There seems to be a bit of confusion in the boating community regarding boat insurance deductibles and how they are applied if you have a claim. How the deductible is applied is contained in the insurance contract (i.e policy wording) and/or the declaration page of the policy. You should be familiar with how these work and it is fairly consistent from one company to the next.
Why is there a deductible in first place?
The deductible defines the amount the boat owner is responsible for paying in the event of an accident. The insurance company only pays for loss or expense about the set deductible. This makes the cost of insurance lower and in many cases you can reduce your premium further by increasing the deductible.
If I wasn’t at fault for the damage do I have to pay my deductible?
Yes. The boat insurance deductible is payable regardless of fault. This even applies if your boat is moored in its slip and is hit by another boat. When fault is clear-cut your insurance company may try to recover the repair costs from insurance company of the boat that is at fault. If they are successful you are reimbursed on a pro rata basis. That means if they recover 50% of the repair costs you are entitled to 50% of your deductible in return.
How is the deductible applied?
The policy will state the deductible is applied to each separate occurrence. This is misinterpreted by some to mean it applies to each peril or the voyage itself. For example, if you damage the hull when winds blows you onto the dock that is one occurrence. On the return trip home the same wind then tears your sail to pieces. Both losses were caused by the wind (an insured peril) on the same trip but two deductible would be charged because they are two separate occurrences.
What is a Disappearing Deductible?
This is an incentive program offered by some insurance companies that rewards claim free history. The company has a formula whereby the deductible is decreased by a % each year you are claim free. The most common is a 10% reduction per year to a maximum of 50%. Once you have a claim the reduced deductible is paid and then it resets back to the full deductible. The 10 % discount is applied on the next renewal and so on.
Multiple Deductibles
A boat policy normally has one deductible for claims to the boat and lower deductible if the claim just involves electronics or personal effects. If there is a claim where more than one deductible could apply then the highest deductible is the only one that applies.
Deductibles are just one element of your boat insurance that you need to understand and consider when comparing insurance quotes. If you have questions about insurance deductibles please contact me at andrew.robertson@cgbgroup.com
