Insurance: hull coverage vs. liability only

Chrisjs · Mar 25, 2014

Further to what Bay Pelican indicated, I believe our umbrella will only cover vessels up to relatively small length - can not remember for sure but seem to think about 25 ft or so. I figure it might help with the RIB but provides no additional protection for the trawler.

BandB · Mar 25, 2014

West Marine doesn't technically sell insurance. They refer to Boat US which then offers it. Now, of course, Boat US isn't actually an insurer. Theirs is underwritten by an insurance company. They just changed to National Liability & Fire Insurance Company. Previously it was Continental Casualty. Boat US insures around $8 billion in boat value.

Now while we've discussed in general the need for Hull coverage to have salvage coverage and the fact liability policies don't provide that, Boat US does offer what they call a Liability Plus policy. This policy is liability plus it adds salvage coverage.

That also is one reason that just getting quotes and comparing is of little benefit if you aren't certain exactly what each policy covers. What about cruising areas? Named storms? Haulout for named storms? Salvage? So many issues and complicating matters.

AusCan · Mar 25, 2014

Some of the marinas around here require liability insurance of up to $2million, even for an overnight stay. I don't know if American marinas have similar policies.

My comprehensive insurance with $2M liability costs $700 year. I classified myself as a sailboat rather than a power boat which made it about 25% cheaper. It may be worth putting up a steadying sail to reduce costs.

jwnall · Mar 25, 2014

AusCan said:
Some of the marinas around here require liability insurance of up to $2million, even for an overnight stay. I don't know if American marinas have similar policies.

My marina only requires $300K liability. Have no idea how representative that may be of U.S. marinas in general, though.

BrianSmith · Mar 25, 2014

IMG2 said:
Do a little insurance shopping, both on the internet and with a local marine insurance broker. Going through a broker saved me a substantial amount over the best policy I found myself. My policy cost about 1/3 less than the numbers you quoted for a vessel that is insured for more than double what you are talking about. Don't skimp on insurance, they are like PFD's, if something happens you can't have enough.

IMG2, can you share contact info for your broker? I've spoken with only one broker so far, plus BoatUS (their quote was more than twice as high), so I'm far from done looking. Just trying to educate myself. Thanks!

BrianSmith · Mar 25, 2014

Tom.B said:
Have you shopped around or is this the only insurance quote you have gotten?

This one, plus one from BoatUS (which was more than twice the cost).

I guess I should have ALSO asked for recommendations for insurance brokers that I should talk to, huh? (So... any recommendations?)

I'm still in the early phases, but these seemed like good questions to have answered early in the process.

Thanks,

Brian

BrianSmith · Mar 25, 2014

djmarchand said:
If you operate a boat, your liability could be much, much more than the cost of the boat. If heaven forbid, you hit another vessel, sink it and kill a couple of passengers, you liability could be millions.

And most marinas that permanently berth you require either a copy of your insurance policy or to be named as an additional insured under your policy. They require minimum limits of $300,000 which is pretty standard in the marine insurance industry.

We have the $300,0000 of boat liability insurance and an umbrella policy that is relatively inexpensive and extends the limit by $2 million.

Whether you also take out hull insurance is a matter of how much risk that you can stand financially. Unless you have a loan for the boat, there is no requirement for hull insurance.

David

To be clear, I'm not trying to scrimp on the insurance! I want to have all the LIABILITY coverage that it's prudent to have (so... how much IS that?). OTOH, I don't want to have any more HULL COVERAGE than I really need. Maybe I didn't say that very clearly.

BrianSmith · Mar 25, 2014

BandB said:
Brian. First, I'd shop the insurance market. However, don't just shop price. Find out what they are covering. Do they include salvage? What about named storms?

But then after saying that I'm finding a disturbing portion of your post and want to try to address this without sounding rude. I'm bothered that you're already looking for short cuts. Not having comprehensive insurance including hull coverage. How little liability. Compared to just the initial work you'll need to do on a $50,000 boat to get it ready and the annual maintenance on one, this is just a small part.

