Blog 2020

Insurance

What Boat Insurance Policies Cover

How and where you boat determines the type of coverage you need. An "all risk" policy will offer the best protection. However, an “all risk” policy does not cover every type of loss. In insurance terms “all risk” just means that any risk not specifically omitted in the policy is covered. Typical exclusions include wear and tear, marring, denting, animal damage, manufacturers’ defects, design defects, ice and freezing.

You may also be able to add extra coverage. Available options may include: medical payments, personal effects, uninsured boaters liability, and towing and assistance. Most policies will cover permanently attached equipment, as well as items like anchors, oars, trolling motors, tools, seat cushions, and life jackets. Be sure to discuss these options with your agent.

Types of Boat Insurance Coverage

This will depend on the type of policy, but common coverage add-ons (in addition to basic ones above) include:

• Specialized Coverage: Coverage for something specific on your boat like an expensive prop or navigation equipment.
• Salvage: Coverage that pays to remove your boat due to damage, from substantial to minor.
• Consequential Damage: Covers a loss that was the result wear and tear rather than an accident (rot, mold, corrosion).
• Towing: Towing your boat across a body of water to safety can cost $400 per hour.
• Cruising Extension: You can get temporary, additional coverage if you plan on leaving the USA (typically to Mexico or the Bahamas).

Not Sea-Trialing The Boat After Repairs Are Made

A client purchased a used powerboat with a large outboard that had a cracked head. Because he wrote into the contract that the engine had to be working before he would buy the boat, the dealer had the engine fixed and claimed they performed a compression test to verify everything was fine. After paying for the boat, the first time the new owner took the boat out, the rod blew a hole in the side of the engine. The dealer he bought it from first said he'd replace it with a used engine, but eventually said that the contract stated that boat was purchased in "as-is" condition and was working on the day of the sale.

Lesson: When contingencies are written into a contract, spell out the details and don't formally accept the boat until you've verified that all repairs have been made properly. Because of the high value of the engine, it would have made sense to have an independent technician check it out and even come along for a sea trial.

Not Allowing A Shop To Attempt To Honor Their Warranty

A client took his family out for a Memorial Day weekend trip when the inboard engine in his boat quit. In hopes of getting the boat fixed quickly to get back out on the water as soon as possible, he scanned the newspapers to find a repair shop. The shop he chose found water in the engine, estimated the repair at $1,500, and said it would have to send the head out for reconditioning.

When the member got the boat back and the engine was still not working, he lost confidence in the shop handling the repair and immediately took the boat to another shop, which fixed it. The member contacted the original shop to ask for his money back or have them reimburse him for the additional work. It refused, saying they were given no opportunity to correct the problem.

Lesson: Pick a shop carefully. Warranty law allows a shop to be given the opportunity to correct a problem. If you take your boat to another shop for further work, the first shop will have no obligation to refund your money or pay for extra work.

STAYING DOCKED DURING THE STORM?

Members of the BoatUS Catastrophe team estimated that as many as 50% of the boats damaged during Hurricanes could have been saved by using better docklines: lines that were longer, larger, arranged better, and/or protected against chafing. If you decide to leave your boat at a dock, you'll need to devise a docking plan that is liable to be far different than your normal docking arrangement. By the time preparations are completed, your boat should resemble a spider suspended in the center of a large web. This web will allow the boat to rise on the surge, be bounced around by the storm, and still remain in position.

Take a look at your boat slip and its relation to the rest of the harbor. For most boats you'll want to arrange the bow toward open water or, lacking that, toward the least protected direction. This reduces windage. Next, look for trees, pilings, and dock cleats-anything sturdy-that could be used for securing docklines. With most docking arrangements, lines will have to be fairly taut if the boat is going to be kept away from pilings. The key to your docking arrangement is to use long lines, the longer the better, to accommodate the surge. (A good rule of thumb: storm docklines should be at least as long as the boat itself.) You will probably want to use other boat owners' pilings (and vice versa), which calls for a great deal of planning and cooperation with slip neighbors and marina management.

Lines should also be a larger diameter to resist chafe and excessive stretching. On most boats you should use 1/2" line for boats up to 25', 5/8" line for boats 25' to 34', and 3/4" to 1" lines for larger boats. Chafe protectors ("Critical Points") must be on any portion of the line that could be chafed by chocks, pulpits, pilings, etc.

To secure lines to hard-to-reach outer pilings, put the eye on the piling so that lines can be adjusted from the boat. For other lines, put the eye on the boat to allow for final adjustment from the dock.

You've completed your fact-finding missions and the used boat you are considering has come up clean.

Now it's time to PASS ... Purchase Agreement, Survey, and Sea Trial. These are the steps you need to take to make sure the boat makes the grade.

Purchase agreements are important because they protect the buyer and the seller. The agreement should clearly state that the purchase is contingent on a satisfactory survey and sea trial and the ability to obtain acceptable financing (if you are getting a loan) and marine insurance. A "good faith" deposit of about 10% should be included with the stipulation that the deposit is refundable if any contingency can't be met. Also be sure to specify a delivery date when the sale will be completed.

