Marina insurance question

Hello! I have a question regarding my marina. I just paid for my slip for the upcoming season & got a weird email from the marina telling me I had to include the Marina in my insurance coverage. That seemed strange to me.

The good news is that I didn't sign anything! Last year at the same Marina they didn't have this clause, but is it now a standard practice?

By the way, I responded by asking them for the actual clause they are referring to in the contract. I'm not going to sign anything without reviewing it, but it seems kind of cheesy to me.

Any thoughts about this? I could use advice.

PS once I get the contract, I'll run it by my insurance company, too.

PSS I'm limited as to where I can dock bc I need a covered slip.

One more thing.

The Marina said it was a clause to include the Marina as an 'Additional Insured.' That's the term they used.

Pretty standard practice in California. Just renewed all my paperwork and listing the marina as additional insured was done too. Tossed me for a loop the first time too but a call to my insurance company explained it well. They didn't bat an eye about it.

Standard procedure for CA

Additional insured rider on your policy, no added cost to you, protects the marina if your boat causes damage. Like catching fire and burning another boat. Puts your insurance first in line.

Starside said:

Hello! I have a question regarding my marina. I just paid for my slip for the upcoming season & got a weird email from the marina telling me I had to include the Marina in my insurance coverage. That seemed strange to me.

The good news is that I didn't sign anything! Last year at the same Marina they didn't have this clause, but is it now a standard practice?

By the way, I responded by asking them for the actual clause they are referring to in the contract. I'm not going to sign anything without reviewing it, but it seems kind of cheesy to me.

Any thoughts about this? I could use advice.

PS once I get the contract, I'll run it by my insurance company, too.

PSS I'm limited as to where I can dock bc I need a covered slip.

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CP and Scary have hit the nail on its proverbial head. Close to 100% of the marinas here in Puget Sound require this.

Marinas require tenants to have insurance. Too often, the tenant will get a binder of coverage to obtain the slip, then cancel the policy. The marina gets 2 major benefits when an Additional Insured:

• They are indemnified in the event of a major calamity.
• They are notified of any major policy changes (pending cancellation, cancellation)

It's a no charge endorsement to you, and a quick paper change for us agents/brokers. Go ahead and get it done.

Hmmmm, I work at a law firm & I question the policy. I already have liability insurance which covers damage to the Marina & other boaters.

I think there's something shady here. What if the Marina works on your boat & makes a mistake like adding water to your fuel tank. Are they liable? Or are you? This could also increase our costs!

What if a transient boater clips your slip & damages a piling? Is the Marina liable, or are you?

Do you see? It's a slippery slope & if a claim is ever filed, we lose! Also, marina repair would be very expensive so you'd have to increase your liability amount.

I'm going to review the language closely before I sign. Guess I'm being cautious but I don't think it's fair for a marina to pass on its costs to the customer. My slip is 5400 a year for a 27' boat. I don't appreciate the extra cost just to protect the Marina. I think it's shady & tells the customer they don't appreciate your business.

Same thing applies to homeowner insurance if you live in a homeowners association (at least ours). When this first came up I questioned it but when I talked to my insurance company they had no problem with it and said that it was no big deal. No cost increase in premium and no change in my coverage. That it was being done all over. I expect you will find this almost anywhere you go. I know it alarmed me also but seems the insurance companies have no issue with it. I also talked to an attorney and he said the same thing. At that point I went along with it. Now been that way for 7 years and no issues.

Starside:

It doesn't work that way.

If a third party causes the accident your insurance will not respond. Only if you damage the marina dock, etc or damage another boater and that boater makes a claim against the you and the marina will your insurance respond.

Without this endorsement, the marina must make a claim against you for the damage you caused and then you have to make a claim and recover from your insurance company. With the additional insured endorsement the marina recovers its losses directly from your insurance company and it takes you out of the middle.

Any damage caused by a third party like clipping a dock is not covered by your insurance and any claim you may have against the marina for faulty work is not covered by your insurance.

David

Starside said:

My slip is 5400 a year for a 27' boat. I don't appreciate the extra cost just to protect the Marina.

