CHAPTER FOURTEEN - PERSONAL ARTICLES & WATERCRAFT

 

In The 1976 Nation-Wide Marine Definition, Article E., several classes of Inland Marine coverages are listed:

E. Personal Property Floater Risks covering individuals and/or generally

1. Personal Effects Floater Policies.

2. The Personal Property Floater.

3. Government Service Floaters.

4. Personal Fur Floaters.

5. Personal Jewelry Floaters.

6. Wedding Presents Floaters for not exceeding 90 (ninety) days after the day of the wedding.

7. Silverware Floaters.

8. Fine Arts Floaters covering paintings, etchings, pictures, tapestries, art glass windows, and other bonafide works of art of rarity, historical value or artistic merit.

9. Stamp and Coin Floaters.

10. Musical Instrument Floaters. Radios, televisions, record players and combinations thereof are not deemed musical instruments.

11. Mobile Articles, Machinery and Equipment Floaters (excluding motor vehicles designed for highway use and auto homes, trailers and semi-trailers except when hauled by tractors not designed for highway use) covering identified property of a mobile or floating nature pertaining to or usual to a household. Such policies shall not cover furniture and fixtures not customarily used away from premises where such property is usually kept.

12. Installment Sales and Leased Property Policies covering property pertaining to a household and sold under conditional contract of sale, partial payment contract or installment sales contract or leased, but excluding motor vehi­cles designed for highway use. Such policies must cover in transit but shall not extend beyond the termination of the seller's or lessor's interest.

13. Live Animal Floaters.

 

There are also several other types of property that can be insured as personal Inland Marine insurance, such as cameras, outboard boats and outboard motors, personal computers and equipment, antique autos, and many other items, including collections, such as personal collections of stamps, coins, antiques, crystal, etc.  These are not listed in the Definition as quoted above, but the Definition states in the beginning that the classes listed in the Definition are not all-encompassing. 

 

Personal Inland Marine coverage can be provided through the Personal Articles Floater, the Personal Effects Floater and the Personal Property Floater.  The Personal Articles Floater is the principal form used, therefore it will be discussed first.

 

THE PERSONAL ARTICLES FLOATER

 

The Personal Articles Floater provides coverage for all types of personal property, whether inside or outside the home, which includes jewelry, musical instruments, cameras, fine arts, and precious stones.  The policy is issued separately as an Inland Marine insurance policy, or as an endorsement to a homeowners policy.  Protection is on an All-Risks basis, subjects to exclusions of wear and tear, war and nuclear disaster.  Each piece of jewelry and other expensive items must be specifically listed in the policy.

 

The Personal Articles Floater (PAF) covers 9 classes of Personal Property against risks of Direct Physical Loss.  Coverage is worldwide except for fine arts.  The following 9 classes of Personal Property can be insured:

 

1. jewelry,
2. furs,
3. cameras,
4. musical instruments,
5. silverware,
6. golfing equipment,
7. fine arts,
8. postage stamps,
9. rare and current coins.

 

Certain classes of newly acquired property, such as jewelry, furs, cameras and musical instruments, are automatically covered for 30 days if the insurance is already written on that particular class of property.  The amount of insurance on newly acquired property is limited to 25% of the amount of insurance for that class of property or $10,000, whichever is lower.  The property must be reported to the company within 30 days after acquiring it to continue the coverage, and an additional premium must be paid from the date of acquisition.

 

Jewelry:  Any article of jewelry may be insured.  The policy also covers silverware, plateware, pewterware, toilet articles, cigarette cases and trophies.  Jewelry may be insured separately or together with furs.  Each item of jewelry must be scheduled and a specific amount of insurance shown for it.  Insurance on jewelry is carefully underwritten because of the moral hazard.  Original bills of sale, or a signed appraisal may be required before the jewelry is insured.

