Liability only or full coverage

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Insurance Coverage

  • Liability Only

    Votes: 4 13.8%

  • Full Coverage

    Votes: 25 86.2%
  • Total voters
    29
B

BobH

Guru
Joined
Feb 25, 2012
Messages
844
Location
USA
Vessel Name
Encore
Vessel Make
Whitby 42
Getting ready to renew our boat policy and thinking about going with liability only. Lived aboard a sailboat for six years and cruised down to the Virgin Islands and up to Maine. Owned a aft cabin trawler for five years. Never had a claim on either one. So, do we need collision and comprehensive?


Do you have liability only or full coverage?



Bob
 
We've done it both ways. On one hand, if I had put the extra money for hull coverage in the bank all of these years, there isn't much we couldn't pay for with it today. On the other hand, if I had lost a boat when I only had liability, I'm not sure I would have had the incentive to get a new one, starting from scratch.

We have full coverage now, but, every time we get our bill, I think about going to liability only. I don't think there is a right answer, other than what is right for you.
 
It all depends on the value of the boat, how much you cruise and where you cruise.

If your boat is only worth $5,000 then forget collision. But a $5,000 boat can still cause a huge liability that could wreck you financially, so always take out liability coverage.

Collision coverage gets more important as the value of the boat increases, particularly as a pct of your net worth. And it also gets more important if you cruise in hurricane prone areas.

There is no single answer.

David
 
I have "full coverage" But if you do the math using their depreciation schedule (5% to 10% per year of boat age) on a 30 plus old boat and the deductable it ends up being a liabity only policy.
 
Liability only. Wood boat, they're not going to pay what the boat's worth anyway. Besides, I haven't hit things, damaged docks, other boats, etc., in about 60 years on the water.
 
Full coverage. I have an agreed value policy with only minor depreciation. Also have coverage for drivetrain failure and a bunch of other normally excluded conditions. Hope I will own the boat 10 years and view the insurance as the cost of playing the game.

Ted
 
djmarchand said:
It all depends on the value of the boat, how much you cruise and where you cruise.

If your boat is only worth $5,000 then forget collision. But a $5,000 boat can still cause a huge liability that could wreck you financially, so always take out liability coverage.

Collision coverage gets more important as the value of the boat increases, particularly as a pct of your net worth. And it also gets more important if you cruise in hurricane prone areas.

There is no single answer.

David
Click to expand...

This is the most correct answer. The coverage you select depends on your individual needs.

Bud said:
I have "full coverage" But if you do the math using their depreciation schedule (5% to 10% per year of boat age) on a 30 plus old boat and the deductable it ends up being a liabity only policy.
Click to expand...

Lepke said:
Liability only. Wood boat, they're not going to pay what the boat's worth anyway. Besides, I haven't hit things, damaged docks, other boats, etc., in about 60 years on the water.
Click to expand...

Bud and Lepke- your observations may or may not be correct based on the policy you select:

  • An Agreed Value policy will not depreciate for total loss- in the event of total loss, you will receive the value agreed upon at policy start and stated on the Declarations page of your policy. Partial losses may have depreciation applied, depending on the policy language.
  • An Actual Cash Value policy will determine the value the vessel at the time of loss, rather than at policy inception. Depreciation usually factors into the settlement.
 
An option I use here in FL is hull insurance minus the named storm coverage. If there is one thing I have proven over and over again it is that I know how to prevent catastrophic damage to my boat by a storm. Unless a tornado picks it up and whisks it away or lightning strikes during a named storm I am covered. It makes a sizable difference in premium. When my wooden hulled trawler which I owned from its 14th through its 43rd birthday got to around 25, I opted for liability only. It was bought in 1972 new for 47K and sold in 2015 for over 60K while I bought it in 1985 for 75K.
 
Pau Hana said:
This is the most correct answer. The coverage you select depends on your individual needs.





Bud and Lepke- your observations may or may not be correct based on the policy you select:

  • An Agreed Value policy will not depreciate for total loss- in the event of total loss, you will receive the value agreed upon at policy start and stated on the Declarations page of your policy. Partial losses may have depreciation applied, depending on the policy language.
  • An Actual Cash Value policy will determine the value the vessel at the time of loss, rather than at policy inception. Depreciation usually factors into the settlement.
Click to expand...

I have an agreed value policy and like you say it will pay out that amount but only on total loss. What are the chances that? Not so much in my book maybe a fire I suppose.
 
Something to consider here is damage “caused” by others, or their boats.

Lets take a example so that we can start to understand the problem.

Lets say that your slip mates boat catches on fire and your boat is also lost.

You would assume that your slip mates insurance would pay you the value of your loss, in this case your boats value plus all your stuff inside.

Why, simply because your slip mates boat causes the loss of your boat through it burning up.