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Veering aside for a minute... that seems pretty pricy compared to marinas up where we are. Certainly compared to our marina. Shorter drive for you, too, assuming you're coming east on US-50.

Not as in the way of Galesville amenites (two restaurants) extra nearby, but not too bad. And in our case, it makes Galesville an luncheon or dinner destination... by boat.

Anyway, you might want to do some shopping around once you've got your conversion squared away.


And now, back to your regularly scheduled conversation...

-Chris

Starside said:

Hmmmm, I work at a law firm & I question the policy. I already have liability insurance which covers damage to the Marina & other boaters.

I think there's something shady here. What if the Marina works on your boat & makes a mistake like adding water to your fuel tank. Are they liable? Or are you? This could also increase our costs!

What if a transient boater clips your slip & damages a piling? Is the Marina liable, or are you?

Do you see? It's a slippery slope & if a claim is ever filed, we lose! Also, marina repair would be very expensive so you'd have to increase your liability amount.

I'm going to review the language closely before I sign. Guess I'm being cautious but I don't think it's fair for a marina to pass on its costs to the customer. My slip is 5400 a year for a 27' boat. I don't appreciate the extra cost just to protect the Marina. I think it's shady & tells the customer they don't appreciate your business.

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You're putting too much "what if" thought process into a pretty simple thing;

• I think there's something shady here. What if the Marina works on your boat & makes a mistake like adding water to your fuel tank. Are they liable? Or are you? This could also increase our costs!

If the marina is contracted to work on your boat, their professional liability coverage will cover damages caused by their work.

• What if a transient boater clips your slip & damages a piling? Is the Marina liable, or are you?

I don't see the relevance of this question. The transient boater is responsible for the damage he causes to your slip and the piling. You would not be involved.

The marina has plenty of insurance coverage for things they are liable for. The marina requiring you, as a boater, to have coverage as part of the moorage agreement is standard practice. As a boater, you are responsible for what you do. Why should the marina pay for damages you cause?

They shouldn't.

There is no added cost to you when a marina (or any entity) is added to your policy as an Additional Insured. There is no pass-thru cost involved- the endorsement is free. Also, liability coverage is very inexpensive- we recommend $300k as a minimum, and to increase that to $500k is usually about $30/year. To increase to $1M from $300k is about $125/year.

Flip your thinking 100%- I'd rather be in a marina where insurance coverage is required and the marina requires to be added as an A/I, because it ensures that there is coverage available should a calamity occur. That tells me, as an insurance professional, that the marina cares about its business and its tenants.

IMO, this is another area where I see boaters do their damnedest to cheap out on coverage, then demand that the insurance company pay if/when they have a claim.

Pau Hana said:

You're putting too much "what if" thought process into a pretty simple thing;

• I think there's something shady here. What if the Marina works on your boat & makes a mistake like adding water to your fuel tank. Are they liable? Or are you? This could also increase our costs!

If the marina is contracted to work on your boat, their professional liability coverage will cover damages caused by their work.

• What if a transient boater clips your slip & damages a piling? Is the Marina liable, or are you?

I don't see the relevance of this question. The transient boater is responsible for the damage he causes to your slip and the piling. You would not be involved.

The marina has plenty of insurance coverage for things they are liable for. The marina requiring you, as a boater, to have coverage as part of the moorage agreement is standard practice. As a boater, you are responsible for what you do. Why should the marina pay for damages you cause?

They shouldn't.

There is no added cost to you when a marina (or any entity) is added to your policy as an Additional Insured. There is no pass-thru cost involved- the endorsement is free. Also, liability coverage is very inexpensive- we recommend $300k as a minimum, and to increase that to $500k is usually about $30/year. To increase to $1M from $300k is about $125/year.

Flip your thinking 100%- I'd rather be in a marina where insurance coverage is required and the marina requires to be added as an A/I, because it ensures that there is coverage available should a calamity occur. That tells me, as an insurance professional, that the marina cares about its business and its tenants.