 

Furs: Any article of fur, or article trimmed with fur, in which fur represents the principal value (fur rugs and imitation furs).  Each item must be listed separately and a specific amount of insurance shown for it.  Furs also are carefully underwritten because of the moral hazard.  If, during the terns of the policy, the insured purchases additional furs, the newly purchased property is covered automatically.  The insured must notify the company within 30 days of its' purchase subject to the following condition:  The insurer is not liable for more than 25% of the amount of insurance already covered on that class of property or $10,000 covered under the policy.

 

Cameras and Camera Equipment:  Cameras, films, telescopes, binoculars, microscopes and projectors used in photography.  Additional insurance can be purchased to cover the Blanket Insurance, but such insurance may not exceed 10% of the total amount on the scheduled items.  This insurance is used to cover filters, sun‑shades, meters and like smaller items.  Not covered would be TV cameras and equipment, coin operated devices, area and radar cameras, camera property.  Professional use is covered by endorsement and additional premium.

 

Musical Instruments:  Musical instruments, instrument cases, sound and amplifying equipment and similar equipment can be insured under the Personal Articles Floater.  Musical instruments played for pay during the policy period are not covered unless an Endorsement is added and a higher premium paid.  Radios, televisions and stereos are not eligible for insurance under this policy.

 

Silverware:  Silver and goldware can also be insured under the Personal Articles Floater, however, pens, pencils, flasks, smoking implements, or jewelry can be insured as silverware.  These types of property may be insured as jewelry.

 

Golfing Equipment:  Golfing equipment, including golf clothes, can be insured under the Personal Articles Floater.  Other clothing contained in a locker while the insured is playing golf is also covered.  Golf balls, however, are covered for loss only by fire and burglary if there are visible marks of forcible entry into the building, room or locker.

 

Fine Arts:  Fine arts include private collection of paintings, antique furniture, rare books, rare glass, manuscripts and bric‑a‑brac. Fine arts are insured on a valued basis.  If a valuable painting is stolen, the amount of insurance stated in the Schedule for that item is the amount paid.  Newly acquired fine arts are automatically insured for 90 days, however, the insured is required to notify the insurer of the purchase within 90 days and pay the additional premium.  The limit of such property is 25% of the total insurance.

 

Fine Arts Coverage has 3 major exclusions:

1. loss to property on exhibition at fairgrounds, or at national/international expositions unless the premises are covered by the policy.
2. breakage of art glass windows, glassware, statuary, marble, bric‑a‑brac, porcelain and similar fragile articles are also excluded. The exclusion does not apply if the breakage is caused by fire, lightning, explosion, aircraft, collision, windstorm, earthquake, flood, malicious damage or theft, and derailment or overturn.
3. damage as a result of repairing, restoration or retouching process.

 

Stamp and Coin Collection:  Valuable Stamp and Coin Collections are also insured under the PAF.  The stamps and coins can be insured on either a Scheduled or Blanket Basis.  If the items are valuable, the property should be scheduled so that each item is listed and insured.  If the property is insured on a Blanket Basis, each item is not separately listed and the insurance applies to the entire collection.

 

Loss Settlement:    If a loss occurs to a scheduled item, the amount paid is the lowest of the following accounts:

1. Actual Cash Value;
2. The amount for which the property could reasonably be expected to be repaired;
3. The amount for which the property could reasonably expected to be replaced; or
4. The amount of insurance.

 

If the stamps or coins are covered on a Blanket Basis, the amount paid is the Cash Market Value at the time of loss.  There is a $ 1,000 maximum limit of any unscheduled coin collected and a $250 maximum limit on any single stamp, coin or individual article, or any single pair, block, series, sheet, cover, frame or card. 

 

Another limit also applies if the stamps or coins are insured on a Blanket Basis, and it has the effect of a 100% Coinsurance Clause.  The insurance company is not liable for a greater proportion of any loss than the amount of insurance on Blanket Property bears to the Cash Market Value at the time of loss.