But... Is your slip mate liable for your boat? Maybe not. Was he negligent? That is the question that a court would have to answer.

His boat could easily burn up and nobody was negligent, in which case you may not be able to recover even one dime.

Thats one of the reasons that I’ll always have full coverage. My insurance company contractually agrees to replace my boat, even if it cannot recover from another party.
 
Bud said:
I have an agreed value policy and like you say it will pay out that amount but only on total loss. What are the chances that? Not so much in my book maybe a fire I suppose.
Click to expand...

All damages even if another boat hits me depreciation applies which ranges from 5% to 10% depends on the item being replaced. So an accident that does say $100,000 of damage. The depreciation of 10% a year for 30yrs results in a value of $4710. There is a clause that says in no event shall the depreciation value be less than 20% of the replacement cost. I am not sure how that is applied but Then subtract my deductable there isn't much left to do the repair.
 
Decisions, decisions. On our homes we only carry liability, the boat has full coverage of course the homes are sitting on land which won’t be destroyed. I guess tied to my home Dock I could sue myself. :)
 
Full coverage with an Agreed Value Yacht Policy (not a boat policy) plus a separate umbrella liability policy in case I hit something or someone and do more than my boat's coverage will pay for.


At my age I don't want to lose everything in a lawsuit. Not likely, but why take the chance.
 
All good comments here on insurance. One more item to consider: If the marina where you dock damages the boat by accident your docking contract likely precludes you from claiming against marina. To make it worse, if the marina sinks your boat, they may go after you for environmental damage and loss of business - some or all of which may not be covered by a liability only policy.
 
There are many factors to consider. One is the definition of full coverage vs. liability only. What is in your "full coverage" policy. Is it agreed value? Does it allow depreciation on partial losses or not? Then there is salvage and environmental.

Finally, it's your risk tolerance. Talking about never having a claim really means absolutely nothing. You could have one tomorrow through no fault of yours. So, can you accept and afford the total loss of your boat or a major loss and needing to pay out of your own pocket. In our case, we could replace, but we like to spread the risk with others, with insurers. I don't have the risk tolerance to deal with knowing I could incur such a loss.
 
Pau Hana said:
This is the most correct answer. The coverage you select depends on your individual needs.





Bud and Lepke- your observations may or may not be correct based on the policy you select:

  • An Agreed Value policy will not depreciate for total loss- in the event of total loss, you will receive the value agreed upon at policy start and stated on the Declarations page of your policy. Partial losses may have depreciation applied, depending on the policy language.
  • An Actual Cash Value policy will determine the value the vessel at the time of loss, rather than at policy inception. Depreciation usually factors into the settlement.
Click to expand...

Perhaps Lepke is in the same boat as us?
We couldn't get agreed value.
All we could get was market value and to them, that was the price we paid.
We stole the boat, we could never ever replace her for the price we paid, at best we'd be paying 4x more for her 5ft shorter lesser sister.

If we were to make a claim the item would be depreciated to probably zero.
Deductibles would likely be higher than the claim.
The best part of the coastline was out of bounds for several months of the year.
The piece de resistance was Lloyd's pulling out as underwriter and Berkshire Hathaway/Chubb taking over and increasing premiums on vessels over 18m x 700% or 7% of insured value.
Figured we were better off increasing the maintenance and ground tackle and going liability only.
 
Last edited:
Bud said:
All damages even if another boat hits me depreciation applies which ranges from 5% to 10% depends on the item being replaced. So an accident that does say $100,000 of damage. The depreciation of 10% a year for 30yrs results in a value of $4710. There is a clause that says in no event shall the depreciation value be less than 20% of the replacement cost. I am not sure how that is applied but Then subtract my deductable there isn't much left to do the repair.
Click to expand...

Not completely accurate.

If another boat hits you, the offending party’s insurance SHOULD make good on the repair of your vessel without depreciation or deductible. ONLY if your policy gets involved would depreciation and deductible come into play.

In other words, your policy will come into play only if the offending party’s policy does not adequately cover the loss, or if the offending party is uninsured and does not have the funds to make you while. Your policy then steps in and effects repairs on your vessel (subject to the policy language) and then subrogates against the other party.

Otherwise- your policy does not come into effect.
 
Mark P said:
All good comments here on insurance. One more item to consider: If the marina where you dock damages the boat by accident your docking contract likely precludes you from claiming against marina. To make it worse, if the marina sinks your boat, they may go after you for environmental damage and loss of business - some or all of which may not be covered by a liability only policy.
Click to expand...

What you describe is called a “waiver of subrogation” clause. It’s essentially a hold harmless clause in a contract that states the marina cannot be held liable (via subrogation) for damages they may cause.

Quite wretched, in my opinion.
 
Pau Hana said:
What you describe is called a “waiver of subrogation” clause. It’s essentially a hold harmless clause in a contract that states the marina cannot be held liable (via subrogation) for damages they may cause.