IMO, this is another area where I see boaters do their damnedest to cheap out on coverage, then demand that the insurance company pay if/when they have a claim.

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Peter is right on target. This is standard for apartment complexes, marinas, malls, shopping centers, and homeowners' associations. Anywhere you rent. Where he says flip your thinking, that might be the biggest point made. It's very much to protect you by having it specified on all renter's policies. I know of a case very recently where an apartment complex required it but didn't enforce it. Someone put a cigarette on a shelf in the storage closet adjacent to the patio. Burned the building badly, leaving it uninhabitable. Apparently having significant problems collecting from tenant's insurance as they were noted as "additional insured." It's a no cost endorsement.

As he says also additional liability is something I'd recommend. It takes so little to cause $100,000 or $300,000 damage in a marina. One million dollar boat lost because of an electrical short on yours. We tend to think in terms of cars and overlook how much higher the values of boats are.

I suggest all look into an umbrella policy to extend above their individual liability policies like this one and auto.

As to marina repair, if it's your fault, you're already responsible. Either your insurer pays or you have to. But rest assured if your boat sticks in gear and you take out a dock, then that falls to your liability insurance and doesn't matter how much insurance they have.

My marina in Seattle requires proof of liability coverage. The policy has standard language naming the "marina, yacht club, or similar facility where the vessel is kept" as an additional insured. It's not an endorsement or an additional form to complete and doesn't name my home marina specifically, so presumably any marina where I travel is covered.

The AI requirement is at marina discretion. Shilsole doesn't require it, but Edmonds does....

drb1025 said:

My marina in Seattle requires proof of liability coverage. The policy has standard language naming the "marina, yacht club, or similar facility where the vessel is kept" as an additional insured. It's not an endorsement or an additional form to complete and doesn't name my home marina specifically, so presumably any marina where I travel is covered.

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Sounds like the wording from a Travelers Luxury Yacht of Chubb masterpiece policy. You're automatically covered at any marina as far as the policy is concerned, but the marina may still may want the formal AI language.

I think in most situations where someone wants to be an additional insured or a named insured is that they receive notification if you cause the insurance to go away by either not paying for the policy or by actually cancelling the policy.
It is common practice in many business situations to require a sub contractor (for instance) to have liability insurance and to require that the both the company hiring the sub and the general contractor be "named insured" on the policy. That way everyone knows for sure there is insurance.

BryanF said:

I think in most situations where someone wants to be an additional insured or a named insured is that they receive notification if you cause the insurance to go away by either not paying for the policy or by actually cancelling the policy.
It is common practice in many business situations to require a sub contractor (for instance) to have liability insurance and to require that the both the company hiring the sub and the general contractor be "named insured" on the policy. That way everyone knows for sure there is insurance.

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Very good point.

Normal here. They ask annually for insurance document as well as annual registration/documentation.

BryanF said:

I think in most situations where someone wants to be an additional insured or a named insured is that they receive notification if you cause the insurance to go away by either not paying for the policy or by actually cancelling the policy.
It is common practice in many business situations to require a sub contractor (for instance) to have liability insurance and to require that the both the company hiring the sub and the general contractor be "named insured" on the policy. That way everyone knows for sure there is insurance.

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Yup.

I had it removed from my policy.
If for some reason my boat causes damage to others, the marina gets in line like everyone else.
Having them as an "additional insured" means they're at the front of the line, and quite possibly, in front of you.

I actually asked the marina if I was listed as and "additional insured" on their policy.
Seems only fair, right? You know the answer I got...

If there's a claim against my policy, I'm first. Everyone else lines up behind...

Patemey said:

I had it removed from my policy.
If for some reason my boat causes damage to others, the marina gets in line like everyone else.
Having them as an "additional insured" means they're at the front of the line, and quite possibly, in front of you.

I actually asked the marina if I was listed as and "additional insured" on their policy.
Seems only fair, right? You know the answer I got...

If there's a claim against my policy, I'm first. Everyone else lines up behind...

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Respectfully, I must question and disagree with you.

