Insurance – it seems when we think of it or hear about it, we all seem to loath the thought of insurance..... Without sounding like an insurance salesman there are many reasons why insurance on boats is a sound investment. Unlike a home and its contents, a boat is something that is exposed to risk at almost all times. Think about some of the following scenarios.... theft whilst the rig is stored at home, theft of the trailer when left unattended at the boat ramp, you enter shallow water and the gearbox / propeller hits the bottom? You are towing your friend's child water skiing and he falls off and receives a serious injury? You forget to put the bungs in? Worse case scenario, a swamping occurs and the boat is abandoned or you unintentionally collect a plastic bag around your water intake on the leg of the motor and blow up the engine due overheating?
These are just a small range of common reasons why it is important to consider insuring your boat and having Third Party Insurance.I am no insurance guru, but I do think it wise to shop around when it comes to boat insurance. John Crawford Marine sells over 150 boats a year and we try to ask customers their reasons for choosing a certain marine policy and unfortunately most of the decisions are based lower annual premium costs, or multi policy discounts. This should be a consideration but definately NOT the decision maker. Many cheaper policies are cheaper for one reason, they simply offer less protection.
Following are some questions that I think are important to consider when choosing an insurer for your new pride and joy!
Does the Third Party Cover:
- Members of your family?
- You, when you are on someone else's boat?
- Observers and water skiers towed by you?
- Barefoot skiing?
Does the policy cover?
- New for old on mechanical and electrical components of the motor up to five years of age which cannot be satisfactorily repaired up to the motor market value?
- Emergency trailerable towing ?
- An outboard or auxiliary motor if it has not been fitted with a safety device?
- Your boat whilst left unattended or moored temporarily off any exposed beach or shore?
Does the policy provide?
- Optional values for liability cover
- A "No claim bonus"?
- Automatic cover for a new boat to the sum insured of your existing boat or market value, whichever is the lesser amount?
Transit cover throughout Australia?
- Cover afloat for Australia up to 250 nautical miles offshore- extended cover if required?
- Discounts while your boat is laid up?
- Personal accident benefits?
- Salvage expenses in addition to the sum insured of your boat?
- National network of service centres for on-the-spot claims service?
- Apportioned excesses for high value vessels?
- Cover for overheating of motors caused by external blocking of cooling system?
- Personal Effects cover?
- Cover for Fishing gear, Water Ski equipment and Diving equipment?
- Cover for Time Trials for Power Vessels up to 30kts?
Following are some common questions that we get asked and some answers worth considering.
If I use my power boat to tow a water-skier (including tubes, toboggan's, sleds or anything tied towed behind the boat) will I have cover under my insurance?
If you have Comprehensive Cover, you can ask your provider to add the water-skiers liability optional cover for an extra premium. This option provides cover for your legal liability to pay compensation up to a specified value for death or injury to a person being towed by your boat or death or injury to other people or damage to their property caused by a person or object being towed by your boat. There must be an observer on your boat for this cover to operate. If you do not have this optional cover listed on your Certificate of Insurance, then any incidents that may occur when participating in water-skiing activities will not be covered. It is best to call your provider and clarify this with them.
What does "Geographic Limit" mean?
This means that your insurance provides cover when you are using your boat up to a certain distance off the coast of the Australian mainland, or the coast of Tasmania. If you use your boat beyond this limit, you will not be covered. It is best to call your provider and clarify this with them.
What does ‘market value' really mean?
Market value is the value of your boat in your local market, for example, the amount it costs to buy your boat (including GST) from a reputable boat dealer in your area. Market value is generally based on:
- Boat type
- Manufacturer or builder
- The age and condition of your boat including wear, tear and maintenance history
- Modifications made to the boat
Insurance companies tend to take into account the market value of your boat in assessing your application for insurance and assessing your premium. They will use an industry guide to estimate your boat's market value. If the market value is not published in an industry guide, they may ask you for your estimate of your boat's current market value. They may also ask you to obtain an expert opinion on the market value of your boat at your own expense.Market value typically fluctuates so at claim time, the insurance provider will need to re-establish the market value of your boat if you lodge a claim that may result in a write-off. They will generally pay the cost of obtaining your boat's current market value at the time of the claim.
Am I required to have insurance if I have a boat loan?
Like most large purchases you buy on credit, your lender will probably require that you at least have liability coverage. Since they are also a legal owner of the boat until the debt is satisfied, they are also liable for any damages you cause while using the boat. So, yes they will most likely require that you carry a liability policy and, in many cases, will also require full coverage to minimize their financial risk should damage occur to the boat.
Does the law require Marine Insurance?
Most states don't require boat operators to carry insurance coverage while their boat is on the water. If you have a loan for your boat, then your lender will most likely require that you carry a policy as a term of acquiring your boat loan. However, even though it's not required by law, it just makes sense to carry at least liability coverage on your new investment. Otherwise, in the event of an accident, your other investments (home, stocks, bonds, etc.) become exposed to a liability claim.
What does the term "Third Party Liability" mean?
A "third party" is someone other than the parties on the policy. The parties on the policy are the policy holder and the insurer. A third party could be the lender, a company that might rent a boat for an event, or some other party that's not directly involved in the issuance of the policy, yet needs to be covered with liability insurance.
You wouldn't think of taking your sailboat out onto the water without good sails and a good motor. You should consider boat insurance just as necessary. If something happens and you injure someone or damage their property, you will be personally responsible to pay for the damages and/or medical expenses you caused.
Unless you can afford to pay that out of pocket, you absolutely must purchase boat insurance to protect yourself. No one ever thinks anything is going to happen to them. But, we know that's not how reality is. Things happen. And, when they do, make sure you are prepared for it. That will ensure your boating experience will be smooth sailing all the way.
John Crawford Marine