Quite wretched, in my opinion.
Click to expand...
Worse still, if you contractually release the Marina from liability they would otherwise be caught with, your insurer may have something to say about its liability to you. Check your policy, there could be a provision negating their liability if you release someone they could have recovered from, under your rights subrogated to them when they meet your claim.
 
If the boat value is a small proportion of your total assets, it may not be worth complete coverage. If a total loss of the boat is not going to severely affect you, then it is a poor investment.

The insurance companies charge an amount which they expect will make them a profit. The odds are almost always in their favour, especially if you boat in a low risk area. You are likely subsidizing the payments of those who are a high risk, such as those in hurricane area, or are completely inexperienced in boat handling.

If the loss of your boat would be a disaster to your life, then you obviously need full insurance.
 
Goes back to individual needs. Personally I could lose the vessel and be fine. It would not upset my life. I would miss it but I have another boat so it wouldn"t stop us from being on the water. That being said it just bugs me that you go to these insurance companies to protect your asset and they put all these clauses and exemptions and warranties so they can not protect your asset if there is a accident. No other industry or category puts up with this crap. The boating industry manufactures, brokers, yards, suppliers, and users should get together and lobby for cleaner policies more like car insurance. I bet you there are more accidents per vehicle than accidents per boat. especially over 40ft.
 
Mark P said:
All good comments here on insurance. One more item to consider: If the marina where you dock damages the boat by accident your docking contract likely precludes you from claiming against marina. To make it worse, if the marina sinks your boat, they may go after you for environmental damage and loss of business - some or all of which may not be covered by a liability only policy.
Click to expand...

I looked at my policy and under exclusions it has:
"Liability assumed by you under any contract or agreement". so I think that is what your talking about if I sign a contract with marina and assume their liability I am not covered. Do you concur?
 
To me, it has nothing to do with your history of claims (or success). It comes down to two factors:

1) Can you afford to lose the boat?

2) Can you afford to replace the boat?

If the answer is NO to either, then I would consider a comprehensive policy.
 
Also keep in mind, Liability only doesn't typically cover salvage costs. If the boat drags onto a beach, are you prepared to have it removed out of pocket AND lose the boat? (I'm not talking about EPA oil/fuel clean-up which should fall under liability).
 
The insurance thing comes up often, and it's nothing more than a risk/benefit situation.


If everything were equal... you were an average boater had an average risk, average boat and operated in average conditions, insurance would be a waste of money in the long term.


I could argue, if one had a number of items to insure and spent a strong effort on avoiding an issue they would come out WAY ahead without insurance.



Another thought.... if you self insure:

you don't worry about deductibles
there is no hassle with the insurance companies
there are no policies with fine print
you don't have to go to court to get justice
there are no attorneys

there no need to create and maintain a value list of the components and their value and pictures
And, in some cases you can deduct the loss as a casualty loss. (See IRS Publication 547, form 4684.)


So, what's the chances you'll have an accident? Just raw stats, including EVERY boat is once in 285 years, and that loss would be $1,085.65. Now, our boats are most likely a LOT more expensive than the average, but crash a LOT less than average. If we factor in how many boats 40 to 65 feet have accidents and the percent that are out there it's about 20 times safer than the average.


The point being, is that you're VERY UNLIKELY to have and accident, and significantly less having a total loss.


BUT and here's the BIG BUT...... IF the boat is a substantial amount of your net worth, perhaps your home and that's most of what you have, a total loss will put you out of business permanently. You will likely die before getting the benefit of the "time between total losses" makes you whole. And that's a risk most folks aren't willing to take.



So, it's a very personal thing.
 
Seevee said:
The insurance thing comes up often, and it's nothing more than a risk/benefit situation.


If everything were equal... you were an average boater had an average risk, average boat and operated in average conditions, insurance would be a waste of money in the long term.


I could argue, if one had a number of items to insure and spent a strong effort on avoiding an issue they would come out WAY ahead without insurance.



Another thought.... if you self insure:

you don't worry about deductibles
there is no hassle with the insurance companies
there are no policies with fine print
you don't have to go to court to get justice
there are no attorneys

there no need to create and maintain a value list of the components and their value and pictures
And, in some cases you can deduct the loss as a casualty loss. (See IRS Publication 547, form 4684.)


So, what's the chances you'll have an accident? Just raw stats, including EVERY boat is once in 285 years, and that loss would be $1,085.65. Now, our boats are most likely a LOT more expensive than the average, but crash a LOT less than average. If we factor in how many boats 40 to 65 feet have accidents and the percent that are out there it's about 20 times safer than the average.


The point being, is that you're VERY UNLIKELY to have and accident, and significantly less having a total loss.


