Protecting the Dream

When it comes to buying insurance for your cruising boat, do your homework before signing on the dotted line.

Hurricane Sandy

BoatUS

In a land-based life, it’s difficult to come across a topic that is more mundane than insurance. But among cruising sailors, it can be a hot-button issue — just mention “hurricane box,” “offshore crew requirements” or “self-insure” at the next dockside potluck and you’ll see what I mean. In general, yacht insurance is a large, complex and somewhat confusing topic since unlike, say, car insurance, coverage can vary widely between carriers and there aren’t any federal or state requirements.

In most instances, the level of coverage you choose will be based on whether you own your boat outright, your marina’s coverage requirements, your budget and your comfort level. If you’re heading out to go cruising soon, whether along the coast or around the world, put some thought into your insurance options so you’ll know that you’ll be covered if you need it.

Before you begin shopping for insurance, Morgan Wells, vice president of Jack Martin & Associates marine insurance agency in Annapolis, Maryland, says that you should be ready to provide all of the information about the vessel, your sailing or boating experience (and the experience of your usual crew complement) and your anticipated cruising plans — particularly where the vessel will be and what your plans are for hurricane or cyclone seasons. As always, prudent due diligence requires that the vessel is in seaworthy condition, but for vessels more than a few years old or embarking on significant voyages, an out-of-water survey less than two years old may be required.

An insurance survey isn't as extensive as a pre-purchase survey, but it will help the insurance company decide whether the boat in question represents an acceptable risk. "This survey will also serve to document all of your systems so the insurance company knows what's in the boat," says marine surveyor Dwight Escalera. "The surveyor will also be checking for U.S. Coast Guard and ABYC compliance, so it's a good time to make sure all your safety gear is up to date."
Something else to consider is a separate rig and rigging survey or inspection. "It amazes me how many sailboats are purchased without a rig and rigging inspection or knowledge of the age of the wires or the last time the rig was pulled from the boat," says Wells. "Having a surveyor who will inspect the rig and rigging, or a professional rigger, do an aloft inspection can reveal problems that might have gone unnoticed dockside but could be catastrophic when offshore, which is good for your peace of mind. Some insurance companies may require a rig and rigging inspection on older boats or prior to embarking on significant ocean voyages. Even if not required, having this done shows the insurance company that you're serious and have done your homework." Other homework would include the preparation of your sailing resume, which should include any boats you've owned or operated, your sailing courses and certifications, prior voyages or passages and relevant experience such as medical training or diesel mechanics.

Consider Your Options
If you're making payments on your boat, the bank or finance company will likely dictate the level of coverage you require. Also, if you keep your boat in a marina, or plan to while cruising, you will probably need to have some level of liability coverage.

Unlike auto insurance, yacht insurance isn’t regulated by any state or federal agency, and you’re not required by law to insure your boat. What this means for you as the consumer is “caveat emptor” as you decide on a policy. “The product you are buying has not been reviewed or approved by any government agency,” says Al Golden, president of International Marine Insurance Services, “so you really need to read through the entire policy yourself.”

Due to the nature of the marine insurance industry, and the unique circumstances of cruising sailors, developing a relationship with an agent who specializes in this type of insurance is an important step in getting the right coverage. Ask for recommendations from other cruisers and do some research online. When you’ve narrowed your field down, contact the agent or company to discuss what you’re looking for and what your plans are, and be sure to ask for a sample policy. “With just a 15- to 20-minute phone call I can get to know a boat owner and get a feel for their preparedness,” Wells says.

When you call the agent, be prepared and ready to discuss not only your boat, but also your crew and itinerary for the coming year. Wells and Golden agree that where you plan to cruise is a prime 
determinant of your premium, and if you want the right coverage at the right price, you need to be upfront with your plans. “Unfortunately, underwriters have really long memories,” says Golden. “So while Florida hasn’t had a strike from a major hurricane in several years, you’re still going to pay a hefty premium to keep your boat there year-round. Whether 2012’s Hurricane Sandy will have an impact on premiums for boaters in the Northeast still remains to be seen.”

Contrary to what you might hear through cruiser gossip, you can find coverage for older boats and for double-handed crews who plan to sail offshore. “This is where having a working relationship comes into play,” Wells says. “Good marine insurance is really done on a case-by-case basis. You can absolutely find coverage for an older boat, provided that it’s been well cared for and you have updated equipment and safety gear. Crew experience plays a big part too. Underwriters tend to look at the whole picture: A seaworthy boat, a crew, even if it’s just a couple, with proper experience and training, and an itinerary that doesn’t include, say, war zones or certain locations during storm seasons are all things that they take into consideration.”

Gone Cruising
If you already have a policy and are planning to go cruising soon, be sure to look it over and make note of any layup periods or exclusion areas, such as an area that you that you need to avoid during hurricane season. For instance, if your goal is to sail south for the winter, you'll need to check your current cruising limits. "Broader cruising areas have higher premiums, so most sailors opt for more limited cruising areas to lower their premiums," says Kim Shaw, assistant vice president of underwriting at BoatUS Marine Insurance. "If they are going outside their cruising limits they need to contact their carrier to obtain a cruising extension."

Keeping costs in check is typically a big concern for sailors who are planning an open-ended voyage, so Wells offers several tips that can lower your insurance bill. "The best way to reduce your premium is to be realistic about the value of your boat and don't over insure the vessel. Insure the boat for an agreed value that closely matches a reasonable fair-market value for the boat. Your agent can provide guidance on the value/premium relationship." Also, consider two or three deductible options. In some cases a higher deductible may provide significant savings. And don't forget to let your agent know if your cruising plans change, as this could even result in some premium refund if your itinerary has been scaled back. Of course the opposite is also true. Another option to consider is the purchase of a legal liability policy only, which will provide coverage for both bodily injury and property damage that the vessel may cause to a third party.
For many cruising sailors, the boat represents the bulk of one's assets, and in many cases a home. While there is no substitute for caution and good seamanship, there is peace of mind in knowing that if your luck changes quicker than the weather, at least your finances can make it through intact.

Resources
Allen Insurance & Financial
www.alleninsuranceandfinancial.com
BoatUS Marine Insurance
www.boatus.com/insurance
Gowrie Group
www.gowrie.com
International Marine Insurance Services
www.imis.pro
Jack Martin & Associates
www.jackmartin.com
Pantaenius America
www.pantaenius.com

Jen Brett is a CW_ associate editor and liveaboard sailor._