Additional Insured?

(Hoping for responses from any insurance professionals here.)

The Green Cove Springs fire thread has raised a question I've been wondering about. Here's my story:

I found a boatyard I liked very much. Got my waterpump rebuilt for $26.00 (yes, the decimal is in the right place, I had the rebuild kit). My plan a couple years ago was to haul out there for some work and leave the boat for a month to return north. The yard said I needed to have my insurance changed to put them on the policy. I called my company and they said they couldn't do that. I thought maybe something was getting lost in translation so I asked my agent to contact the yard and work it out. The agent called me back and said the yard was crazy and what they were asking for was illegal. (They were in Maine so insurance regulations may vary by state). She explained that, since the yard had no ownership or insurable interest in the vessel, they couldn't be a named insured. She said they offered a letter assuring the yard that our insurance would cover any damage to the yard or other vessels due to something like an electrical fire but the yard would accept nothing less than a policy that had their name on it somewhere. I found another yard.

After reading the GCSM thread, and learning that this is becoming common practice at many marinas, I called up that yard and was told their policy has not changed. I've never been asked for this anywhere else.

Can someone explain what is going on here? Can that yard, which is doing a booming business mostly for lower end boaters, really be getting all of them to have their insurance policies re-written before hauling? My company is a major one and made a good case why they couldn't write a new policy just to have a boat hauled. My agent said the yard probably was going bare without insurance and trying to get the customers to provide it indirectly.

Well, this is a bit complicated to explain. Normally, without the additional insured thing, if you damage a marina or other boats due to something like a fire on your boat, then the injured party, the marina or the boat owner, has to make a claim against you, your insurance company will investigate and if valid pay the claim. This is all within the liability provisions of your policy.

Now if you designate the marina as an additional insured under your liability policy, not your hull policy, then if the above incident occurs, the marina can make a claim directly to the insurance company because they have a duty to protect the marina, not only you. So it makes it somewhat easier for the marina to get paid- they can work directly with the insurance company and not just through you.

It is a very common practice and most insurance companies routinely grant the additional insured protection to the marina for no additional charge. I am surprised that yours wouldn't. Maybe you were insured in a state that has regulations to prevent it, but again that isn't common.

The foregoing uses a simple example that probably was going to be paid by your insurance company in any case. There are other situations where your marina contract makes you responsible for their faults and the additional insurance comes into play. But that is specific to the contract, not neccesarily the additional insured provision.

FWIW, my marina asked for a copy of my insurance declarations when I signed up for a year's mooring contract. A month or so later I got a document from my insurance company providing that the marina was an additional insured. I didn't have to do anything. The marina and my insurance company took care of it.

David

Liability Policy. Should the Marina Keeper’s Liability Coverage lapse or become void, coverage under this endorsement shall be
suspended until such time as the Marina Keeper’s Liability Coverage is reinstated.
No insurance is provided hereunder for breach of said additional insured’s bailment duties and obligations nor for any liability or
damages arising out of the additional insured’s own negligence or the negligence of its employees, officers or agents. Further,
coverage hereunder shall be limited to damages arising from a covered peril but shall not include costs of providing said
additional insured with a separate legal defense in any litigation in which it is named as a defendant.
Coverage extended to the additional insured will be limited to indemnification for damages caused by the insured boat.
Contractual agreements for damages arising from accidents occurring on property belonging to the additional insured and/or the
negligence of the additional insured’s employees are specifically not covered by the policy or this endorsement.​

Thanks. This has been very helpful. I wish I had been party to the conversation between the yard and my insurance company. I suspect there was some miss-communication such as the yard failing to make it clear that they were talking about liability only. The manager was not a great communicator.

I'm still with the same company but now in a different state so, if this comes up, we'll see how it goes.

I have boats in two marinas in two different states. They both require to be named as additionally insureds on my policy. I have dealt with additionally insured clauses on my liability policies for years and years. Even on builders risk policies naming the customer for their equity in the project. This is covered by an "as interest may appear" clause. Insurance is a complicated item. There can be many ways to cover things.

Additional insured is standard for marinas, standard for apartments, standard for commercial rentals. It's really no different than every home mortgage which names the lender as an insured.

BandB said:

It's really no different than every home mortgage which names the lender as an insured.

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Actually, very different. The lender is a partial owner and has a financial stake in the property until the mortgage is paid off.

Your neighbor's house could burn down and set your on fire. How many people ask their neighbor to make them an additional insured?

