Boat insurance is mandatory on almost all states and countries. However, having boat insurance is not enough. The issue of whether the coverage of your boat insurance is suitable for the use you will give to your boat is just as important. Therefore, you need to understand the different concepts that apply to this kind of insurances in order to select the insurance policy that best suits your needs.
Following you will find some basic guidelines that will help you understand the different clauses on boat insurance policies so you can decide which one best adjusts to your requirements. There may be some coverage that you can do without and other type of coverage that you would prefer to have that is not included. Once you know this, you can request your insurance company or broker to design a boat insurance product customized for your particular necessities.
Common Deterioration Excluded
Regular wearing out of boat parts is not covered by boat insurance and therefore you should not expect to be able to claim for damages caused by such reasons. Thus, it is advisable to do proper maintenance to your water vehicle to ensure that no claim is rejected due to lack of coverage of common deterioration. This is an important fact and it works just like car insurance with the sole difference that due to the constant contact with water, boats tend to deteriorate a lot faster.
Values Insured
There are different clauses on boat insurance that relate to the value of the boat. There are mainly two systems to calculate the value of the water vehicle: stated or agreed value and actual cash value. Stated or agreed value is the value that the insurer and insured establish in the insurance contract prior to signing. Both parties agree which is the value insured and in the event of a claim the whole or a portion of that value is covered according to the type of damage or liability.
The Actual Cash Value on the other hand, is not a fixed value and relates to the market price of the boat at the time of the accident or claim. Though these policies tend to be a lot cheaper, there might be discussions at the time of claims and thus, an agreed value is advisable because the amount is already fixed in the contract and there will not be any discussions about that issue.
Liability Coverage
Liability Coverage is a very important part of a boat insurance policy. This covers the insured for any damages caused to third parties whether on board of the boat or not. Therefore if you will invite friends or acquaintances as passengers or use the boat in areas where other people can be damaged by the regular use of the boat, it is advisable to pay special attention to this type of coverage.
Combined Policy
The most common boat insurance policies provide a combination of property coverage and liability coverage. Therefore it does not matter whether the property is damaged by an accident or someone is injured. Even if both things occur, the insurance will cover for all the costs provided they do not exceed the insurance amount limit.
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