Buying boat insurance is easy right? If you know what to look for it is but for first time boat owners the process can appear a bit confusing .
If you are buying your first boat I would like to offer some tips so you avoid the common mistakes of first time buyers.
In my post How to Buy Boat Insurance Part 2 I recommended starting the insurance process before you put your money down to buy a new or used boat. Today I’m going to help you avoid the second most common mistake made by new boat owners.
“Learn from the mistakes of others.
You can never live long enough to make them all yourself.” – Groucho Marx
Most people get their first experience with auto insurance and apply what they may have learned to other types of insurance. That is your first mistake when it comes buying boat insurance.
Auto insurance policies in Ontario (and other jurisdictions) are identical from one company to the next because they are controlled by the Provincial regulator . There is basic coverage that is mandatory and then some options to consider, making it easy to compare the policies on price alone.
Boat insurance policies are not controlled by the regulators so each company has their own unique coverage. Some offer stripped down coverage so they can offer a lower premium and others include all the bells and whistles so they can say they offer the best coverage.
The important consideration here is that it is a mistake to compare boat insurance based on price alone. If you buy the least expensive coverage you may just be buying a headache down the road.
Here are some examples of how policies can differ from one company to the next:
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- Deductibles – How much you pay can vary and there may be separate deductibles for the boat, personal effects, electronics, tender & outboard, machinery etc. The deductible is what you pay in the event of a claim, so it is important to know what it is.
- Exclusions – The exclusions on an All-Risk policy define what types of damage is NOT covered. Most policies exclude wear and tear and gradual deterioration like rust and rot but there can also be costly surprises. Beware of exclusions for vermin, animals, mysterious disappearance, and conditions regarding loss due to freezing.
- Basis of settlement. An Actual Cash Value policy applies depreciation on every claim so the owner will likely pay a percentage of the repair cost in addition to the deductible. For an older boat this can run into the $1000’s. The better option is an Agreed Value/Replacement Cost policy where the insurance company will settle claims using new parts and there is no depreciation. You just pay your deductible if there is a claim. Some items such as older sails and winter covers may be depreciated on an agreed value policy.
- Wreck removal. If your boat sinks it is a hazard to navigation and in most cases must be raised. This can cost upwards of $10,000 depending on the circumstances. Some policies only pay up to the boat’s value while others have coverage up to $1 or $2 million for this type of claim. If your boat is worth less than the wreck removal limit it could result in a very large out of pocket expense for the wreck removal.
It is never wise to shop for boat insurance based on price alone.
If you compare boat insurance quotes based on the price alone you could be in for a very unpleasant surprise if you have to make a claim and find out you don’t have the coverage you thought you did.
One way to avoid these costly mistakes is to rely on the advice of a marine insurance professional like the staff at Skippers’ Plan Insurance. Boaters have trusted us with their insurance for over 70 years. No other brokerage in Canada has been specializing in pleasure craft insurance for as long as we have been in business.
I look forward to hearing from you at 1-800-661-7211, email andrew_robertson@ajg.com or try our online quote form
Andrew Robertson
Senior Vice President | Skippers’ Plan Insurance
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with their boat insurance for over 70 years!
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Skippers’ Plan Boat Insurance
Part of Arthur J. Gallagher Canada Limited
800-661-7211 | 416-789-7211
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