Automobiles
With so many insurance companies offering coverage, it can be difficult to know all the right questions to ask.
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Am I required by the State to have insurance on my boat?The simple answer is no. Most states do not require you to have insurance for your vessel. The few states that do require boat insurance are Arkansas, Hawaii, and Utah.
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Will I be asked for proof of insurance?In most cases you will be asked to provide proof of boat insurance on your vessel when you finance your boat purchase or when you dock at a marina.
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Am I required to have a boating license?Again, most states do not regulate boat operator licensing. The handful of states that do require you to have a boating license are Alabama, Delaware, Georgia, and Mississippi. While a boating license may not be required, your state, community or local lake authority may have other prerequisites.
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Should I cancel the insurance during the off-season?Absolutely not. There is certainly more risk of damage to your vessel/liability to other vessels during boating season; but off-season risk exists as well. If your vessel is stored at a facility during the off-season, the facility will almost certainly require proof of insurance with full coverage - hull damage and liability. If stored in a private garage or on private property your vessel can still experience damage, such as components freezing, collapse of or a fire in the storage structure or a weather event like wind if the boat is stored outside. In most states, your insurance policy outlines a lay-up period during which the boat is not in use because of weather - winter and hurricane season. The insurance policy premium is reflective of the lay-up period when the vessel is not in use.
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What coverage is provided by boat insurance?Base coverage includes Bodily Injury, Property Damage, Hull Damage (Comprehensive and Collision), Uninsured/Underinsured Boaters, and Medical Payments. Extra coverage often includes Wreck Removal, Fuel Spill Liability, Emergency Services, Boat Rental Reimbursement, Ice/Freezing, and Personal Effects.
Actual Cash Value, Replacement Cost, and Agreed Value
You've probably heard about Actual Cash Value (ACV) or Market Value as a method for valuating your vehicle in the event of a total loss. Two other valuation methods are Replacement Cost and Agreed Value.
Actual Cash Value (ACV) represents the amount equal to the replacement cost minus depreciation at the time of the loss. Depreciation includes factors like wear and tear, mileage, maintenance, etc.
Replacement Cost will compensate you enough money to replace your vehicle after an accident. If your vehicle has an ACV of $15,000, for example, but it would cost $20,000 to buy the same vehicle, the insurer will pay the $20,000.
Agreed Value is a payment basis wherein you and the insurance company agree on the value of your vehicle ahead of time and the amount is listed on your declaration page or agreed value endorsement.
Caveat #1: Many carriers who offer Agreed Value coverage will pay either the Agreed Value or the Actual Cash Value at the time of loss, whichever is higher. You might think Agreed Value will be higher than ACV but that is not always the case. For example, when the Prius and the Tesla were first released, the demand for the vehicles pushed the secondary market valuation much higher than the original cost new from the manufacturer (which is often set as the Agreed Value).
Caveat #2: Some carriers offer New Car Replacement Cost. This will most often be available on brand new cars in the current model year. The coverage is usually provided for the first term after the vehicle was purchased, provided the vehicle was purchased from an authorized dealer and is the first owner of the vehicle. In the event of a total loss to the vehicle, the insurer will pay no less than the sticker price of the original vehicle or replace the vehicle with the newest model year of the same type and class of vehicle that was destroyed.
