BOATS AND YACHTS
INCLUDING: Boat Dealers • Boat Repair and Dry Docks • Marinas
Wherever one finds summer resorts, inland lakes, large rivers or harbor facilities, there are also marinas and boat and yacht sales and service agencies. The insurance requirements of these operations are unusual. While marine insurance is the oldest form of insurance, it is usually also one of the least understood. A bank or other lending institution almost always has an interest in the merchandise on the dealer’s floor and in the boat or yacht when purchased by the customer. The liability exposures of the dealer that provides boat repair or service require special attention. So does the liability of operations that accept boats and yachts for winter storage. In some cases, physical damage coverage is needed for the boats and yachts themselves.
Package Policies
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.
Commercial Package Policy (CPP)
Property Coverages
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
Property Coverage Forms
Building and Personal Property Coverage Forms
Equipment Breakdown Protection Coverage
Perils Insured/Causes of Loss Forms
Property Coverage Options to Consider
Outdoor Trees, Shrubs and Plants Coverage
Utility Services–Direct Damage Coverage
Valuation Options
Peak Season Limit of Insurance
Time Element Coverages
Business Income with Extra Expense Coverage
Business Income without Extra Expense Coverage
Time Element Coverage Options to Consider
Business Income from Dependent Properties Coverage
Ordinance or Law Increased Period of Restoration Coverage
Utility Services–Time Element Coverage
Inland Marine Coverages
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.
Contractors’ Equipment Coverage
Difference in Conditions (DIC) Coverage
Electronic Data Processing Equipment Coverage
Valuable Papers and Records Coverage
Crime Coverages
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.
Computer and Funds Transfer Fraud 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
Crime Optional Coverages to Consider
Employee Theft and Forgery Policy
Inside The Premises–Robbery or Safe Burglary of Money And Securities Coverage
Inside The Premises–Robbery or Burglary of Other Property Coverage
Inside The Premises–Theft of Other Property Coverage
Lessees of Safe Deposit Boxes Coverage
Securities Deposited With Others Coverage
Unauthorized Reproduction of Computer Software by Employees Coverage
Surety Coverages
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.
Contract–Performance of Service or Supply Bonds
Commercial Liability Coverages
The liability exposures for boat dealers and marinas fall into two categories—operations performed on premises and 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.
Commercial General Liability (CGL) Coverage
Employee Benefits Liability Coverage
Employment-Related Practices Coverage
Special Events Liability Coverage
Commercial Auto Coverages
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.
Nonownership Automobile Coverage
Uninsured/Underinsured Motorists Coverage
Workers Compensation Coverages
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.
Workers Compensation and Employers Liability Coverage
Longshore and Harbor Workers’ Compensation Act Coverage
Stop-Gap or Employers Liability Coverage
Excess and Umbrella Coverages
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.
Bumbershoot Liability Coverage
Ocean Marine Coverages
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.
Protection and Indemnity Coverage
Ship Repairers Legal Liability Coverage
Wharfingers Liability Coverage
Specialty Coverages
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.
Business Legal Expense 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
Transportation Brokers Contingent Cargo Coverage
Underground Storage Tank (UST) Liability Coverage
Unmanned Aerial Vehicles (UAV) (Drones)