Yawn… I can hear you already! Yes yes I know insurance isn’t exactly exciting – until you come to make a claim! Then you really want to know all about what you are covered for don’t you?
Insurance can make up a reasonably big chunk of any boating budget. So before you go buying a new boat you might want to do a bit of research on what insurance is all about and how much it is likely to cost…
Thinking about all the terrible things that can happen to your boat, you would expect that your insurance would cover these things:
- Being struck by lightening and blowing out all your expensive electrical gear
- Catching fire – be it in a marina or from a cooking mistake or engine/electrical fire at sea
- Hitting something and sinking
- Hitting someone else and damaging their boat
- Losing your mast (and sails and rig) in a storm
- Being towed (perhaps you’ve lost your rudder, mast etc)
- Getting wrecked on a reef – including the cost of salvage and any clean up (diesel spills etc)
- Having a rat chew through a water inlet and sinking the boat.
- Being damaged during haul out or transportation – falling off a cradle etc.
- The boat is stolen or broken in to and your personal possessions are taken
- Injuring yourself
So where do you start when it comes to shopping for insurance? Well for starters you can ask around for recommendations from other cruisers. They will soon tell you if they think their insurance company is good or bad. Then you might want to do some shopping around. Ask for quotes from at least three companies and then compare their prices but also what they cover. Be as specific as you can when completing the forms to make sure that you are “comparing apples with apples”.
Cover for Racing
You should advise if you are planning on racing as this may be excluded or demand an increased premium or higher excess.
Apparently many marinas insist on boats having a third party liability policy of at least USD$1,000,000. This not only covers you for any damage you do to other people’s boats, but also if your boat damages the marina or piers etc (imagine your engine dies at the critical moment when coming in to a berth). You may be required to show your insurance certificate when checking in.
Many insurers offer discounts for qualified sailors, so be sure to indicate any qualifications and certificates that you have on any quote applications. This policy I am looking at stipulates that the boat may not be sailed singlehanded on any passage longer than 24 hours, and if there are less than three people on board, then the people who are on board must be suitably qualified to take charge of the boat.
There may be discounts (or increased premiums) depending on where you leave your boat when you are not aboard and you should advise that you are living aboard (if you are!) as some policies exclude this.
Other discounts include no-claims bonuses, and the premiums may be cheaper if you opt for a higher excess.
As with most insurance policies, no liability of any sort may be admitted without the insurers prior written consent.
There are often exclusions for things as well – i.e. stipulations as to what you do with your boat during hurricane seasons, specific clauses restricting your visiting particular countries – perhaps places with wars or piracy. Some insurance companies may require the boat to be hauled out or stored in a particular area during a designated period. So you should specify where you plan to sail your boat when you get the first quote.
Also some insurers only cover particular areas. So if you are planning a round the world cruise, it is best to check this and go with a company who is going to cover you for the places you are intending to visit.
Generally policies also exclude damage caused by insects, barnacles, marine growth, corrosion, rot, rust, mould, frost, electrolysis, and weathering. Reckless behaviour, wilful misconduct and acting under the influence of alcohol or drugs can also give your insurance company an excuse to not pay out on a claim.
Proximate cause means something that sets off a chain of events that leads to loss or damage. For example a rat getting on board and eating through vital electrical equipment and an inlet hose causing the boat to sink. Did you policy exclude damage by vermin? What did the cause of the damage result from? Think of any scenarios that could apply to you and ask your insurance company – get them to confirm in writing anything you are unsure of.
The Topsail policy has a condition that two experienced crew must be on board, and that self steering gear must be fitted and fully operational at the commencement of a passage. You can do single handed passaged not exceeding 24 hours providing the vessel is suitably equipped.
Also the vessel has to be marina berthed when unattended for any period in excess of 24 hours.
Check the depreciation clause. Some policies depreciate the value of spars, sails, rigging, canvas, machinery, batteries, tenders, navigation equipment and outboards. This can be up to 30-50%! Basically if you break your mast and lose your sails they may only pay 70% of the cost of the replacements. They may require you to have a survey of the boat before they insure it.
It is worth knowing your rights in regards to salvage. The Topsail policy will pay reasonable salvage charges, but you must obtain the insurers consent before you offer to compensate anyone.
A boat policy is not a home contents policy. So carefully check what is covered in regards to personal effects, especially if you don’t have a home contents policy to fall back on. The Velos policy I am looking at does not cover the loss, damage or theft of money, jewellery, diving/fishing/sports gear, computers, cameras, mobile phones and anything over GBP£250 unless specified. Things like damage due to wear and tear, damp, mould and vermin are not covered, nor is damage to fragile items. Hmmmm that doesn’t leave much!
Topsail however include all personal effects within the total sum insured as specified on the insurance schedule – in this case NZD$17,000 and limited to NZD$1,500 for any one item unless specified.
The loss of diving equipment is not covered unless it is stolen from a locked compartment.
As with all insurance claims, you have to provide proof of ownership if making a claim. This can be hard to do if the item has been pinched. I know it is a hassle, but you can make a spreadsheet inventory of all the things on board the boat, add the date, place and price of purchase and any serial numbers as well. Save the receipts and take a photo of the items as well. Keep a copy of this on the boat, a soft copy online and leave a copy back at home as well.
