Boat Insurance Problems

 

By Cameron Easey, eHow Contributor

Buying boat insurance is similar to buying insurance for an automobile, but coverage options differ on boat insurance policies. Insurance for a boat depends on many factors including laws in a particular area, the type of boat being insured, the size of the engines in the boat and whether the owner took any training courses. Problems that can arise with boat insurance include the type of coverage that was purchased, coverage requirements and how the value of the boat is determined.

1. Requirements

   • Unlike automobile insurance, states generally do not have laws that require any type of minimum insurance coverage for boat owners. However, South Carolina is one state in which liability insurance or a bond is required for boat owners. Individuals should check with their state Department of Motor Vehicles for any coverage requirements. If a boat is financed with a loan, the bank may require listing them as a loss payee on the policy.

   Coverages

   • Individuals who own a boat need to know what coverages are included as well as excluded on their policy. Most policies include coverage for theft, fire, sinking, collision and vandalism. Insurers typically exclude personal effects, medical payments and uninsured boater coverage from their boat insurance policies. Coverage for personal watercraft, dinghies and trailers used to haul a boat can also be excluded from a policy.

   Actual Cash Value

   • Many boat insurance policies use the actual cash value of the vessel when a claim is submitted to an insurer. Actual cash value is the market value of the boat as determined by the insurer when a total loss occurs. An insurer will use various methods for determining the value of a boat including market guides as well as the age and condition of the boat. Depreciation is also used as a factor when determining the actual cash value of a boat.

   Agreed Value

   • Another option for the value of the boat when a claim is filed is using an agreed value. An agreed value is an amount or value for the boat that is agreed on by the insurer and the insured. This means that when a total loss occurs the insured will receive the agreed value that is stated in the policy. A boat insurance policy may also provide replacement cost, which is similar to agreed value, in which an insurer will replace the boat with a similar make and model if the original type is not available.

   Reducing Premiums

   • Boat owners who pay for insurance coverage may not know that there are options available to reduce the amount of premium that is paid for a policy. One way in which to reduce policy premiums is to take a boating safety class. Boat owners can also increase the amount of the deductible that applies to their policy. A typical deductible can rage from 1 percent to 5 percent of the value of the boat or hull, depending on the insurer.