Boat Insurance Coverages, Accidents, Injuries and Claims
We are in the thick of boating season in Ontario. The sun is shining, the lakes are getting warm, and everyone has their much-loved watercrafts out on the water.
But what happens if you get into a boating accident, or even worse cause injury to someone with your boat? First and foremost, you want to ensure that you have adequate insurance coverage in place; otherwise, you may be paying out of pocket for physical damage to the watercraft or law suits made against you.
In this article, we will be covering boat insurance basics, including:
- Boat insurance policy basics: what your coverages are
- Physical damage claims: what happens if you damage your boat
- Liability claims: the importance of liability limits and what it covers
Boat Insurance Policy Basics
Boat insurance policies and coverages are not all created equal. Generally speaking, you have two options for insurance on your boat: put the boat on your property or home insurance policy, or purchase a marine-specific insurance policy.
Your home insurance policy may automatically provide coverages for boats under a certain size and horsepower for predetermined value limits. Or you may need to “schedule” the boat onto the policy for physical damage and liability coverages. With that said, putting a boat onto your property policy is not always the best idea. If you have a claim, it will affect your home insurance policy and you may experience issues such as losing discounts, having difficulty changing companies, and more.
We always recommend purchasing a marine-specific insurance policy for your boat. This ensures that claims related to the boat remain away from your home insurance and only affect your boat insurance.
We work with many different marine-specific insurance companies, and while each company’s coverages differ slightly from another, the basic coverages are generally the same.
Your basic marine-specific coverages will include:
Hull and Machinery
This coverage outlines the dollar amount of physical damage coverage that you have placed on the hull and motor/engine/other equipment that is on the boat. There will also be a deductible on the policy. The value that you insure your boat for should be the purchase price plus any additional taxes or fees. This value is the maximum amount of money you would receive in the event of a total loss to your boat. Settlement basis on your policy may be replacement cost, agreed value, or actual cash value. It’s important to review your limits and settlement basis with your licensed broker to ensure you understand your coverages.
Liability Insurance
This coverage provides you with protection against claims (law suits) from injuries or damage to other people or property. There will be a listed limit for this coverage, which is usually $1,000,000.00 or $2,000,000.00. This liability coverage differs from your personal liability on a property policy in the way that it will only cover you for claims related to the operation of the boat insured on the policy, whereas your personal liability coverage is much more robust.
Now that you understand the two main coverages on a marine policy, it’s time to apply them to real-life situations.
Physical Damage Claims – What Now?
Picture this: It’s the August long weekend and the weather is spectacular. You took some vacation time, and you’re out crusing on Georgian Bay. You’ve been on Georgian bay before, but you’re not all that familiar with it. All of a sudden you hear a crunch and a scraping sound and you realize what you’ve done—you’ve scraped the hull on rocks in water that was shallower that you realized. Both the hull and the prop have extensive damage.
You’re going to have to put in a claim to your marine insurance provider. What you’ll need is your policy number, a note on the time and approximate location of the accident, who was driving the boat, and a bit of an idea on the damage sustained.
Then you’ll open your claim. The claim process for a boat is very similar to that of a vehicle. You’ll be assigned an adjuster, the damage to the boat will be assessed by an appraiser, and then it will be determined as to whether the repairs will be approved or the boat will be written off and deemed a total loss if the damages are so substantial that repairs would cost more that the value of the boat.
If the repairs are authorized, you will simply have the boat repaired at a qualified marine repair shop. If the boat is deemed a total loss, your adjuster and appraiser will determine a value to offer you based on your settlement basis, at which time you and either accept or counter offer.
If at any time you have questions or concerns about your claim, you can contact our licensed brokers for information and help on the process. We are always here to answer your questions and step in when you need us to.
Liability Claims – The Importance of Limits
The Canadian Government has passed legislation to ensure that if a marine incident happens in Canadian waters, people affected can be compensated for eligible losses. This legislation includes the Marine Liability Act, which sets out limits on the compensation that can be awarded in the event that an incident takes place.
Most marine-specific policies automatically include $2,000,000.00 liability, but some companies still offer a limit of $1,000,000.00. It is extremely important that you purchase a liability limit that will adequately protect you in the event of a claim. For example, if you are found liable for causing life-altering injuries to multiple people in a boating accident, each of those individuals may make a claim against you.
Your liability limit will also cover you for the cost of your legal fees to defend yourself, pollution damage caused suddenly and accidentally by you, and uninsured or underinsured coverage if you suffer damages from another boater.
Closing
We’ve briefly reviewed the main coverages available under a marine-specific insurance policy. While the foregoing is an excellent starting point to understanding the coverages available, it is not all encompassing, and your specific situation is unique and deserves to be reviewed in detail with a licensed broker to ensure proper protection.
Contact our office at 1-888-231-2011 option 2 or visit our website to start a quote for your boat insurance needs.
Stay safe while out on the water. Never operate a watercraft while intoxicated.