Some policies require boats to have fire extinguishing equipment on board, which must include regular maintenance and servicing by a qualified agent, and including a fire blanket.
And what does your policy cover you for in the haul out yard? Who is liable if the haul out company damage your boat during the haul out process, or if there is a fire in the yard?
Some policies include cover for personal accident cover and medical expenses if you injure yourself while on or getting on and off the boat. Check the exclusions.
Conditions re Security
Check your policy to see what they require in regards to security. For example with outboard motors they may only be covered if you know the serial number, and if it has been secured by an outboard motor lock and the dinghy was left at a recognised mooring or anchorage. This particular policy also stipulates that dinghies are permanently marked with the name of the parent boat.
Making a claim
Firstly are you claiming for a total or partial loss? Does your policy have an agreed value or a market value? Agreed value is better as then there can be no arguments. This might require a valuation to agree on a figure.
With a partial loss does your policy state ‘replacement value’ – i.e. they will replace your old chart plotter that was stolen with a new one. Or does your policy state ‘indemnity value’ – which is the depreciated or market value. Of course if its over five years old then its probably not worth very much. So replacement is better than indemnity. Check your policy!
Claims must usually be made in writing as soon as possible after the incident and providing names and contact details of any witnesses or third party claimants.
You need to provide evidence of your claim including:
- Your name and contact details
- The policy number
- The date and place of the incident
- The cause and details of the loss or damage
- Repair estimates if already obtained – the insurer may require you to get alternative quotes.
- Police details including crime reference numbers if applicable
- Names and contact details of any other parties involved
- Details of any injuries sustained by anyone covered under the policy
- Names, insurers and contact details of any witnesses
- Original receipts, invoices, instruction booklets or photographs for proof of ownership
- Purchase dates and location of lost or damaged property.
You often hear people complaining about the service from their insurance companies when it comes to claims, but often the issues come through communication errors or not being able to provide proof that you owned the gear and its condition in the first place. Provide as much detail as you can to help support your claim. Get your own quotes for repairs done to assist the claims process and ensure that you are getting a fair deal from your insurer when they come to making you an offer.
Check the financial rating of the insurance company you are dealing with. An ‘A’ rating or better is what you are looking for. Ask around other sailors to find out how they fare when it comes to paying out claims.
Shop around. Don’t assume that you are with the best company and paying the best price. It is easy to just stay with the same company year after year, but it is worth doing some research every so often to make sure you are getting the best deal with the best cover.
Read your policy – every year at renewal time, and make sure that you are adhering to all the conditions.
Sailing experience can make a difference to insurance premiums. Make sure you let your insurance company know.
Consider using a broker. They work on your behalf to ensure that you get the best policy suited to your requirements and they can assist with sorting any claims as well.
Write up an inventory of all the equipment on your boat along with the price you paid, when and where it was purchased, and evidence of ownership – photos, receipts etc. I know its a hassle to do this, but you might save yourself a lot of time, effort and money down the track.
The other thing to remember is to pay your premium! It can be easy for renewal letters to be lost in the post when you have no fixed abode. Set up an automatic payment or direct debit from your account or credit card to ensure that the payment isn’t missed.
Keep a copy of your insurance certificate and the contact details of the insurance claims department handy on the boat. You should also have a copy in your grab bag and leave another copy back at home with someone you trust – and give the insurance company the authority to talk to that trusted person too. That way if you are in some kind of tricky situation you can get that person to call up and deal with the insurance company on your behalf.
If you are traveling to other countries, you should take Sailing Mareda‘s advice below and get translations of your insurance certificate made (the insurance company should be able to provide this for you) as this will make life much easier when checking in to foreign ports/marina’s when they want to see your insurance cover.
So for those of you who are already out there and are insured, consider this a reminder to dig out your policy and ensure that it still meets your needs, and that you are complying with their requirements – such as having your fire extinguishers inspected and dinghy named & locked correctly! It would be terrible to miss getting paid out because of something simple like that.
In terms of how much it costs…? Well this one particular policy I have been looking at I based on our hypothetical new boat plus contents – a total of aprox NZD$280,000. The quote came back for NZD$1,600.00 per annum. This was with a company called Velos Insurance. I have had another quote from Topsail Insurance for $1473.00.
I thought that was pretty reasonable, especially considering I pay about NZD$700.00 a year for my current boat Wildwood who is insured for NZD$50,000.
These are the first quotes I have obtained and was really just for getting a ballpark figure of what we might need to put in the annual cruising budget.
So far I think the Topsail insurance policy looks better – and it is cheaper! I have had lots of good feedback about them as well.
You can find them on http://www.topsailinsurance.co.uk
Another popular insurer I haven’t checked the policy of is Pantaenius. Here is a link to their website.
Check out the Cygnus blog post on getting a good insurance quote here.
Also this article on policy fine print to consider.
Do you have any insurance tips or recommendations? Any claims or problems? And how much do you pay per annum in premiums (if you are willing to share)? I always love getting the valuable advice from my dear readers!
While you are here and on this topic check out my post on Salvage.