BUT and here's the BIG BUT...... IF the boat is a substantial amount of your net worth, perhaps your home and that's most of what you have, a total loss will put you out of business permanently. You will likely die before getting the benefit of the "time between total losses" makes you whole. And that's a risk most folks aren't willing to take.



So, it's a very personal thing.
Click to expand...

Good analysis!
 
Bud said:
Goes back to individual needs. Personally I could lose the vessel and be fine. It would not upset my life. I would miss it but I have another boat so it wouldn"t stop us from being on the water. That being said it just bugs me that you go to these insurance companies to protect your asset and they put all these clauses and exemptions and warranties so they can not protect your asset if there is a accident. No other industry or category puts up with this crap. The boating industry manufactures, brokers, yards, suppliers, and users should get together and lobby for cleaner policies more like car insurance. I bet you there are more accidents per vehicle than accidents per boat. especially over 40ft.
Click to expand...


Bud,


Boy, you hit the nail on the head, and totally find that to be true. They want their cake and eat it too. If they loose money, they just raise the premiums and/or reduce the coverage, or they just stop selling in that area/market.


Property/Casualty profits over the last 20 years have been 40 Billion, with 2018 being nearly $60 Billion. Profitability has been in the 3 to 8% and agencies in the 9 to 11%. Not horribly bad considering they can just charge more, move in markets and just not pay claims, unlike any other business.



And, agree, I could argue the risk on boat losses over 40 feet is ridiculously low. The vast majority of us will never have a loss.



Now, in sounding so negative on insurance, I do have hull coverage on my trawler. And that's because I feel it's a reasonable risk, but getting to the time to rethink. I'm on my third year of ownership, did the great loop which for me was a high risk activity.... new to the boat and in areas I've never boated. And my premiums are less than 1/2 of one percent of the hull. When it approaches one percent I start to rethink. Out of 20 boats, I've only insured 2. The other I had a partner in and that's ok, but the premiums were brutal. Never a loss, other than towing.
 
Here's just another thought....


Most people tend to over insure. Gotta be protect from everything..... house, car, boat, bike, and even their phones! And I'd bet that most of them consistently loose money on premiums.


What ever happened to just be responsible for ones self?


How much do the premiums have to go up before we just say NO?
 
Seevee said:
The insurance thing comes up often, and it's nothing more than a risk/benefit situation.


If everything were equal... you were an average boater had an average risk, average boat and operated in average conditions, insurance would be a waste of money in the long term.


I could argue, if one had a number of items to insure and spent a strong effort on avoiding an issue they would come out WAY ahead without insurance.



Another thought.... if you self insure:

you don't worry about deductibles
there is no hassle with the insurance companies
there are no policies with fine print
you don't have to go to court to get justice
there are no attorneys

there no need to create and maintain a value list of the components and their value and pictures
And, in some cases you can deduct the loss as a casualty loss. (See IRS Publication 547, form 4684.)


So, what's the chances you'll have an accident? Just raw stats, including EVERY boat is once in 285 years, and that loss would be $1,085.65. Now, our boats are most likely a LOT more expensive than the average, but crash a LOT less than average. If we factor in how many boats 40 to 65 feet have accidents and the percent that are out there it's about 20 times safer than the average.


The point being, is that you're VERY UNLIKELY to have and accident, and significantly less having a total loss.


BUT and here's the BIG BUT...... IF the boat is a substantial amount of your net worth, perhaps your home and that's most of what you have, a total loss will put you out of business permanently. You will likely die before getting the benefit of the "time between total losses" makes you whole. And that's a risk most folks aren't willing to take.



So, it's a very personal thing.
Click to expand...
Curious if your numbers are based on liability, hull insurance, or both?

Another question that comes to mind is how many losses and accidents go unreported? If you don't have any insurance and your boat sinks, does that make the statistics? If you only have liability insurance, do you report accidents with your vessel so the insurance company can raise your liability rates?

Finally, the use factor really isn't factored into those statistics. I currently own 6 registered boats (don't ask :nonono::facepalm:), of which 2 didn't go in the water this year. It wouldn't surprise me if 33% of all the boats in the USA were used (underway) less than 10 hours this year, and 90% were used less than 100 hours this year. The point being if you're a car driver, over a certain amount of miles each year, you are more statically likely to be involved in an incident. I would imagine that probably is true for boating.

This is one of those things where looking at averages is probably hugely misleading as we are probably a group at the top 10% of the price range and top 20% of the use range.

Ted
 
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Seevee said:
Another thought.... if you self insure:

you don't worry about deductibles
there is no hassle with the insurance companies
there are no policies with fine print
you don't have to go to court to get justice
there are no attorneys

there no need to create and maintain a value list of the components and their value and pictures
.
Click to expand...

Oh yes, you still have all those worries from the other party involved, if any. Marinas and other boaters and their policies and you still need to know values and you may still end up with attorneys and courts. Don't think you get completely out of it.
 
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