Part 2: Shopping for Insurance
by Ken Levitt
Picking a Carrier
Every insurance company has different available coverages and options. When you start out trying to compare carriers, it will be like apples and oranges. Some will include coverages that cost extra or don't exist at other companies. The first thing a company is likely to do is just send you a boiler plate quote. Without a lot of detailed discussions with them, you may not know that you can have a higher or lower deductible, you can add or increase personal effects coverage, or drop a coverage you don't need.
Pick a company (or two if you are compulsive like me) and spend a lot of time on the phone going over their coverages. For each coverage, find out if you can have more or less of it and at what cost. If you don't see a coverage you might be interested in, ask them if they have it.
Once you have a configuration and price, use this as your base to talk to other companies. Tell them you have a quote from another company (no need to mention the cost or carrier) with all of the following coverages and deductibles. Ask them to give you a quote that matches as closely as possible the same coverages and deductibles. This is easier done in email or with an online quote form than over the phone where details will likely be lost.
Restrictions on where a policy allows you to sail and the cost to spend a few weeks out of your normal sailing area may be the biggest deciding factor in selecting an insurance carrier. It is not likely that you will want to cancel a planned vacation or restrict your normal sailing area just to save a few dollars.
Many policies will restrict your sailing to specific areas and may limit the maximum distance you may be from shore. You may be covered from the coast of Maine to South Carolina, but don't assume you are covered for inland lakes. Make sure your policy covers all of the areas you are likely to sail on a regular basis. With most (but not all) companies, you can purchase a single-use rider to cover an area that is not in your normal sailing area for a short period of time (often 30 days). If you think you are going to need this, find out in advance if your carrier offers such a rider and what it is likely to cost you. It may be less expensive to have a smaller sailing area with a once a year rider than to have year-round coverage for a larger area.
You should be especially careful about your insurance if you are planning on sailing to other countries. Mexico requires that you have insurance from a Mexican company. Some companies may include Canada and the Bahamas; others do not.
Quality of Carrier
The lowest price is not always the best deal. Talk to other boat owners who have had claims. See how satisfied they were with the results.
Many insurance plans (like BoatUS) are underwritten by an insurance company you never heard of. The underwriter is the company that is ultimately responsible for funding your claim. This makes the Underwriter's financial health something about which you should be concerned. An underwriter with a really bad year of unexpected claims may not have enough money to pay for them all. Although this does not happen often, it is worth your while to check before you buy and every few years there after to make sure they have maintained their good rating. If the insurer will not tell you who the underwriter is, don't do business with them.
The AM Best company ( http://www.ambest.com/ ) provides the industry standard for evaluating the financial health of an insurance company. You can check an insurer's rating, but be aware that ratings are inflated. A++ and A+ are what you should be looking for. A is acceptable, and A- is borderline. Stay clear of any company rated less than A-. Best will also show you the outlook for a company. "Positive" or "Stable" are good; "Negative" is bad.
Due to high losses in Florida, some companies have formed new companies to cover their FL risks. A company may have an A+ rating in the other 49 states, but only a B rating in FL.
All of the policies I have seen exclude power boat racing, but permit sail boat racing. If you plan on racing, it is a good idea to check the wording in the policy.
Dinghy and Motor
Some policies will cover a dinghy and motor up to a certain percentage of the value of the primary vessel; others will have no coverage unless you have it added in. Your dinghy may have a different deductible than the primary vessel; check this.
Many companies will lower your premium if you are willing to take a higher deductible or raise it if you want a lower deductible. Ask what options are available and decide which is the best value for your individual circumstances.
Most companies will quote a policy with $100,000 liability. Do not consider anything less. The difference in cost between $100,000 and $300,000 should be about $65. If you have a homeowner's umbrella policy, that policy may require you to carry $300,000 of liability on the boat. Check with your agent.
Lay Up Period
If you live in a part of the country where sailing is only done part of the year, your policy may give you lower rates by excluding you from sailing certain times of the year (i.e. November 1 through April 30).
If your policy doesn't have a lay up period, you can create your own by reducing your coverage in the fall and increasing it again in the spring. Note that this is slightly easier to do if the policy renewal date matches one of these two times.
For reasons known only to them, some insurance companies refuse to insure multihulls. Some may insure cats but not tris. Others have a short list of multihulls that they will cover. You can save yourself a lot of time and energy by finding out up front if they are willing to insure your type of boat.
Insurance Problems in Massachusetts
A number of years ago, the Massachusetts legislature decided they could make points with the voters by keeping auto insurance rates artificially low. The only way to do this was to screw the insurance companies. To insure that companies didn't just stop selling auto insurance in MA, the legislature decided that if a company refused to sell auto insurance in MA, then they could not sell any other type of insurance here either. In reaction, a number of companies pulled all of their business out of MA. This is why companies like Progressive and Allstate sell boat insurance in only 49 states.
If you live in Massachusetts, all may not be lost. It turns out that is doesn't matter where you live, but where you boat. For some companies, the home state for a boat is where it physically resides at least half the year. Six months of winter storage in Rhode Island or New Hampshire might qualify you for a policy in that state. For some companies, the boat's residence is defined as the state in which you do the majority of your boating. If you work through an independent agent (rather than directly with the company), they can advise you on the proper way to fill out the application form to make it clear that the boat does not reside in MA.
A company like National Marine Underwriters does not sell auto insurance anywhere, so they are able to sell insurance in MA.
Hard to Insure Boats
Some companies will not insure home built boats like a Farrier Trimaran, even though it is a proven design by a well respected designer. Other companies are refusing to cover boats older than 15 years, despite the fact that they may have been maintained in near new condition. I have included all of the information I have in section 5 of this article.
If you have a hard to insure boat, and have found a carrier, please contact me so that I may pass your findings on to other owners under who find themselves in similar circumstances.
Your insurance policy may include towing as part of the base cost or offer it as an optional add-on. If your towing bill exceeds your BoatUS limit, you can file claims with both BoatUS and your insurance company, as long as you don't make a profit on the transaction. Decide how much total coverage you need; and if the basic coverage totals are not enough, add extra coverage to the least expensive one.
Some insurers treat fishing equipment differently than other personal items. It may have a different deductible, separate premium, or lower maximum coverage. If you carry expensive fishing gear, pay special attention to this part of your policy.