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Know the Ropes

February 5, 2015

National Underwriter - 03/06/15
By Billy Johnson

Millions of boaters, particularly those who have been suffering through this harsh winter, are looking forward to the approaching spring. As owners prepare to take their boats out of storage and into the water, insurance advisers should help their clients properly protect their prized possessions and keep their passengers safe.

Reduce Risk Between Bow & Stern

By spring, many boats have been sitting idle for at least three or four months. Encourage clients to ensure that the boat’s registration is up to date and:

  • Review the owner’s manual. Even if a client has relied on a marina to de-winterize his or her boat, there’s a good chance it may not have received the recommended maintenance.
  • Check batteries and fluids. If the boat has been inactive for several weeks or more, it is critical to check battery strength and fluid levels. Boat electronics such as a stereo, GPS, radio and radar can drain a battery. Leave the battery switch in the “off” position when not in use. Inspect battery cables for rust or corrosion, and use a wire brush for a good, clean connection.
  • Consult a maintenance checklist.
  • Prepare for a vessel safety check. Ensure that the boat is equipped with working fire extinguishers, distress signals like flares and a horn, ample life jackets that have been approved by the U.S. Coast Guard, proper ventilation and navigation lights with working bulbs.
  • Enroll in a boating safety course. This will help your clients become more skilled captains and will likely lower their premiums.

Conduct a Coverage Check-Up

Talk to your clients about their coverages to ensure the policies properly reflect their needs. Consider:

  • Coverage limits. Is the boat insured on an “agreed value” basis? If so, is it reflective of the boat’s current fair market value? New outboard motors and other improvements can significantly increase the market value of a boat.
  • Lay-up warranties. This type of warranty precludes boat owners from navigating their boats during a specified period—usually in return for a premium reduction. It’s not uncommon to see watercraft policies—issued in the Northeast, Midwest and Mid-Atlantic states—include a lay-up warranty from November through April.
  • Navigational limits and restrictions. These limits are applied based on where the boat is moored, or where the policyholder previously advised the carrier where the boat will be navigated. Be well aware of any other restrictions on a vessel’s usage. For example, does the client plan on competing in any sailing races other than club boat races, which are typically covered? Do they plan to use their boats for any business purposes or fishing charters? Will any newly licensed household members or crew be operating the boat this year?
  • Personal excess liability. Will the underlying limits on the boat’s policy meet the required underlying limits on a personal excess policy?
  • Deductibles. It’s not uncommon for boats to have special deductibles, for example, one that is applied in the event of a hurricane or windstorm. Make sure the client is up to speed on which deductibles apply to them so that they aren’t taken by surprise at the time of a claim.