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.