The Business of Selling Marine Insurance for Agents
Summertime has finally arrived and with it comes boating season. It’s a time of year when potential and existing policyholders may begin asking for advice on what types of boat insurance coverage they need. The best way to insure a boat is by having a stand-alone boat policy - not an endorsement to a homeowner's policy.
Anyone who owns a boat knows a thing or two about keeping it afloat, the best boat launches, and the best local fishing spots, but also the terminology. If you don’t have a good working understanding of the products and the marketplace, now is a good time to brush up on your knowledge and definitions so you're prepared to answer their questions.
Here are some suggestions for the types of marine insurance coverage you may want to recommend for certain types of boats, ranging from pontoons to fishing boats and even houseboats and yachts.
- Runabouts, pontoons, and ski boats. If your client has one of these, chances are good they will at one time or another pull a skier, so a water sports endorsement with higher liability limits should be considered. Carrying coverage for emergency assistance and towing as well as additional protection in a crash involving watercraft that might be uninsured, underinsured, or not owned by the user is also a good idea.
- Bass/walleye boats. Designed for avid anglers, fishing boats usually carry plenty of expensive equipment such as fish finders, trolling motors, GPS systems, and more. People with these types of boats should be sure to secure sufficient coverage for these items, as well as higher personal effects limits for their fishing rods, tackle, and other accessories.
- Sailboat. These craft usually will have auxiliary outboard engine power for use when winds are calm or while docking and undocking. These engines are vey attractive to thieves. Sailors can discourage stealing by placing locks on the engine and trailer when not in use. It’s also a good idea to have coverage for replacement value on the engine.
- High-performance craft. This type of boat is powered by specialized engines and drive systems for maximum performance. It’s a good idea to get coverage for the engines, drives and accessories. For high-performance craft, an inspection is often required before a policy is written.
- Yachts and houseboats. These high-end vessels are often loaded with high-value electronics, including navigation, radar, satellite TV, high-end stereos and hot tubs that all need to be covered to protect the owner from theft. Yachtsmen should consider higher liability limits and may need occasional professional crew coverage. Yachts with a full-time captain and crew may need commercial marine coverage.
In addition to the type of boat, there are several other factors that need to be considered before writing a boat policy. For example...
- Who is going to be driving the craft? Experienced boat operators and those who are claim-free may qualify for discounts. Additionally, boats over a certain length may require proof of a pilot's license. (not the same as aviation)
- How old is the boat? For newer boats (three years or newer), your customer may opt for replacement cost coverage. For slightly older boats (up to 10 years), agreed value coverage may be a good choice. A vessel that is more than 10 years old is typically valued at actual cash value, which is the market value of the boat at the time of loss - not to exceed the insured value listed on the declaration page.
- Where the boat is going to be used? If the boater plans to be in coastal waters, there will be limits on how far away from the coast the boat can travel. This is typically 75 miles or less from each country’s coast. If the boater gets into trouble beyond the allowed distance, coverage may be denied unless he or she has a cruising extension.
In addition to pointing out all the different coverages people should consider, also be sure to emphasize the importance of keeping insurance active during the off-season. In most states, boats are taken out of the water for the winter and stored in drydock. But just because it isn’t in use doesn’t mean boat owners should drop their coverage. Boats are still vulnerable to weather, fire, theft and other perils during the offseason.
If the boat is stored at a commercial storage facility, the facility will be responsible for any damage inflicted due to their fault or negligence, but not acts of God such as hurricanes, tornados, fire, flood, etc. The client’s insurance must provide coverage for these perils.
A quick reminder to your avid boating clients about local storage units, when to lower policy limits for off-season storage, and just general boating safety and insurance tips could help you retain a client or get great referrals for years.