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Some important concepts about insurance can be confusing to the average consumer, especially with marine insurance–the least regulated field of the insurance industry. Marine insurance differs significantly from other forms, such as homeowners and auto insurance. Other forms are standardized within a given state; every marine policy can differ more substantially from others in important ways. Provided below is valuable information on understanding, evaluating, and buying marine insurance from any company or through any agency or broker.
Types of Property Coverage: Agreed Value, Replacement Cost, and ACV
Again, remember, items such as canvasses, tops, sails, outboard motors, and certain other items are often covered on an ACV basis on “agreed-
Don't find out that you have inferior coverage when it's too late. Make sure you insure your property and liability correctly now, and avoid unwanted surprises.
The term "liability coverage", as commonly used, can actually refer to more than one form of coverage, but in general, it pays for legal expenses to defend you from lawsuits arising from the operation of your vessel; it also pays for covered financial damages awarded by the courts to a plaintiff in such cases where a court holds you legally liable. In the case of P&I coverage, but not Watercraft Liability, it also pays for the expenses of wreck removal, oil spillage, and other things named within the P&I policy. There are some exclusions and important differences in the types of liability insurance, of which you should be aware. The exact coverage provided under any policy will be written within the policy jacket. Read carefully, as various coverage items are commonly provided within one section of a given insurance policy but excluded in another section of the same policy–or vice-
Though the terms are often used loosely, interchangeably, and incorrectly-
Policies may vary, but generally, Watercraft Liability generally covers bodily injury and property damage to others. It does NOT cover bodily injury to YOU, a family member, or an operator of your vessel. If you receive a quote that says "Liability" instead of P&I, confirm whether or not you are being quoted Watercraft Liability or true P&I-
Policies may vary, but generally, P&I covers everything that Watercraft Liability covers PLUS the following: liability to captain and crew (where Jones-
Other Important Variables and Information
Be aware of how far offshore your policy covers you. Some policies are inland only. Inland rates are typically lower than coastal rates. Coastal policies generally allow use in saltwater while inland policies are typically limited to “inland lakes and rivers” and often limit navigation to freshwater. Some coastal policies limit navigation to 5, 10, 25, 50, 75, or 100 miles offshore. Most of our coastal-
"Inland navigation" normally refers to operation of a vessel inland of the freshwater demarcation line. However, on some policies, "Inland Navigation" can also refer to saltwater harbors, lakes, and rivers. The latter is the exception, not the rule.
"Coastal navigation" normally refers to operation of a vessel in saltwater within, along, and outside of the coastline. It normally includes offshore navigation, but be sure to check what your offshore mileage limits are and/or if there are any on your policy.
Be very careful here. Some companies provide marine insurance policies with NO COVERAGE for windstorms. This is often overlooked by customers: they do not even know that they don't have coverage for damage caused by the effects of wind or windstorms. Some agents do not actively discuss this with their clients. One popular misconception is the idea that a person's homeowner’s insurance will cover his boat for the windstorm as long as the boat is in his garage. That is false. Homeowner’s insurance only covers boats up to 14 feet in length, with up to a 25 HP motor, while in the garage, for up to $5,000. If you insure your $50,000 bay boat with an X-
Most policies exclude mechanical breakdown, but we offer certain policies that include it. We are one of the few agencies who has a charter-
A named windstorm is any windstorm that has been given an official name by an official weather service; for example, such storms include, but are not limited to nor-
Some polices from certain carriers carry “named-
This is the same as the named-
The Jones Act is another name for the Merchant Marine Act of 1920, which regulates maritime commerce in U.S. Waters. The Jones Act grants rights to “seamen”–which can be any paid captain or crew member–to collect for injuries caused by the negligence of the captain, fellow crewmen, or the owner of the vessel. If you have anyone who might be considered a “seaman” under the Jones Act, such as (but not necessarily limited to) a paid captain or mate, you need Jones Act coverage. The U.S. Supreme Court has defined a “seaman” as being one who spends more than 30 percent of his time in service of a vessel on navigable waters, but the determination in any given case will be up to the courts. If you have anyone who might reasonably be construed by an attorney as an employee of you or the boat, you need to discuss Jones Act coverage with a knowledgeable marine insurance agent. We can discuss the details of this with you and provide necessary coverage.