To be clear, I am NOT looking for short cuts - just information. To me, the decision to purchase hull coverage is a financial / risk decision, just like having collision coverage for a car. (I have a 19 year old Volvo station wagon that I don't have collision on, but I do have it on my much newer Passat wagon, for example.) But if SALVAGE costs are not part of the liability coverage, and would only be covered by the hull coverage, well, that's information I didn't have before, so thank you!

BandB said:
As others have said, just because the value of the boat is $50,000 and you're only half oqwner, doesn't mean you're limited to $25,000 exposure. The cost of salvaging the boat and cleaning any environmental damage could be several times that and salvage is part of the hull coverage, not the liability coverage.

As to liability, what kind of liability do you have on cars? Plane? What has your attorney advised you to have? I'd recommend as someone else did $300,000 minimum with an umbrella for a couple million. But the umbrella should be part of your whole insurance plan.

This is exactly the kind of input I was hoping for - again, thanks!

BandB said:
<snip> What is the age of the boat? That does impact insurability and cost greatly.

It's a 1974 or 1975 (we are looking at two different ones). And yes, I'm finding that age definitely matters - which seems strange, as it has nothing to do with the cost of either auto or airplane insurance. Oh, well...

BandB said:
Now someone mentioned LLC's in a rather harsh way as weaseling out of blame. I can say without question if I was buying a boat in a partnership situation I'd want an LLC. <snip>

Thank you for that. The LLC approach is not a way to weasel out of anything - it just happens to be a very neat, tidy way to form and manage a partnership.

BrianSmith · Mar 25, 2014

MVNoPlans said:
The OP asked two questions: if liability only policy is wise for a sub $50K hull, and if so, how much liability would be enough.
My answer to first question is yes, and the answer to the second question depends on the financial position of the owners. If neither couple has much in the way of assets, you have less to fear from a lawsuit and less need for higher limits. Why? Because no attorney will take the time to sue two couples who have no reachable assets as the attorney will not get paid. In that instance, any party damaged by your boating will from a practical standpoint be stuck with your policy limits.
Our marina requires a minimum of $300K in liability. Check with marinas in your area, take a look at what you have to lose if things go wrong, and insure appropriately.
As was mentioned above, your liability is not generally limited to the 50% ownership. Let us imagine you and your wife have assets and the other couple does not. "Joint and several liability" will enable a potential plaintiff to have a go at you for the entire damages in excess of the policy limits even if you were not on the boat when the harm occurred. Choose your co-owners wisely as well.

Great information / advice. And to clarify, we and the other couple are in sufficiently good financial condition that we could each easily "eat" half the cost of a $50K boat - and also good enough that someone with an aggressive lawyer would probably want to come after us both. So, "more than minimum" liability sounds like it's in order, and the jury is still out on the hull coverage. (Unless I confirm that the costs of salvaging a sunken boat would not be included in the liability coverage, but would be covered by the hull coverage. That would probably tip the scales towards full coverage.)

Thanks.

BrianSmith · Mar 25, 2014

alormaria said:
Call Al Golden at IMIS. You need to discuss marine insurance with a marine insurance broker. He deals with 3xA rated companies you will never find yourself.

I will, thanks!

BrianSmith · Mar 25, 2014

Will said:
If I read that right, liability only for $2200 a year......that seems a might bit high...?

Recommend shopping around a bit........

No, sorry, $1,100 for liability only, another $1,100 for hull coverage, for a total of $2,200. Even at that, though, I will be shopping around a bit!

ranger58sb · Mar 26, 2014

alormaria said:
Call Al Golden at IMIS. You need to discuss marine insurance with a marine insurance broker. He deals with 3xA rated companies you will never find yourself.

I've been working with Al and his IMIS folks (son Gary, plus Heather, etc,) since the early '90s, and they do very much seem to keep an eye out for our best course of action over the years.

-Chris

Insurance: hull coverage vs. liability only

Chrisjs

Guru

BandB

Guru

AusCan

Guru

jwnall

Moderator Emeritus

BrianSmith

Senior Member

BrianSmith

Senior Member

BrianSmith

Senior Member

BrianSmith

Senior Member

BrianSmith

Senior Member

BrianSmith

Senior Member

BrianSmith

Senior Member

ranger58sb

Guru

Similar threads

Latest posts