Insurance is one of those things you buy hoping never to use. If you do have to use it, though, you expect your boat insurance to pay "to fix the boat," whatever that means to you. If you haven't taken a close look at a potential policy, you could end up blindsided by clauses that exclude coverage for certain types of damage. You don't want to wait until you make a claim to find out if you're getting what you think you're paying for.

This week we will look at some of the shortfalls,

Some ways that some boat insurance policies fail to live up to expectations.

Consequential Damage

Keeping the water out is a constant battle. Half of all sinkings that occur at the dock happen when some small part below the waterline gives up the fight. The most common culprits include stuffing boxes, outdrive bellows, hoses or hose clamps, and sea strainers. But those parts most often fail due to what insurers call "wear, tear, and corrosion," meaning that the part succumbed to general aging and deterioration. Most insurers exclude losses from "wear, tear, and corrosion," so they won't pay for the failed stuffing box.

But what about your boat that's now sitting on the bottom?

Some policies won't cover that, either, because they exclude any "consequential" damage that results from wear, tear, and corrosion. Others will cover the resulting damage as long as it falls into very specific categories, most often fire or sinking. The most generous policies would cover your boat that just sank, plus the other losses likely to result from a failed part: fire, explosion, collision, dismasting, and stranding.

Salvage

In every hurricane, boats get scattered hither and yon, and after the storm they need to be salvaged — rounded up and returned to where they belong. That takes Travelifts, cranes, flatbed trucks, and other heavy equipment to accomplish, and it can cost hundreds of dollars per foot of boat length

In some insurance policies, the money to pay for salvage is deducted from what you get to fix the boat. Other policies pay salvage in addition to the money to fix the boat, but will only cover salvage up to 25% or 50% of the insured value. The most generous policies provide separate salvage coverage up to the insured value of the boat, in addition to payments made for the boat and its equipment.

Not in a hurricane area? Everyday events can still result in such salvage claims as a serious grounding, hitting an underwater rock or floating log, or running into another boat.

 Reason enough to be sure you understand how that would be handled under your policy.

If you’re curious as to the deeper meaning behind these signals, here’s some nautical flags know-how.

1. Shapes and types are important.

Nautical flags mostly take the forms of squares, though you’ll also see pendants, which are triangular with a flat tip. You’ll additionally see what’s called substitutes (alternately called repeaters), which are triangles. Since this is a “flags 101” article, we’ll focus on the squares and pendants. They’re the ones you’re more likely to see in common boating situations.

2. Learn the letters and numbers.

There are 26 square nautical flags, each representing a different letter of the alphabet. More accurately, each represents the international code word connected to the letters of the alphabet, such as Alpha, Bravo, Charlie, Delta, and so on. In addition, there are 10 pendants for the numbers zero through nine. For the numbers 10 and larger, a boat would combine flags.

3. Colors are by choice.

The only colors you’ll find on nautical flags are black, blue, red, yellow, and white. These colors stand out quite well when seen with your own eyes on the horizon or through binoculars. Flags can be a solid color or a combination of colors, too.

4. Solo or combined, nautical flags convey meaning.

Depending on the intended message, boats fly one flag or up to seven flags in a row.

• For example, if you see the A (Alpha) flag, this means “diver down, keep clear.”
• If you see the W (Whiskey) flag, the boat has a medical emergency and needs help.
• The combination of the D (Delta) and V (Victor) flags, meanwhile, means “I’m maneuvering with difficulty and require assistance.”
• The J (Juliet) and L (Lima) flags mean “you’re running the risk of going aground.”

In fact, signals with two nautical flags typically mean some type of distress or maneuvering issue. Three or more flags can include pendants and denote things like points of the compass, geographical signals, names of ships, time and position, as well as latitude and longitude.

5. Flags are sometimes exclusive or secret language.

While boaters around the world use nautical flags to communicate common scenarios, particular situations call for their own language. Race committees combine flags to convey a race is four minutes from start, for example, or that a course has been shortened. The U.S. Navy groups together signals in ways known only to its personnel to communicate with its fellow ships.

