Every Boat Policy Comes with an Anchor

Every Boat Policy Comes with an Anchor


Every Boat Policy Comes with an Anchor

His parents have had their insurance in your agency since the first year you started in business. Noah has had his insurance with you since he graduated from college twenty years ago. He considers himself a sophisticated buyer. Noah does the research necessary for his major purchases. In fact, you’re aware that it took him nearly five months to make up his mind about the nineteen-foot Ranger fishing boat he purchased.

He told you about its top-end of 46 mph powered by its Mercury 115 HP outboard motor. He swears he got a really good deal on it at $22,100 new and you believe him — given his family’s penchant for tracking down the best value.

You turn the marketing of his boat policy over to your customer service representative and he runs it through several companies’ rating programs. You sell him a policy for $279 and are confident that your diligence found him the lowest price in your agency. You rarely consider commission when selling a policy, but in this case you know you didn’t sell him a policy that would have paid your agency twenty percent on new and renewal, and did sell him a policy that is going to pay you 12.5 percent new and five percent on renewal. The loss of commission doesn’t bother you because you write several policies for him and want him to have the best value. Besides the company you placed it with makes it really easy to order the policy so your CSR likes working with them.

But did you find a policy that provides great value? ..and all the coverage you need?  Policies vary greatly.

Does your policy include mechanical breakdown coverage?

Most boat policies provide coverage for accidental direct physical damage to the boat. An example of this is when your client crashes their boat into a dock or runs onto a submerged rock.  Most boat policies however, exclude coverage for mechanical breakdown. If the engine ingests debris and overheats …or if some internal engine part fails and the engine is then ruined…most policies will not cover this damage.

The good news is certain boat insurance policies do provide mechanical breakdown coverage!

Did you sell the policy that does? The Ranger bass boat we used in our example above has half its value and purchase cost of the boat in the boat’s engine. A Mercury 115 HP engine cost about $12,000. Is it covered for mechanical breakdown?  You want to be certain it is.   And you need to make sure the mechanical breakdown coverage covers the ENGINE  (not just the lower unit).  

Always be certain you have sold a policy written on an Agreed Value basis.  This means in the event the boat is a total loss the insured will be paid the “Agreed Value” as it appears on the policy declaration page. This will avoid the surprise and potential gap in coverage you can have with an ACV policy.

Boat and yacht ownership (and insurance) has a very interesting issue. If the boat sinks, the boat owner is financially responsible for the raising and the removing of the wreckage of the boat. Question? Does the boat insurance policy cover the cost of raising and removing the wreckage?   Many boat policies do not cover this cost and you need to make sure you sold your customer a policy that does cover these costs.  Raising a large vessel off the bottom can cost tens of thousands of dollars. Don’t leave your insured without this coverage.

On yet another interesting twist in boat ownership….did you know if a boater were out boating and found themselves in imminent danger (i.e. at risk of sinking for some reason) ..that the rescue vessel coming to their aid and providing a  “rescue” of their vessel is entitled to the full value of the rescued vessel?  Yes, this is true. If the rescue vessel were to put a temporary patch on a vessel taking on water and then tow that vessel safely back to shore…the rescue vessel, (i.e. salvage team), would legally be entitled to the full value of the vessel they rescued.  For example, if a $75,000 boat had sustained $10,000 in damage (i.e. a $10,000 hole in the boat) …this would mean the salvage team would be entitled to a $65,000 marine salvage award.  This also means the owner of the rescued vessel either pays $65,000 or receives a salvage lien for $65,000.   The question for you is  …did the boat insurance policy you sold provide your client with coverage for a marine salvage claim. Many policies do not. Please be careful to sell your client a policy that does cover this potential gigantic exposure.

A few other things for your consideration:

Does the hull deductible match your customer’s appetite for self-insured risk? Some companies have ten percent deductibles, while others go as low as $100.

Does the policy you sold him contain accidental fuel spill coverage?

Did you cover the trailer?

If your customer is left with a loss that isn’t covered, when it could have been, he may go fishing for a new agent, and take his extended family with him.

James Holm


Mazda, Google, Or You? Who Will Decide If You Will Continue to Drive a Car?

“After a lifetime of driving, repairing and studying automobiles, I have come to an unavoidable conclusion – we are the weakest link in a car. As car components go, human beings are deeply substandard – we have imperfect perception, we are ruled by emotion, and we vary wildly in quality.” Peter Cheney, award winning Canadian writer for the Drive section of the Globe and the Mail

Are we really seriously considering relinquishing our right to drive a car?

For fourteen years Mazda has celebrated what it calls the “emotion of motion” with its “zoom zoom” advertising campaign. The early ads featured a young boy dressed in a black suit and tie who looked into the camera and whispered “zoom, zoom”. His voiceover is still used in current ads to signify our love affair with acceleration.

Even at an age where I’m gleefully cashing the first of my social security checks, I know exactly what “zoom zoom” means. I can remember being a boy of nine on the farm. I had dawdled with my chores and subsequently lost out on an opportunity to drive the half-mile from our farm to my grandmother’s farm.

