Boat Insurance Saving Money can Cost You We are grateful for the following advice provided by boater Michael MacLean, President of MacLean Insurance Protection team. He has arranged the insurance for Gillian's boat and many others at Limi When looking at insurance for your boat, you have two options. You can add the boat to your existing home insurance policy, or you can purchase a stand alone boat insurance policy. Here are some things to consider... Insurance companies have limits as to the size, speed, and/ or horsepower of the boat they are willing to insure under a home insurance policy so you may not be able to add the boat to your home insurance policy The basis of settlement on a home insurance policy for boats is usually actual cash value which is replacement cost less depreciation. A basis of settlement on a stand alone boat insurance policy is usually agreed value. A policy basis on an actual cash value settlement is cheaper but saving money can cost you. If you have a boating claim on your home insurance policy, it will count as a claim on the policy. Claims frequency is sometimes used as a reason for insurance companies to cancel or non-renew your home insurance policy. Once this happens, it is likely that your next home insurance policy will be very expensive with less coverage than your previous policy. Consumers are faced with a multitude of choices when shopping for boat insurance. However, the decision usually comes down to purchasing a boat insurance policy or adding the boat to your home insurance policy. Regardless of how the boat is insured, the decision is usually based on price without knowing the coverage and how the decision can affect the settlement of a claim. Boat insurance is for most types of vessels: Sailboats; Cruisers; Runabouts; Pontoons; Jet Boats; Fishing Boats; Bass Boats; House Boats; Trawlers and Classic Boat. When looking at Boat Insurance, there are two coverages that are important to insuring your boat: Physical Damage Coverage (Hull & Machinery) [your boat and attached equipment] and Protection and Indemnity (Liability) coverage. The boat insurance policy should provide physical damage coverage on an Agreed Value basis as opposed to Actual Cash Value (ACV). This will ensure that in the event of a total loss to your boat, you will recover what the boat is worth. See sample further on. Agreed Value - The amount paid following a total loss is the amount shown on your policy - without depreciation. Partial loss claims are settled new-for-old without depreciation. The value of the boat is determined at the start of the policy and can be determined by its purchase price or by a qualified marine surveyor. Actual Cash Value - The amount you will be paid is the replacement cost of the boat less depreciation in the event of a total loss. Below is an example of Agreed Value vs. Actual Cash Value loss settlement. Actual Cash Value Premium $300.00 / year    Agreed Value Premium $400.00 / year Loss $ 8,000   Loss $ 8,000 Less Depreciation $-3,000   Less Depreciation $0 Less Deductible $ -250   Less Deductible $ -250 ACV Settlement $ 4,750   Agreed Value Settlement $7,750 In this example, saving $100 for an Actual Cash Value policy would have cost you $3,000 after the settlement of the claim. When shopping for boat insurance, find out if the Agreed Value policy extends to the motor and other items in the boat, or on the boat only. Some Agreed Value policies cover the boat on an Agreed Value basis but the motor and contents are on an Actual Cash Value basis. Saving money now can cost you later. Liability coverage protects you for at-fault property damage and bodily-injury claims. The coverage has three key components. It will investigate your loss, defend you if you are not at fault and pay up to the policy limit if you are at fault. The recommended limit is $2 million. Further comprehensive ("All Risk") coverage is available which includes: multi-perils coverage; personal effects; uninsured boater coverage; wreckage removal; fuel spill liability; on-water towing; roadside assistance when the boat is being towed on land and breakdown towing. The premium for your boat insurance is determined by many factors: The value of the boat The area of navigation The experience of the boat owner/operator The use of the boat The loss/claims history of the owner/operator You may qualify for a discount on your boat insurance premium if you: Have taken courses and/or are a member of the Canadian Yachting Association or the Canadian Power & Sail Squadron. Insure your boat at market value. Consider higher hull & machinery deductibles. Personal boat insurance is mandatory when financing your boat - the financial institution will require an insurance policy to be in place for the life of the loan and you will not be able to pick up your boat from the dealer until insurance is in place. Otherwise, the choice is yours, but it's a wise choice to reduce worry. Insurance protects your personal boat from damage due to an insured loss and it also protects you from the risks to property and person that are inherent in everyday life. Michael McLean is the President of McLean Insurance "Ontario's # 1 Award-Winning ProtectionTeam Since 1972" They are also a leading authority on Marine & Watercraft Insurance Coverage. For more information or a FREE, no-obligation quote on your auto, home or watercraft insurance, please call 1-800-267-7928 or email: service@protectionteam.ca You can also get a FREE on-line quote by visiting: www.McLeanInsuranceLive.com Back to Tips and Tricks Page Long Island Marine Inc. 1424 Commodore Ln, Box 41, KARS ON K0A 2E0 Tel (613) 489-2747 Fax (613) 489-1486 Email: info@longislandmarine.com www.longislandmarine.com Home | Limi Life | At Your Service | Troubled Waters | Enviro Boating Tips 'n Tricks | Visuals | Looking for a Boat? | Careers at LIMI | Love Letters