Pleasure boat policies provide coverage for boats that are not involved in commerce. We offer part-
Charter coverage is for boats that take passengers for hire, such as fishing boats, guides, dive boats, eco-
The term “captain’s coverage” can mean more than one thing because it’s used loosely. If you have a paid captain and/or crew, you have a liability exposure with regard to them in the event that they get hurt on your vessel, and we can cover that exposure on our marine polices. Upon request, we can also offer separate policies for captains who operate vessels that they do not own to cover their own liability exposures arising from their own conduct as a professional captain.
Most marine insurance policies include a marginal amount of coverage for towing, if any. Average limits are around $500 and sometimes $1,000. Some of our polices include $5,000 of towing coverage at no additional premium. Keep in mind that towing and salvage are not the same thing and that most marine insurance polices cover salvage, and those with real P&I cover wreck removal, also. Also, keep in mind that towing coverage on a marine policy only applies to being towed on the water, not the road.
Marine “salvage” is the act of rescuing a vessel from imminent peril or recovering it after abandonment or loss. Coverage for necessary salvage costs pertaining to the insured’s vessel as a result of a covered peril is provided on most marine insurance policies.
Most marine polices cover this risk because maritime law requires boaters to help each other on the water.
Many marine policies exclude activities like skiing from coverage, and in order to cover this activity, it must be added back to the policy with an endorsement or be otherwise stipulated as covered without being excluded. As with other perils and options, we offer some policies that cover skiing, and some others that do not. If you ever intend to pull skiers; make sure you have the proper coverage. Inform your CSR or agent about any skiing activity that you intend to do.
Parasailing is normally excluded from coverage; however, we offer commercial policies to cover this activity for parasail operators.
Whether pleasure or commercial, boat and yacht policies typically only cover liability for incidents directly involving the VESSEL. Incidents that occur on docks, beaches, or otherwise not onboard the vessel, are not covered, unless specified in the policy or endorsed. If you operate a business, there are many other liability exposures that remain UNCOVERED by a marine policy. We encourage you to explore the full range of your liability exposures and will be assist you. We can provide coverage for these additional commercial exposures by providing a Commercial General Liability policy.
Contrary to popular misconceptions, umbrella policies do not cover over everything. They often contain exclusions and/or require an underlying amount of liability insurance for any given exposure. A common exclusion is liability for watercraft. We can offer umbrella policies and provide high limits of liability coverage on your marine policy. If you have an existing umbrella policy, speak to your agent to make sure it covers over watercraft and to determine the underlying limit. We will be happy to help.
Owners and operators of marinas, boat dealerships, repair facilities, boat clubs, and other organizations often operate clients’ boats in the course of business operations. Commercial General Liability policies do NOT cover this without marine P&I coverage added.
MOLL covers the liability exposure related to a business that may be deemed by a court to have taken legal care, custody, or control of someone else’s boat. This coverage is important for boat and yacht dealers, marinas, and some repair facilities and mechanics (and similar operations). We offer MOLL coverage to applicable commercial customers. Some general-
Mysterious disappearance, freezing, thawing, improper winterizing, racing, skiing (on certain policies), intentional acts causing loss, losses associated with boats under contracts not disclosed to the insurance company, and wear and tear are generally excluded.
Racing (racing requires a specific policy covering that type of use),
Leasing or contracting the boat without disclosure to the insurance company,
Towing the vessel with a trailer or vehicle not rated for the effective weight of the vessel,
Misrepresentation of material information,
Failure to comply with safety standards of the boat manufacturer or law enforcement,
Failure to operate, moor, and maintain the boat in a reasonable and responsible manner.
Failure to uphold your responsibilities set forth in any given policy.
Admitting fault or otherwise undermining the defense case of your insurance company in a liability claim where you are the defendant.
Actual coverages, exclusions, endorsements, and definitions vary per policy. We offer policies from dozens of companies, each of which have varying coerages and options. It would be virtually impossible to accurately describe all actual or specific policy provisions for all companies, policies, and customers. This web page is only a general guide on how various policy provisions and terminology are commonly applied in the marine-
As your active agent, we work hard to help process and expedite claims with the various carriers to our ability, based on the leverage we have by having long-
Strickland Marine Insurance Agency, Inc. is not a law firm or an insurance company or carrier; the information on this web page is provided as general industry information for customer-
Copyright Strickland Marine Insurance Agency, Inc., 2014
Strickland Marine Insurance
125D Wappoo Creek Drive
Charleston, SC 29412
125 D Wappoo Creek Drive, Charleston, SC 29412