5 Boating Right of Way Basics

1. Vessels under sail (without auxiliary power engaged) have right of way over powerboats in most cases. There are exceptions as described above and in an overtaking situation.
2. When crossing, the boat on the right (approaching from starboard) has the right of way. At night, you’ll see a red light moving across your horizon to the left. If there is a constant speed and bearing, you’re on a collision course and need to take evasive action.
3. When meeting head-on, each vessel must alter course to starboard if possible to give a wide berth to the oncoming vessel. At night you’ll initially see both red and green lights.
4. Any vessel overtaking another must keep clear of the stand-on vessel. You must keep clear if you’re coming up from behind and passing any vessel even if you are under sail and are coming up on a powered vessel. At night you’ll see a white light.
5. When approaching another vessel whose intentions aren’t clear, take evasive actions early and make them clear in order to communicate effectively with the other vessel. In other words, slow down and make any course changes large enough to be understood and consistent (don’t drive haphazardly).

Today we will address larger boats

Large Boat (Greater than 29') Insurance

What are the differences between boat and yacht insurance?

Generally "boats" are considered to be 26' and smaller, and "yachts" are 27' and larger. Generally speaking yacht coverage is broader and more specialized because larger boats travel further and have more unique exposures.

What should I look for in a yacht policy?

There are two main section s of a yacht policy. Hull insurance is all risk direct damage coverage that creates a very broad insuring agreement. It will include agreed amount hull coverage, meaning all parties agree at the time the policy is written on the value of the vessel and that value will be paid in the event of a total loss.

A true yacht policy also includes replacement cost (new for old) coverage on partial losses, with the exception of sails, canvas, batteries, outboards and sometimes outdrives, which are depreciated. Protection and indemnity insurance is the broadest of all liability coverages, and because maritime law is unique, you will need coverages that are designed for those exposures. Such things as Harborworkers and Longshoreman's coverage and Jones Act (crew) coverage can be critical, as an uncovered loss in this area could run into hundreds of thousands of dollars. Besides providing payment of judgments against you, P&I also provides for your defense in Admiralty Courts.

What is a normal deductible?

A yacht policy usually carries a percentage of the insured value deductible, for instance a 1%, deductible means a boat insured for $100,000 would have a $1,000 deductible. Most lenders allow a maximum deductible of 2% of the insured value. Beware of "named special deductibles" such as storm damage of 10% or more.

What are some of the other standard coverages I can expect?

These standard coverages have standard deductibles and average limits:

• Medical payments, $10,000 limit
• $5,000 limit personal effects, $250 deductible
• $500,000 limit uninsured boaters liability, no deductible
• $1,000 to $3,000 limit Towing and assistance, no deductible
• $1,000 limit Fishing equipment, $250 deductible
• $1,000 Hurricane haul out coverage. Small percentage of limit as deductible. Hurricane warning must be posted by NOA. Payment made to move boat to safe location, haul out or make special preparations to withstand storm.

What is Breach of Warranty?

That is coverage that primarily protects the lienholder's interest in your boat, paying off the balance owed but nothing more. If you breach the warranties in the policy, such as promising not to go outside your navigational limits, not to use your boat during the lay-up period, not to use your boat for anything but private pleasure use, and you do NOT have this coverage and experience a loss, you don't get paid for that loss and neither does the lender. You could end up making payments on a boat you cannot use.

Some Boat Insurance Coverage FAQs

Small Boat (29' or less) Insurance

What is the best coverage for my boat?

It is best to have what is known as an "All Risk" policy, which will provide coverage for all types of losses except those specifically excluded in the policy. Typical exclusions may include wear and tear, gradual deterioration, marring, denting, scratching, animal damage, manufacturer's defects, defects in design, and ice and freezing.

How much should I insure my boat for?

You should insure your boat for the amount it would cost you to replace it with like kind and quality. This is called "Agreed Value" or "Stated Value" coverage, and in the event of a total loss, will pay the full insured amount. Beware of policies providing "Actual Cash Value" (ACV) coverage, which means the value of your boat will be replacement cost less depreciation.

What other coverages can I expect with my policy?