Question- As the A/I endorsement is not part of the policy until requested by the insured, it is not a big thing to get it removed. Than being said, does your marina require to be named on your policy as an A/I?

If, for some reason, your boat does damage to others, the hierarchy will not be that the marina "gets in line first" due to the A/I endorsement. Rather, depending on the severity of the event, both the injured parties vessels and marina) will generally seek remedy from their own policy to speed up the repair or remedy to the injured parties- then the insurance companies will subrogate against the injuring party's insurance policy.

The above is treated as one claim by the injuring party's carrier.

Secondly, Having the marina on the policy does not boot them to the front of the line- because there is no line. Next, you cannot make a liability claim against yourself, so your statements that "they would be in front of you" and "I'm first" are invalid. Liability coverage is for the damage you can do to others, not yourself. If your vessel is damaged but repairable, the Part A hull coverage would cover the repair of your vessel.

There is no reason for you to be an additional insured on a marina's policy. We (as recreational boaters) don't have the exposures that a marina does, (commercial general liability, maritime general liability, SRLL if the marina engages in repair operations, etc. I'm sure you could push it as a matter of principle, but i's be ego talking and not much more.

If there's a claim agains your policy, the type of claim will determine who is paid. Once you file the claim, your duties are done, and the insurance company is in the driver's seat with regards to the disposition of the claim. Same if another party file a claim against your policy- the insuring company has the legal obligation to act as your legal representative in the adjudication of the claim.

So from your description, the only benefit to the marina of being an A/I is they get notified if I reduce or cancel my insurance? Seems there are better ways to go about this than adding the marina to your policy...

I suspect that due to all the privacy laws now days that if they are not on the policy there is no way the insurance company can notify them. The marina would have to ask for proof of insurance on a regular basis. I guess if there where not people who provide proof of insurance to get in and then cancel to save money there would be no requirement. But, having been someplace that requires car insurance to get a tag on your car and then being involved with a driver who had current tags on his car but no insurance because it had been cancelled I totally understand the point of view of the marina operators. Those people are out there.

Patemey said:

So from your description, the only benefit to the marina of being an A/I is they get notified if I reduce or cancel my insurance? Seems there are better ways to go about this than adding the marina to your policy...

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Agreed, sir- were all folks upfront and ethical, this would not be a problem.

The reason that more marinas are requiring the A/I endorsement is that too many time, a marina tenant would obtain insurance, show the proof to the marina, then promptly cancel the policy. When a claim occurred, the marina would be left as the potential target because of their lack of enforcement of their requirement.

Any party that is an A/I on your policy cannot change, cancel, or even discuss any specifics of the policy- that is the privy of the named insured (usually the owner). It's really no different than you having the requirement by an auto lender to carry insurance on a financed car. The lienholder can ask if coverage is in force, but cannot make any changes to the policy.

Also, as the marina has no vested fiscal interest in the vessel, they are not privy to any partial or total loss payments.

ranger42c said:

Veering aside for a minute... that seems pretty pricy compared to marinas up where we are. Certainly compared to our marina. Shorter drive for you, too, assuming you're coming east on US-50.

Not as in the way of Galesville amenites (two restaurants) extra nearby, but not too bad. And in our case, it makes Galesville an luncheon or dinner destination... by boat.

Anyway, you might want to do some shopping around once you've got your conversion squared away.


And now, back to your regularly scheduled conversation...

-Chris

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Yeah the problem is the covered slip. They are all 60' & even though my boat's half that size, I'm still paying for the bigger slip.

I do want to find another marina, though but am at Galesville through the year.

Does your marina have covered slips?

Proof of insurance isn't the issue. We all have insurance & show the Marina the term that it's good for. That's easy for them to track. When it expires, they just ask for proof of renewal.

For me, I just don't get why A/I is necessary. I already have liability insurance to $500k. That covers other boats, the Marina, etc.

Why is the Marina asking for A/I if our insurance already covers it? That's what I don't get & why I'm leery.

