Extra Coverage Can Help ‘Float Your Boat’ This Summer
Many boat owners assume their boats are covered under homeowners insurance policies. Homeowners insurance typically offers up to $1,000 in coverage for boats, boat trailers, motors, and related equipment-perhaps sufficient for small craft owners. However, the following exclusions exist:
- Losses in the water, including damage from sinking and collision, including hitting rocks or other debris.
- Wind loss if your boat is left in the open. Keep boats in a locked building on your property.
- Flood damage.
- Theft losses if they occur off your property. Take extreme safety measures to avoid theft when the boat is off your property.
Owners of high-value, regularly used boats may want to consider extra coverage, such as:
- Coverage for hazards like sinking and collision is available as “special perils coverage.” Annual premiums are about 2 percent of the value of the boat and its related equipment, with at least a $100 deductible required. Higher deductibles mean lower premiums-which is good only if the premium savings justify the higher out-of-pocket expenses if losses occur.
Also, special perils coverage can usually be bought as a “scheduled item” on homeowners insurance. If you don’t have homeowners insurance, and/or need to save some money temporarily while still having limited coverage, some insurers may allow you to add your boat to your auto insurance. This should be considered temporary; you have the same limitations in coverage as with homeowners insurance, and this solution won’t cover loss of personal property on the boat.
Does My Car Insurance Cover Other Drivers?
Many people are concerned about lending their cars to friends. They should be. They could be liable. If someone drives your car, it’s important to know if you’re protected.
States’ laws and insurers’ rules vary; your agent can explain them as they apply to you. In the meantime here are some general rules of thumb concerning who’s covered by your policy when driving your car.
Permissive Use Drivers (PUD)
PUDs have permission to borrow your car occasionally. For example, if a friend borrows your car to run to the store, are you covered?
Yes, but note that in a PUD accident, you and the PUD could face lawsuits to cover remaining accident costs if your policy’s liability limits are exhausted and your PUD has no coverage of his own. If the PUD does have vehicle insurance, the not-at-fault party can make a claim on this policy. The primary coverage comes from the vehicle owners insurance. Secondary coverage comes from the PUD.
Each state and insurer has different laws about household residents with drivers’ licenses who drive another household member’s vehicle.
Are your household members covered?
Maybe, depending on your state, insurer, and whether the household member is an excluded driver, nondriver, or driver on your policy.
If a household resident owns a vehicle and has his or her own insurance, he or she may be excluded from your policy; claims won’t be covered under your policy if this person has an accident while driving your vehicle.
If a household member classified as a nondriver has an accident driving your car, your claim would likely be covered. But nondrivers with licenses are rated on your policy as drivers, so if they have a bad driving record, this will impact your premiums.
If you don’t disclose household members, your insurer can deny claims and cancel your policy, and you could be sued and/or possibly charged with insurance fraud. When it comes to insurance, honesty is the way to the best policy.