E&O Tip on “Do some of your watercraft customers know the benefits of a separate policy?”

Now that the warm weather has arrived, your agency will probably have customers looking to get their boats in the water. How are those “toys going to be insured? Even if the watercraft is eligible for coverage under the homeowners policy, make sure that those customers are aware of the benefits of a separate watercraft policy.


Coverage under a homeowners policy can be limited in areas such as:
– the HO policy will provide liability protection but not provide any physical damage coverage.
– under a HO policy, there may not be any coverage for injury to passengers and others as well as any coverage for the trailer and accessories.
There are many benefits to a insuring the boat / yacht with a specialty carrier. Some coverages that are often either automatically included or for a fee with the specialty carriers are:
– Roadside Assistance if your vehicle becomes disabled while towing your boat
– Coverage for fishing equipment and other personal effects such as water skis
– Fuel spill coverage 
– Wreckage removal
– Medical payments even for water skiers
There have been a number of E&O claims involving watercraft. Among the issues:
– Territorial restrictions. This can involve specific territories (such as Cuba). In addition, some watercraft policies have limitations that exclude coverage in certain types of water (fresh water vs. salt water) or sizes of water (rivers and lakes as compared to larger bodies of water such as the ocean).
– Hull coverage – Look to write the coverage on an Agreed value basis as this is broader than ACV.
– Insufficient limits – major accidents can occur. Be sure to secure high limits and schedule this policy under the umbrella
– Not understanding the binding guidelines relating to the age of the vessel – are there any specific survey requirements 
When you complete the application, look to sit down with the customer to review each question and explain the coverages in detail. If the customer does not choose the broadest protection, get their sign off for the coverages they declined.
The agency should be sure to review the policy to make sure that it matches what was requested. Also, when the policy is mailed, include a cover letter advising the client to review it to make sure that everything is in order.
Education of your customer is an important issue. Consider including this as a topic in your next customer newsletter and include it as a topic on your website. Spell out the benefits of a specialized policy as compared to securing the coverage via the HO policy. It is also a great topic to include in your personal lines reviews to ensure that customers know the differences.



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