Boats And Yachts Insurance FAQ

• At the minimum, boat and yacht operations need general liability insurance.
• If they have employees they will need workers compensation in most states.
• If they have vehicles registered to the business, or use vehicles for the business purposes, they will also need commercial auto.
• There are also other specialty coverages and endorsements that might be needed based on their operations.

The ocean marine exposures and operations of boats and yachts operations must be placed as monoline coverages with specialty carriers. However, the non-ocean exposures can be covered with standard carriers using standard coverage forms. These standard forms can be combined into a package policy for convenience and premium discounts.

Types Of Boats And Yachts Package Policies:

• Commercial Package Policy (CPP)

Boats, yachts and their parts and accessories are the primary property items needing coverage. Because many operations own their facilities, building coverage is necessary. Properties are frequently located in remote or rural areas and may be unoccupied at times during the off season. Fire caused by flammable liquids and theft of valuable inventory are two very important and common causes of loss that must be covered in addition to vandalism that may occur during the off season.

Most marinas have food and liquor services and gasoline supplies that must be taken into account. Peak season coverage should be considered if there are peak periods of activity and corresponding increases in inventory levels.

Ordinance or law coverage should be considered for any operation initially built in an area without building codes that later become subject to building codes.

Time element coverage should not be overlooked, particularly business income from dependent and secondary dependent properties because many boat- and yacht-related businesses depend on a few or a limited number of suppliers and/or customers. Coverage for extended periods of indemnity should also be considered because of the seasonal nature of these operations.

Types Of Property Coverages:

• Building
• Business Personal Property
• Personal Property of Others
• Improvements and Betterments

Electronic Data Processing (EDP) coverage should be seriously considered when insuring diagnostic equipment and other computer-based property in the boats and yachts category. A scheduled property coverage form might be considered for property frequently moved to and from off-site locations.

If the stock of boats held for sale is subject to floor plan financing arrangements, floor plan coverage should be considered. The business personal property limit should be reduced when certain property is written on inland marine forms in order to eliminate duplicate premium charges.

The inland marine perils or causes of loss are generally equal to or better than the special causes of loss form that applies to property coverages. As an example, most inland marine forms include earthquake and flood coverage.

Types Of Inland Marine Coverages:

• Accounts Receivable Coverage
• Bailee Customers Coverage
• Contractors' Equipment Coverage
• Difference in Conditions (DIC) Coverage
• Electronic Data Processing Equipment Coverage
• Fine Arts Coverage
• Floor Plan Coverage
• Installment Sales Coverage
• Processing Risk Coverage
• Scheduled Property Coverage
• Signs Coverage
• Transportation Coverage
• Valuable Papers and Records Coverage

The commercial crime program consists of many coverages. Employee theft coverage should always be at the top of the list for a boat and yacht operation because of the potential for employees to steal valuable inventory. Inside the premises-theft of other property coverage may be a more cost-effective way to cover theft of inventory than using the special cause of loss property forms because there is no coinsurance clause.

As a result, the insured can choose a specific theft coverage limit instead of using the limit required under a business personal property form in order to meet its coinsurance requirements. If employees regularly work on boats at customers' premises, the clients' property employee theft coverage option should also be considered.

Types Of Crime Coverages:

• Computer and Funds Transfer Fraud Coverage
• Employee Theft Coverage
• Forgery or Alteration Coverage
• Inside The Premises-Theft of Money and Securities Coverage
• Inside The Premises-Robbery or Safe Burglary of Other Property Coverage
• Money Orders and Counterfeit Money Coverage
• Outside The Premises Coverage

Surety bonds guarantee that one party will keep its promise to a second party or pay a penalty to which both parties agree. Marinas often promise to supply services or products. When such a promise is made to a government agency, a bond is required.

In a similar way, a government agency will require a license or permit bond from the boat, yacht or marina business before issuing it a license or permit to operate. The bond is a guarantee that the business will operate within established rules and guidelines.

Types Of Surety Coverages:

• Contract-Performance of Service or Supply Bonds
• License and Permit Bonds

The liability exposures for boat dealers and marinas fall into two categories: 1) operations performed on premises and 2) those performed on vessels. The general liability policy covers the exposure on premises but ends once a vessel on water is boarded. On the other hand, ocean marine coverage begins once a foot is set on the vessel and ends when the foot leaves the vessel.

For these reasons, coordination of coverage between the two policies is extremely important. In addition, if a marina sells liquor, a liquor liability policy is required in order for the insured to be completely protected.

Types Of Liability Coverages:

• Commercial General Liability (CGL) Coverage
• Employee Benefits Liability Coverage
• Employment-Related Practices Coverage
• Liquor Liability Coverage
• Special Events Liability Coverage

Boat, yacht and marina operations require auto coverage because vehicles are commonly used to pick up supplies. Some operations may haul boats and yachts which can add to the exposure, especially as the size of the boat or yacht increases. All exposures increase when the vehicles are used on narrow rural roads and highways.

Types Of Business Auto Coverages:

• Auto Medical Payments
• Business Auto Coverage
• Collision Coverage
• Comprehensive Coverage
• Garagekeepers Coverage
• Hired & Non-owned Auto Coverage (HNOA)
• Uninsured/Underinsured Motorists Coverage

Boat, yacht and marina operations with paid employees are required to carry workers compensation coverage to protect their employees. Many operations are also subject to the Longshore and Harbor Workers' Compensation Act and the policy must be endorsed to cover the obligations created and imposed on the employer by this act.

Types Of Workers Comp Coverages:

• Longshore and Harbor Workers' Compensation Act Coverage
• Stop-Gap or Employers Liability Coverage
• Workers Compensation and Employers Liability Coverage

Accidents involving boats can be deadly, especially when alcohol is involved. Boat, yacht and marina operations should purchase excess liability limits for operations both on the premises and on vessels. Bumbershoot liability insurance may be required for the on-vessel exposures while a standard excess or umbrella policy may be sufficient for the other exposures.

If the professional cannot be combined with other coverages, a separate excess liability policy over the professional liability policy, including all amendments and exclusions, should be purchased to provide additional limits on that exposure.

Types Of Excess Liability Coverages:

• Bumbershoot Liability Coverage
• Excess Liability Coverage
• Umbrella Coverage

Boat, yacht and marina operations have a number of unique coverages available to them. The following should be considered when evaluating the insurance needs of boat and yacht operations.

Types Of Ocean Marine Coverages:

• Ocean Cargo War Risk Coverage
• Ocean Marine Cargo Coverage
• Ocean Marine Hull Coverage
• Protection and Indemnity Coverage
• Ship Repairers Legal Liability Coverage
• Wharfingers Liability Coverage
• Yacht Coverage

As boat and yacht operations and marinas grow larger, they may intentionally or unintentionally take on additional exposures not covered by most standard insurance forms. The following policies or coverages may apply to these operations.

Types Of Specialty Coverages:

• American Expatriate Coverage
• Business Legal Expense Coverage
• Cyber Liability Coverage
• Directors and Officers Liability Coverage
• Environmental Impairment Liability Coverage
• Export Credit Insurance Coverage
• Identity Theft Insurance Coverage
• International Insurance Coverage
• Risk Retention Group Liability Coverage
• Solar Energy System Coverage
• Tax Liability Coverage
• Terrorism Insurance Coverage
• Transportation Brokers Contingent Cargo Coverage
• Underground Storage Tank (UST) Liability Coverage
• Unmanned Aerial Vehicles (UAV) (Drones)
• Weather Coverage