbers, costs, etc.). In the event of a theft or other loss, they’ll have an accurate list to present to the claims adjuster. 
  • Advise of the benefits of taking a boating safety course to learn more about how to avoid an accident.
  • Most boat-sinking events occur due to leaks while a boat is docked. Stress to policyholders the importance of maintaining their docked boats from water wear, tear and corrosion and regularly checking small parts and the overall condition of the boat — even during the off-season.
  • Remind clients that their boat coverage only covers named drivers of the vessel. If they have a change in drivers, they must notify your agency.
  • Warn of the dangers and consequences of being found intoxicated or under any other substances at the time of an accident, as this could lead to costly liability claims or even a claim denial. 

And when the season comes to an end…

You’ll likely encounter clients who, when summertime is over, will opt to remove all coverage for their boat. Now’s a good time to remind them that even during the off-season, watercraft can be subject to damage or liability issues — costs that they’ll have to cover out of pocket. Remind them that boat insurance can be maintained year-round, providing protection against fire, vandalism, theft, liability and winter storms.

We hope these tips will help you keep your boating and watercraft policyholders safe and claim-free!

About FastrackCE

Need to complete your insurance continuing education credits this summer? FastrackCE can help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.

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