The following are standard coverages with standard deductibles and average limits:

• Medical payments, $5,000
• $1,000 limit Personal effects, $250 deductible
• Uninsured boaters liability, between $300,000 and $500,000
• $500 to $1000 limit Towing and assistance, no deductible
• $1,000 limit Fishing equipment, $250 deductible

Who is allowed to operate my boat?

Most policies will allow anyone to operate your boat so long as you have given them permission. There are exceptions, of course, especially with high performance boats or personal watercraft so always read your policy. But beware, too many additional drivers often results in increased premiums.

I live in an area where I can't use my boat in the winter, but my lender requires it be insured year-round. What can I do?

Ask your insurance agent if they offer what is commonly referred to as a “lay-up” discount. You have year-round coverage with a discount for the months your boat is in dry storage.

 Understanding Your Legal Liability to Guests

When a guest steps aboard, the typical boat owner is more likely to be thinking more about having lunch or getting underway than worrying about his legal duties and responsibilities as "Master" of the vessel. But if that guest were to stumble and be injured, you can bet the boat owner would quickly ponder what, if anything, could have been done to have prevented the injury and, heaven forbid, whether he might be liable.

The question of liability is both simple and complex, steeped in more than 3,000 years of maritime legal principles dating back to the Phoenicians. Admiralty law, like land-based legal concepts, starts with the premise that a property owner owes his invited guest a duty to exercise ordinary or reasonable care for the safety of the guest.

Deciding just what constitutes reasonable care can be especially complicated on a boat, which is bobbing, slippery and filled with obstructions. It has a great deal to do with the experience of the boat owner and the boating experience of the passenger and whether the boat owner had or should have had knowledge or notice of some dangerous condition. Additionally, it may depend on whether the owner knew or should have known his guest was unaware of or unfamiliar with the condition.

The duty to exercise reasonable care is rooted in the duty to provide a reasonably safe boat for the invited guest. This does not require that the boat be accident proof. Under the law, the applicable standard of care requires the boat owner to provide a boat that is reasonably safe, not one that is absolutely safe.

A guest also has some responsibility - a duty to exercise care for his or her own safety. A guest cannot simply walk blindly about the boat. But reasonable care does mean that you may be held accountable if you fail to warn a guest, for example, about a ladder you know is unstable.

For those affected by storms, some safety tips .....

Generator Safety Tips

• Use proper care. Proper ventilation is critical to reducing the risk of carbon monoxide poisoning from a generator’s engine exhaust. Carbon monoxide (CO) poisoning is a common, serious danger that can cause death if generators are used improperly; this is particularly true when the fuel is not burned completely.
• Placement is key. Never use generators indoors or outside near windows, vents, or air intakes that could allow CO to come indoors.
• Keep other items clear. Maintain plenty of air flow space around the generator.
• Pay attention. Get fresh air immediately if you begin to feel sick, dizzy or light-headed or experience flu-like symptoms.
• Buy CO detector. Because CO is invisible and odorless, it makes sense to buy a CO detector (similar to or sometimes combined in a smoke detector) to warn of rising CO levels.
• “Ground” your generator. Carefully follow all instructions on properly “grounding” the generator.
• Keep the generator dry. Short circuits may occur in wet conditions, which can cause a generator fire. If needed, place the generator under an open canopy–type structure.
• Be prepared. Always keep a fully charged fire extinguisher nearby.
• Leave it to the professionals. To avoid electric shock or electrocution, do not try to fix or otherwise work on a generator.
• Organize your cords. Keep cords out of the way to avoid injury, but keep them in plain view to keep track of cord damage (such as fraying or cuts) that could cause a fire.
• Do not “back feed” power. Do not plug the generator into a wall outlet. Back feeding will put you and others, including utility line workers, at serious risk because the utility transformer can increase low voltage from the generator to thousands of volts.
• Know local laws. Some states have laws making the generator owner responsible for taking steps to make sure that the generator’s electricity cannot feed back into power lines; additionally, owners of commercial, industrial, or residential generators must notify the local utility of their locations.
• Don’t touch. It’s hot. The exterior portions of a generator, even if operated for only a short period of time, can become hot. Avoid touching the generator without protective gear and keep debris clear to avoid a fire.