It is extremely important that you read the agreement before you sign it. Not only should you look for the above contingencies but also the details of what you have to do to get your deposit back if the deal falls through. The Bureau has dealt with many complaints where buyers have lost their deposits due to the contracts being broken without cause. Protecting yourself is important because the majority of used boats are sold "as is," which means that you will have little or no recourse against the seller if problems become apparent after the sale. Finally, be sure that all signature lines are signed by both buyer and seller.

Dealer or private seller?

This argument just may have been going on as long as the debate of which came first, the chicken or the egg. Buying from each has its pros and cons. The going dealer commission rate on used boats is 10% whereas a private seller doesn't charge a commission. On the other hand, a dealer may provide after-sale service or even a warranty and might be able to help with a loan if you need to finance the boat.

Whether you end up buying from a dealer or from a private seller, I recommend, "Buy local."

In fact, consider it your mantra when looking for a boat.

You will come across all kinds of beautiful boats online or in boat classifieds; however, if you are in Albany, NY, and the seller is in Disco, WI, you can't just hop in the car and take a look at the boat without taking some major time off from work.

Also, if the dealer is five hours away and the boat develops problems, you aren't going to be happy having to drive back and forth to the dealer, wasting precious boating hours.

Local boaters know local dealers.

Your fellow boaters are good sources of information about how dealers treat their customers.

But before you buy, do your research.

"Dig up the Dirt."

Obviously, no boat is defect-free.

There are some models that are known to have problems.

But where can you find out this information?

Recalls on boats and engines can be found on the U.S. Coast Guard's website: www.uscgboating.org/.

Q: Marine surveys are a waste of money for smaller boats, aren't they?

A: A professional "condition and valuation" marine survey (typically costing around $15 to $20 per foot) can often pay for itself. It provides a list of deficiencies as well as needed repairs, focusing on safety. Deficiencies can be used to renegotiate the sales price or scrap the deal altogether if the repairs are too expensive or complicated. Without a survey, you may overpay or be faced with unexpected and expensive repair bills. For most people, a boat worth more than a couple thousand dollars is a candidate for a marine survey.

Q: Cheaper auto-engine parts work just as well on a boat, right?

A: Not so fast! Substituting certain automobile parts in your boat's engine can be dangerous. Inboard and sterndrive engines are housed in an enclosed space, unlike car engines, which are exposed to air. A small spark can set off gas fumes that build up in a boat's bilge. Boat-engine parts, such as starters and alternators, are designed to be spark-proof or "ignition protected," while automotive parts aren't.

Q: My boat has a capacity plate. Does that mean the U.S. Coast Guard certified that my boat is safe?

A: Neither the U.S. Coast Guard nor any other federal agency certifies boats. Only a few federal laws govern boatbuilding, including flotation requirements for powerboats under 20 feet, passenger- and weight-capacity labels, and fuel-system safety. Manufacturers self-certify that their boats meet these legal standards. The Coast Guard does, however, have a factory-visit program that audits boatbuilders periodically for spot checks and tests a few dozen boats for flotation compliance every year.

Q: My boat has flotation, so it can't sink, right?

A: Only monohull powerboats 20-feet long and smaller and built after 1972 are required to have integral flotation designed to keep it from sinking, even when swamped. The U.S. Coast Guard requires these boats to be able to remain afloat and, in most cases, upright when filled with water. Sailboats aren't required to have flotation, and inboard/outboard boats have less-stringent requirements than outboard boats. Some manufacturers, such as Grady-White, install flotation in all of their boats, regardless of size.

Stainless steel can and does rust.

Whoever named stainless steel must have been an optimist. Stainless steel certainly can and does rust, though if you know why, you can avoid using it in places where it's less suitable. Most marine-grade stainless used on production boats is from the 300 series. Type 304 is a good multipurpose steel. The Gateway Arch in St. Louis is clad with 304. Types 316 and 316L have a slightly higher nickel content and added molybdenum to improve their corrosion resistance over 304 — especially with regard to pitting and corrosion in saltwater environments. There are higher grades as well, such as the type used in dental implants. Most boaters will opt for Type 316 and 316L.

The key to stainless steel is that the chromium in the steel combines with oxygen to form an invisible surface layer of chromium oxide that prevents further corrosion from spreading into the metal's internal structure. Stainless steel actually protects and repairs itself, except in areas where there is a low level of oxygen, such as a stainless-steel screw in a damp deck core. This kind of corrosion is referred to as "crevice corrosion." It can eat into the stainless, causing great weakening. In some cases, cheap plated steel or zinc fasteners are mistaken for stainless steel and then cursed when they begin to rust or crumble. Use stainless steel where it won't be starved of oxygen, and get high-grade stainless fittings from a known supplier. Stainless steel that is attracted by a magnet is not what you want to use on a boat.