Boat Insurance - Should I check before writing a check for the new boat?

Over the last several years we’ve seen a lot of changes with boating.  During 2020 people that had never owned a boat found they could “social distance” while having fun with hundreds or thousands of other boat owners.  So much so that boat dealers and manufacturers couldn’t keep up with demand.  We also learned as a result that boat values were not depreciating at the same rate as they had in the past.

Many of these new owners quickly learned there is a lot more to buying a boat than writing a check.

Today’s blog is going to outline 6 things which are related to the insurance side of boat/ yacht ownership to be familiar of, prior to writing that check and then being surprised.

First – New Boat Owners.  

If this is your first owned boat, staying under 30 feet is much easier to find insurance.   Many insurance companies are OK with new owners of small boats many define small boat as being less than 27ft.  Depending on the vessel type 30 feet may still be considered small boat.  Many other companies will define 27 ft+ as yacht.  Also, for vessel over 27’ and more than 10 years of age, a survey could be required by the insurance carrier.  Some companies might have different survey age requirements, but it’s 10 to 20 years in most cases.  Good value for you as well to know the safety and integrity of the vessel you are about to invest your money and hopefully enjoy with friends and family.  Every boat is designed and built for specific uses, make sure you're buying the right boat for how you plan to use it.

Second – Experience.  

Purchasing larger boats, or what used to be called “3 foot’itis”.  What we see now a ‘day are jumps of 15’ or more.  Or, moving from a single engine boat to a boat with triples or quads+.  These larger vessels are fantastic, and you can bring so many more friends aboard, explore further, vacation aboard with places to prepare food, sleep & a real head.  The insurance side of this equation understands experience matters.  Docking, draft depth, tides, maintenance.  Many companies limit the jump in length to 10’-15’.  And will want you to have 2-4 years of experience on a vessel within 10’-15’ of the yacht you are now purchasing.  Some may allow the jump in length but may require an experienced captain to operate the boat.  Or, that you get lessons on operating the yacht from an experienced captain who the insurance carrier approves, who can then sign a proficiency statement once your qualified.

Third – Location.  

Will this boat be moored in the Southeast Coastal or Gulf Coast area?   Areas considered in the Catastrophic Zone (CAT Zone) the coastal area from North Carolina to the Texas/Mexico border.  If you plan to have a vessel that will be kept in that area of the country between June 1 and November, you may need a plan on how you will store and protect that yacht/boat in case a named storm is approaching.  Hurricane Ian caused over $112 billion in damages.  These losses over the last several years has led to fewer insurance companies available to offer marine policies in this area.  As a result, the boat insurance market has “Hardened” meaning premiums are higher today than they were 5 years ago.  Higher rates are also a result of US inflationary rates we’ve seen.  Higher costs for parts and repairs.  Higher legal costs and then the higher values of boats and yachts.  

FYI…some policies today in CAT Zones may have a “Named Storm Haul Out Requirement or Warranty”.  Meaning if the boat is damaged during a Named Storm and the vessel was not haul out of the water, you could be without coverage for that loss.  Other companies may offer a policy; however, they might exclude any claims related to a named storm.

Fourth – Financing.  

Check with your lender on what they require from the insurance coverage.  Some banks and credit unions have loans requiring deductibles to be under $1000.  Many marine insurance policies base the deductibles on % of the value.  2%-5% deductibles are more common today than ever before.  Find out from your Insurance Agency, (like Charter Lakes), if $1000 deductible is even possible for the vessel you are considering.  You may need to find a different lender.  Besides the standard deductible you may have policies with 5%-50% deductibles for Names Storm related losses or a separate deductible for Lightning strikes to the boat.  Be sure to review your policy.

Fifth – Maintenance. 

Like with most things you own, maintenance is required for boats as well.  Boats that are well maintained are more fun, more reliable, last longer, and hold their value better.  Claims due to lack of proper maintenance or wear and tear are typically excluded within most insurance policies.

Lastly – Absentee owner. 

You have a boat kept at a second residence or more than 3 hours from your primary residence. Or, if it’s kept in an area known as a CAT Zone (areas prone to catastrophic natural disasters, like hurricanes) and you live in Michigan.  How and who will be watching and caring for the vessel while you are not there is important. 

These are just a few of many important considerations to review prior to writing the check on that new boat purchase.  Be sure to give us a call and we’d be happy to assist you with a quote for that boat purchase.