Is Getting Boat Insurance Changing?

There have been some ongoing changes to marine insurance over the years. They seem to have started because of the increasingly dangerous weather conditions as the Earth warms, including more named storms and hurricanes in the southern waters. There have been instances in the Caribbean where million-dollar catamarans were hiding from an incoming hurricane, and all of them were destroyed. It isn’t any wonder that when insurers face huge losses, they become cautious about whom or which boats they will insure.

We sometimes don’t consider that the Insurance Industry is a business that needs to make a profit over time, or its investors will move their money somewhere more profitable. Lloyds of London has been insuring boats since 1688, and individuals have invested money into it with the anticipation that their investments would surpass their losses at the end of the year. When the insured ships were lost at sea, insurers lost their investment and often owed more than they had invested. The same is true today, and recent bad years with devastating hurricanes have made Lloyds reconsider recreational marine insurance in some parts of the world. As losses increase, all insurance companies are becoming more careful about issuing insurance policies to boaters.

A recently received notice from Navtec, an organization that trains surveyors in Fort Myers, Florida, discusses some things surveyors need to remember.

Insurers want to know that the boat is safe to insure and that no items would cause it to sink or catch fire. The agents don’t have the time or the expertise to go out and check your boat, so they rely on marine surveyors to check boats for them. A surveyor can tell what a boat is worth compared to others. He or she can suggest things that should be done to the boat to make it safer for the owner and less of a risk for the insurer. A new wrinkle is that with many boat prices starting to go down, the insurance industry is beginning to worry about them being over-insured. Insurance Underwriters have discussed that with sailboat prices dropping, many boats are over-insured and so will only sell insurance for the amount sales data states a particular boat should be worth. If you live in an area where prices are inflated, like the Okanagan, and the survey reflects this higher price, the insurers might return with a lower amount.

When you buy a new boat, before it’s licensed or registered in your name, they also suggest a “rider” policy to cover it while you receive it, register it, and bring it to your moorage.

That’s the boat, and it may be in excellent condition and just what you paid for it, but there is another wrinkle. The insurers want to know if you are as accomplished as the boat. An insurer is often unwilling to insure the boat because the person running it is a bad risk. The insurers want to know if you have much experience with the type of boat and the area in which you plan to use it. Someone with 10 years on the water in a canoe and 5 years running a powerboat will not be the best risk for taking a large sailboat for a trip around Vancouver Island, thus, insurance can be denied or limited. Insurers are also interested in whether you have had any accidents, tickets, or convictions involving cars or home insurance claims.

Suppose you plan to cruise your quarter-million-dollar Island Packet to Mexico or the Caribbean and want it totally covered. In that case, you may be denied because it’s in a hurricane location, or they may require it to be moved to a safe area during that time of year, or they may ask you to get more experience and training before they write an offshore policy.

The latest development is that many insurance companies are not offering full coverage to boats older than 20 years. In addition, I’ve heard of some offshore insurance companies requiring the rigging to be less than 10 years old to be able to get insurance.

Our well-cared for Corben 39 that was written off 4 months after our work on the hard when a named storm flooded it.

Things are indeed changing in the Insurance business.

So, what should we do to have the best chance of getting full coverage on an offshore-capable boat?

• Take as many courses as possible and keep track of them in a file.
• Get as much experience as you can on a boat like the one you want to insure and log that in your file.
• Insurers will ask who the principal operator is. It’s the person with the experience.
• Include some Power Squadron courses, as well as the Bluewater Cruising Association ones.
• If you have motor vehicle tickets or suspensions, expect some resistance.
• Don’t use your boat in organized races.
• Get to know your boat systems and learn to repair whatever breaks.
• If you buy an old boat, be prepared to restore it to its former glory before you have it surveyed.
• Maintain a spotless boat, which means the bilges, too. A surveyor will be impressed that the owner maintains a clean boat, which generally means the systems are also maintained.
• Like every other surveyor, I’d like to be able to rate it above average rather than state many things need to be fixed, and the insurance broker will read the items that need to be upgraded.