I was crushed because I would always know that no matter how many times I drove a car after that . . . I could have driven more. A year later I was driving our farm’s grain to the elevator, which was six miles away in our three-quarter ton pickup. Driving had become a necessary tool on a family farm, but no less satisfying.

Zoom zoom.


Perhaps today’s generation has been ruined by cars that were designed to drive fast.

In my teens I went for a test-drive with a friend who had built a hotrod. We took the car out on a stretch of highway that had been semi-abandoned when the interstate was built. The car didn’t have any floorboards so we were looking down at the pavement flashing by beneath.

It wasn’t that I was a stranger to speeds in excess of 100 MPH. At that time it was fairly common to “bury the needle” which meant the speed of the car exceeded what the speedometer was capable of registering. It was the day of big engines, even in family sedans. Even our family Rambler was deceptively fast in a 0 to 60 MPH run.

Yet, going down the highway in a “homemade” roadster at 130 MPH is the “fastest” I ever experienced. I suppose it had a lot to do with the perception that I was in a state of near-death. Tom, the friend who did the work on roadster, was incredibly smart and talented. He eventually became an aeronautical engineer, which apparently became boring because he later went back to school and became a neuro-surgeon. Knowing that Tom was smart was comforting, yet in a world where speed is best measured by how much our butt puckers my sphincter-meter was topping-out.

Today’s “couches on wheels” are so comfortable that they apparently prompt people to believe they can multi-task with their personal devices while driving without undue risk. Big “comfy” cars definitely make driving at the speed limit on a four lane road seem like you’re standing still. With the soundproofing and other “enhancements” we have become detached from our surroundings. I’m not advocating doing away with floorboards, but changing a car into a transport “pod” seems just as Draconian.

Perhaps the driverless car is merely an outgrowth of the change to an automatic transmission?

As stated above, I was driving our grain to market at the ripe old age of ten. The local elevator featured a steeply-sloped driveway. During harvest, trucks would line up waiting to dump their grain. It was considered a rite of passage for young drivers to be able to successfully simultaneously work the clutch and accelerator with a fully-loaded box of grain at the apex of the ramp. Adding to the complexity was the knowledge that if you got the truck moving into the elevator too fast you would have to stomp on the brakes to stop at the right spot. Since that “spot” was on the elevator’s scale, Mister Rutherford and Mister Munson would have a stern talk with you, if you caused their scale to bounce. The worst outcome would be to “buck and stall” repeatedly on the hill leading into the elevator, to the extent that one of them would take over driving the truck, “To get things moving, for crying out loud!”

Even though I dreaded each trip to the elevator that demanded I negotiate that driver’s-skills gauntlet, I still much prefer a standard transmission to an automatic.

I’m not a Luddite and truly understand that today’s automatic transmissions are modern marvels in their efficiency.

I went through this philosophical dilemma years ago when automatic braking systems were first introduce, eliminating the need to rapidly pump your brakes to stop on ice.  Having grown up in North Dakota I can attest that the ABS changed driving tremendously . . . for the better.

Yet, I love the ability to control my car as much through the clutch as I do the brake. I want to be the one aligning my gears to the car’s needs.

Predicting the Future with Driverless Cars

According to Google, the driverless car will ease traffic congestion, lower pollution, and prevent accidents.

Years ago I was an underwriter for an insurance company that specialized in insuring long-haul trucks. Based on loss experience we realized that 70% to 80% of accidents were caused by external factors; and that was before the day of cell phones and texting.

Traffic congestion is largely caused by inattentive drivers who create a rift in the “flow” by going too fast or too slow, tailgating or leaving too much room between us and the car in front of us . . . or in general, being human. Supposedly driverless cars will allow many more cars to occupy the same stretch of highway and move at faster speeds because their movements will be predictable.

Try saying this out loud. “Computers are predictable.” That sounds ridiculously wrong, because it is.

Even more salient is this. Are we going to have one apocalyptic day when we send all current cars to the junkyard and replace them with driverless cars? If not, Google’s Nirvana will be marred for many years by cars with drivers. Further, if these “driverless” cars are equipped with steering wheels and pedals for “emergencies” humans will find reasons to believe their situation is an emergency, even when that emergency is nothing more than being late for soccer practice.

If all cars actions aren’t “predictable” the efficiencies gained will be much less and probably non-existent.

The same logic applies to the promised lower pollution and some of the prevented accidents.

Google touts the 360-degree vision for its cars’ computers and their perfect attention to the matter at hand. It would seem to me that a human’s basic desire for self-preservation is a much stronger barrier to carnage than a machine that still finds “rebooting” to be a satisfactory response to most problems.

I would be much more comfortable if Google left the development of the driverless car to Volvo, who has been working on this for decades and seems poised to launch its first cars. Volvo has an amazing dedication to safety, while Google has a great tradition of April Fools’ Day jokes.

Driverless cars? What is wrong with the heart of our generation?

NASCAR is the number one spectator sport in our nation, with one in three adults claiming to be fans. Yet, where is the equivalent of Charlton Heston staring into a camera and promising to put pedal to the metal until you pry “my cold, dead hands” from the steering wheel of my 68 Corvette?

James Holm