Primarily the reason behind adding an "additionally insured" is required notification from the insurance company to the shipyard, marina, and other of cancellation of policy for any reasons. Stops individuals from getting insurance so they can enter yard or marina then cancelling policy. All contractors doing government work will have a policy with the municipality they are contracted with as an additionally insured so they can not cancel policy during the performance of the project without the municipality being directly informed by the insurance carrier.

Roger Long said:

Actually, very different. The lender is a partial owner and has a financial stake in the property until the mortgage is paid off.

Your neighbor's house could burn down and set your on fire. How many people ask their neighbor to make them an additional insured?

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Actually the lender is a lienholder, or mortgage holder, not a partial owner. They have no ownership. And the marina is also a lienholder in most states. They have a lien on the boat until their fees are paid, including any damages. Not as clear and obvious as in a mortgage and they aren't a mortgage holder.

Still, the better comparison is apartment rental and slip rental and both require listing as additional insured.

ulysses said:

Primarily the reason behind adding an "additionally insured" is required notification from the insurance company to the shipyard, marina, and other of cancellation of policy for any reasons.

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A friend of mine couldn't get his insurance company to make a marina an additional insured either. They would list the marina as an "additionally notified". That put them on the mailing list for notices of overdue premiums, cancellations, changes, etc. The marina accepted that.

It is becoming standard practice for marinas to request to be added as additional insureds. Here in my neck of the woods one company refused to do it. I won quite a few new clients as a result.

Robster_in_edmonds said:

It is becoming standard practice for marinas to request to be added as additional insureds. Here in my neck of the woods one company refused to do it. I won quite a few new clients as a result.

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We've added and removed so many times that we just speak to the same person in the office and she faxes and emails while we're still on the phone.

One other small but important tidbit is that once listed as an additional insured, (in NY at least) they receive notice when your insurance is canceled.

Dcbeach said:

One other small but important tidbit is that once listed as an additional insured, (in NY at least) they receive notice when your insurance is canceled.

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And they receive notice when they are removed as additional insured.

At one time this would have been a lot of effort for the insurance company, but with today's technology it's all pretty much automatic.

Our yacht club marina requires us to have them on our policy as "additional insured" but we have never had a boatyard make that request.

Here is what I just heard from my insurance rep this morning. Same company as before but issued in a different state by a different office:

[FONT=&quot]Good Morning Roger,[/FONT]
[FONT=&quot][/FONT]
[FONT=&quot]There are 2 different things going on from an insurance stand point. What you were told by the Maine agent is correct that the marina will not be listed as an INSURED as they do not own the vessel. However, what people are referencing on the forum is additional INTEREST. A marina can be listed under that to be notified of any changes to the policy as well as proof of the liability coverage. There is no charge to do this and is becoming the norm for apartment complexes also (they want to make sure liability is there in the event of a loss). [/FONT]
[FONT=&quot][/FONT]
[FONT=&quot]Please let me know if Oasis will like this to be done for you while it is at that marina so I can get it processed & over to you or them directly to not delay your schedule. [/FONT]
[FONT=&quot][/FONT]

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Roger Long said:

Here is what I just heard from my insurance rep this morning. Same company as before but issued in a different state by a different office:

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Sounds like you've come to a positive conclusion.

There is a difference between being "an additional insured" and being an "additional named insured". An additional insured has specific rights with respect to liability that your policy may cover. An "additional named insured" has the same rights and will be listed on any claim checks along with all other "named" policy holders.

jwilsail said:

There is a difference between being "an additional insured" and being an "additional named insured". An additional insured has specific rights with respect to liability that your policy may cover. An "additional named insured" has the same rights and will be listed on any claim checks along with all other "named" policy holders.

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Good point. And at least in one state shown above the accepted term is "Additional Interest." The marinas aren't going to quibble over the terminology.

Roger Long said:

A friend of mine couldn't get his insurance company to make a marina an additional insured either. They would list the marina as an "additionally notified". That put them on the mailing list for notices of overdue premiums, cancellations, changes, etc. The marina accepted that.

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That makes much more sense. It`s why lenders want to be included on property insurance, there is usually a deal that if the owner doesn`t keep the cover current it is kept current for the lender, who will pay the premium and add it to the borrowers debt.

Just putting the marina on as an insured runs counter to normal underwriting practice. What if the marina has a bad insurance record, has questionable employees(or even owners). Insurers like to know who they cover. Could premium rise, might the insurer just refuse to cover the marina? What happens with the duty of disclosure?

This happens in CA as well. marinas and yards.

Can't believe that your insurance carrier refused to add the yard as an "additional insured". That is a normal practice for every marina I have ever been in in recent years and I have never had any hassle from my carrier.