Don’t Miss the Boat on Insurance

iStock_000018106369XSmallAs the weather starts to warm up, those who enjoy water sports and boating start turning their thoughts to taking their equipment out of winter storage. This activity in and of itself is usually a good reminder for many people to start thinking about how all of their watercraft are insured. For others who live in climates that can enjoy water-based activities year-round, there’s probably less of a conscious thought of verifying insurance is in place. In either event, you should take this opportunity to review your policy and thoroughly understand what is (and is not) insured on your home insurance policy.

If you own a very small boat or other recreational equipment meant for use on the water, you might have coverage on your home insurance policy. Most policies will include up to $1,000 for any watercraft that you own, including everything associated with it, such as outboard motors, trailers, and furnishings. Of course, this is a very small amount of coverage so it’s likely that you’ll need a specific watercraft policy. Just as with automobiles and aircraft, the home insurance policy is not the most appropriate place to cover the exposure. Instead, a specialized policy will offer better terms and more specific coverage.

When it comes to liability, you will have a limited degree of coverage depending on the type of watercraft. Usually, the home insurance policy defines the liability coverage offered based on the size of the motor or the length of the craft. For example, it’s common for liability coverage to be excluded if your watercraft’s motor is in excess of 50 horsepower or if the craft itself is greater than 26 feet in overall length. Therefore, if you have a sailboat, you can get away with decent-sized vessel being insured for liability purposes, so long as its motor is less than 50 horsepower. On the other hand, many jet skis are much shorter than 26 feet, but have engines significantly in excess of 50 horsepower.

It’s important to understand that the home insurance policy only intends to provide very minimal and incidental insurance coverage for your watercraft. Usually the coverage applies to a small sailboat for the kids that’s tied up to the dock by your house. If you have a nice yacht, it’s time to start shopping for specific watercraft insurance.

Speaking of the dock by your house, you also need to understand how that is insured. In many instances, you can probably cover your personal boat dock under the “other structures” part of your home insurance policy if it’s on your property. However, when you consider the different types of exposures that confront your boat dock, you might want to reconsider the insurance. For example, the other structures coverage follows the same perils as your dwelling coverage and will not cover damage as a result of freezing, thawing, pressure, or weight of water or ice. These are exposures more commonly faced by your boat dock than your home. If your boat dock is particularly valuable, inquire with your insurance company as to any alternatives to traditional other structures coverage. In some cases, it might actually be possible to insure it as personal property at a higher cost but with better coverage terms.

Although boating can be a great activity in good weather, there are definitely some serious insurance issues that you should resolve before getting too far out in the water.

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