No. 4 – Boat insurance is not the same as car insurance

What’s Covered?

Naval oil spill containment training

USN conducting oil spill containment training

It’s tempting to go with your auto or home insurance company when you look for insurance for your boat. But you should be aware that boat insurance needs to cover other situations besides the usual automobile coverage of medical, liability and collision. Here are some more things to consider for your boat insurance:

  • Fuel cleanup – In the event of a boat accident, it is likely that some fuel or oil will be leaked into the water. You will likely be charged for any cleanup costs. Does your insurance policy cover this?
  • On-the water towing – On-the-water tow services are extremely expensive, and the USCG will not provide towing unless it is a true emergency. Running out of gas on the water does not count as an emergency.
  • Trailer insurance – If you have a problem with your trailer, will your insurance (auto or boat) cover towing costs to get a repair? Or damage to/caused by your trailer?
  • “Consequential damages” – A thru-hull fitting fails while you’re at the dock, and your boat sinks. Does your insurance cover damage the “consequential damage” caused by the fitting failure? Or will it just cover the fitting repair?
  • Salvage – Let’s say your boat sinks or runs hard aground, and has to be salvaged. Who pays for the recovery costs?

Where are You Covered?

Read the fine print…Will your policy cover you if an accident occurs in your normal fishing areas? If your policy covers you while you’re in “the coastal waters of the US and Canada”, remember that “coastal waters” usually refers to waters within 12 miles of the coast. Many of our offshore banks are well outside that area.

And what about Mexico? In the case of Mexican coastal waters, you must also have liability insurance thru a Mexican insurance company. We typically purchase our Mexican insurance thru MexPro, but there are several other brokers as well.

If nothing else, you should contact your insurance underwriter to clarify how far offshore you’re covered, and whether coverage extends into Mexican waters.

Who’s Your Daddy?

Boat insurance policies are issued by companies called “marine underwriters”. Underwriters are the ones who cut the check to cover your claim, and dictate the provisions of your policy. It is not unusual for your policy to change hands between underwriters, and the new underwriter may not offer the same coverage you had before.

I’ve personally had new underwriters change my policy coverage without telling me. Sometimes the changes have been positive: increased coverage for personal effects and “vanishing deductibles”, for example. Sometimes the changes have been negative: adding restrictions on geographic coverage, or removing coverage altogether.

My original policy for Toy Boat 2 covered me 100 miles offshore, and 200 miles into Mexican waters. Not that I was ever going to go that far out – it was just the only package the underwriter offered that would cover me in the areas that I fished. Since then, my policy underwriter has changed three times, and two of the three times, the new underwriter dropped the riders for offshore and Mexican waters without telling me. 

Correcting the problem wasn’t hard. It just took a phone call and a few more dollars in premiums. But if I hadn’t been taking a close look at the new policies, I would have missed the changes.