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Trevor Tarpinian, CEPA®, CIC
Licensed Insurance Counselor
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7 Cautions to Insuring Your Boat

The homeowners insurance policy is a powerful financial tool. In addition to protecting one of your most valuable assets, it has the capacity to protect your toys: boats, ATVS, golf carts, travel trailers, and snowmobiles. You can usually get physical coverage and possibly some liability coverage on these by piggy-backing  ("endorsing") them onto your homeowners insurance policy. Doing this is quick, convenient, and provides some coverage, but there are some shortcomings to this approach that you need to know.

1. Deductibles. This can be a headache. Your main homeowners has a deductible (usually $500 or $1,000). Will a claim to your boat or ATV be subject to the same deductible? If it is, and your boat is only worth $1,200, you're not getting much coverage if you have a $1,000 deductible. If it's not, what deductible options do you have? Are they high? Do they offer disappearing deductibles for going years without a claim? These options can be limited on a homeowners policy and one can usually find more flexibility and greater options on a separate policy made specifically for a boat or snow mobile.

2. Liability Off Premise.
 Ever driver your ATV or 4-wheeler off your property line? How about your boat? Unless you own a private lake or a nice amount of acreage, you are probably leaving your property to enjoy the toys. If you have the toys endorsed on the homeowners policy, and liability is covered, check to see how far the liability extends. The homeowners policy may only cover liability if the toys are on your property. If this is the case, as soon as you leave the property line, you leave your coverage also. A separate policy can provide liability coverage on and off premise, giving you peace of mind that you are covered no matter where you take the toys.

3. Towing/Roadside.
 Your homeowners insurance policy doesn't come with roadside service. If your auto insurance has this feature, or a roadside club like AAA, it's only going to provide roadside service for your car or truck, not the boat and trailer. How do you feel about paying this out of pocket if the trailer gets a flat, or the boat and trailer need to be towed because of an accident? Keep this in mind too: the towing bill will not be the same for the boat and trailer as it will be on a car. Expect it to be at least 3-4x the cost. Having the boat and trailer on its own, specialized policy can remedy this. Most boat policies have roadside provision packaged in to the policy - or at least provide you with the option to add it for a few dollars a year.

4. Claim Process. When you make a claim on your snow mobile, how would you like the insurance company sending out someone that specializes in homeowners claims (and the physical structures of house) to give the ruling on your snow mobile or boat? Well, that's exactly what you might get by keeping the toys on your homeowners policy. You may get an adjuster that isn't experienced in specialized property, like a boat, ATV, or travel trailer. This could delay the claims process. Putting the toys on their own policy, with a company that specializes in this coverage, will ensure you get a claims adjuster at time of claim that is trained particularly for your individual recreation vehicle.

5. Claim Settlement: Actual Cash Value, Replacement Value, or Agreed Value?
 How will the homeowners policy respond at time of claim? Have you read your insurance contract? Generally, coverage for a boat on a homeowners policy will settle a loss by actual cash value, meaning the company is going to give you Kelly Blue Book value (factoring in depreciation). The homeowners policy might offer Agreed Value coverage, meaning they'll pay out the exact amount of coverage stated on the policy. No more and no less, regardless of depreciation. One of the shortcomings to the homeowners policy is the limited amount of settlement options its going to offer you. A separate policy specializing in boats, ATVs, or travel trailers will usually give you several options to choose from, like actual cash value, replacement value, and agreed value.

6. Claim Effects on Your Homeowners Policy. Don't you love how you get punished by making a claim? You make a claim and rates adjust and go up at your next renewal. It's part of life now. Every company is using complex algorithms to automatically calculate your rates. There is nothing personal about it anymore. If your boat or ATV is on your homeowners policy, and you need to make a claim, you're making a claim on the homeowners policy. It could very likely affect your rates at renewal. So why not hedge against this? Placing the toys on their own policy insulates you from their respective claims affecting your homeowners rates. Make sense?

7. Bells & Whistles. One of the limitations of homeowners insurance when covering your boat, ATV, or travel trailer is the bare-bones coverage it offers. What about customization or modifications to the 4 wheeler or motorcycle, like the custom fenders, pipes, winch, or paint job? What about equipment you carry on the boat (fishing gear & tackle?) or ATV (GPS and hunting gear?). Your homeowners policy probably won't adequately cover customization and will likely not cover your equipment if it's stolen. These coverages, along with other niche features, can be addressed on independent policies designed for your toys.

Have further questions about insuring your boats, ATVs, or travel trailers? Use the button below to contact us and ask your question.

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