Anyway, I hear what everyone is saying - that it's standard practice & I should just go with it. I will ask my insurance company, though & will ask for an explanation of how it benefits the Marina. If there's no benefit, then why do they do it? There has to be a reason, & I suspect it lowers their insurance costs somehow...And that's what makes me question it bc if it's lowering the marina's costs, then there must be some hidden liability that we are being asked to cover, right?

Anyway, that's just my legal brain going off. I just like to know all the dirty details in practice before I sign anything.

Patemey said:

So from your description, the only benefit to the marina of being an A/I is they get notified if I reduce or cancel my insurance? Seems there are better ways to go about this than adding the marina to your policy...

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I agree with you here. I don't think that's the reason why they do it.

My Proof of Insurance includes the Term of 1 year & I pay upfront, so if proof of insurance is their reason, then they have no reason to ask it of me as I'm paid in full until 2016.

Starside said:

I agree with you here. I don't think that's the reason why they do it.

My Proof of Insurance includes the Term of 1 year & I pay upfront, so if proof of insurance is their reason, then they have no reason to ask it of me as I'm paid in full until 2016.

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While you are paid in full you could cancel and get some money back.
The marina would have no way of knowing that the policy was cancelled.

How happy would you be if someone else did that. Then ran into your boat and sank it. Who would you go to for $$ when the owner had no assets and no insurance? My guess is you would sue the marina for allowing a boater into your marina with no insurance. And I suspect that most of us would not accept "But they showed a piece of paper that said they had insurance " as a reason for the marina to not make good on our claim. So...

In theory, you are correct. In actual practice, not so much.

In an average sized marina, there may be anywhere between 10% and 50% (or more) absentee owners (more than 300 miles form the marina). Take that amount, factor in the fact that an overwhelming majority of boat owners are weekend warriors and never engage the marina staff, and the challenge increases. The A/I has the insurance company automatically sending proof to the marina.

There are no hidden agendas- there is no savings that the marina gets for requiring its tenants to add them as an A/I. Even it there was, it wouldn't be of concern to you, so no need to worry about it. Stop looking to tilt at windmills you think are dragons......

Why does your legal practice carry Professional Liability Insurance and E & O insurance? Because your business practices demand the coverage in the event that you create a liability event thru slander, libel, or the perception for the client that his legal advisors did not act in his best behalf. In a like manner, the marina carries insurance for its business practices. Unlike your legal practice, the marina has additional exposures from its moorage clients, and demands that said clients carry insurance AND provide proof of same. The proof for some marinas can be a photocopy or a certificate fro the agent. Other marinas require the Additional Insured endorsement.

If you're so paranoid about this, you may want to rethink boating as a past time. The other legal ramifications will twist your head sideways... Admiralty Law, Jones Act, the OPA of 1990, and so on.......

BryanF said:

While you are paid in full you could cancel and get some money back.
The marina would have no way of knowing that the policy was cancelled.

How happy would you be if someone else did that. Then ran into your boat and sank it. Who would you go to for $$ when the owner had no assets and no insurance? My guess is you would sue the marina for allowing a boater into your marina with no insurance. And I suspect that most of us would not accept "But they showed a piece of paper that said they had insurance " as a reason for the marina to not make good on our claim. So...

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Exactly. I can have a policy cancelled in 5 minutes- the insured will have unearned premium in hand within a week or 2. Only the named insured would be notified unless the marina is listed as an A/I.

In your example above, the marina might be found not liable if they have that paperwork supplied by the client showing proof of coverage.

Here home lenders go on the Policy,true they have an insurable interest, but they get notified if the policy lapses, premium unpaid, etc, and can even renew the policy(and charge the borrower the cost).
Making the Marina party might enable them to lodge a claim for damage the boat owner did, if he refuses to lodge a claim. If your insurer does not mind, why would you? If it lowers the Marina insurance cost, that might mean lower slip rent for you.
Change of subject,I read above policies carry $500K public liability. Is that a mistype for $5M? Seems way too low. 10M is more like it. Say your boat catches fire, your fault, sets fire to parts of the marina and 10 boats...it adds up.