 

EXCLUSIONS

 

The following exclusions apply to Stamps and Coin Collections:

 

1. theft from any unattended automobile (unless shipped as registered mail);
2. loss to property not part of a Stamp or Coin Collection;
3. loss to property in the custody of transport companies;
4. damage from being handled or worked on;
5. mysterious disappearance unless the item is scheduled or specifically insured, or is mounted in a volume and the page to which it is attached is also lost;
6. transfer of colors, inherent defect, dampness, extremes of temperature, or depreciation;
7. damage from fading, creasing, denting, scratching, tearing or thinning.

 

 

PERSONAL PROPERTY FLOATER

 

A Personal Property Floater provides coverage for all personal property, regardless of location,  of an insured and household residents, including children away at school.  It is written on an All-Risks basis, subject to excluded perils such as war, wear and tear, mechanical breakdown, vermin, and nuclear disaster.  “Personal Property” includes clothing, television, musical instruments, cameras, jewelry, watches, furs, furniture, radios and appliances.  Coverage can be extended to damage of real property as the result of theft of personal property.

 

The Personal Property Floater (PPF) provides an insured with extensive coverage on Unscheduled Personal Property.  Usually the property is kept at the insured's property but there is Worldwide Coverage when the property is temporarily away from the insured's residence.  The insured property is insured on a Risk of Direct Physical Loss ("All‑Risks ") Basis.

 

PERSONAL PROPERTY COVERED

 

There are 13 classes of Unscheduled Personal Property that the Personal Property Floater may insure.  A separate amount of insurance will be applied to each of the following classes:

 

1.  silverware, goldware and pewterware,

2.  clothing,

3.  rugs and draperies,

4.  musical instruments and electronic equipment,

5.  paintings and other art objects,

6.  china and glassware,

7.  cameras and photographic equipment,

8.  guns and other sports equipment,

9.  major appliances,

10.  bedding and linens,

11.  furniture,

12.  all other Personal Property and professional books and equipment while in the residence;

13.  building additions and alterations

 

The total amount of insurance in every category is the maximum limit of recovery for any single loss to property in that particular category.  The total amount for all 13 categories is the Total Policy Limit.  A $100 deductible applies to each loss.  Obviously, a higher deductible is also available with a corresponding reduction in premium.

 

NEWLY ACQUIRED PROPERTY  

 

Newly acquired property is automatically covered up to 100% of the total amount of insurance or $2,500, whichever is lower.  The insurance on newly acquired property can be applied to any of the 13 classes.  Keep in mind that the total amount of insurance is not increased.

 

If property is located at a newly acquired principal residence, coverage is for 30 days from the time the property has been moved to the new residence.

 

PROPERTY NOT COVERED

 

The PPF does not cover the following types of Personal Property:

 

1. animals, fish or birds,
2. boats, aircraft, trailers and campers,
3. motor vehicles (including motorcycles and motorized bicycles) designed for transportation or recreational use,
4. equipment and furnishings for the above vehicles unless they are removed from the vehicle and are at the insured's residence,
5. owned property pertaining to a business, profession, or occupation (however, professional books, instruments and equipment are covered while in the insured's residence),
6. property normally kept other than at the insured's residence throughout the year.

 

The PPF also has specific limits on certain types of property.  There is a $100 limit on money, a $500 limit on securities, notes, stamps, passports, tickets and similar property; and a $500 limit on jewelry, watches and furs.

 

EXCLUSIONS

 

Losses caused by the following are excluded:

1. types of water damage excluded elsewhere in the policy; 
2. acts or decisions of any person, group, organization or governmental body;
3. any work on covered property (other than furs, watches and jewelry);
4. animals owned or kept by the insured;
5. dampness or extreme changes of tempera­ture (except if caused by rain, snow, sleet, hail or bursting of pipes or apparatus;
6. wear and tear, deterioration, or inherent vice;
7. mechanical or structural breakdown (except by fire);
8. marring or scratching of property, breakage of eye glasses, glassware and other fragile articles (but not if the loss is caused by fire, lightning, theft, vandalism or malicious mischief, and several other causes of loss specifically named in the policy); or
9. insects or vermin.

 

 

 

PERSONAL EFFECTS FLOATER

 

Personal effects insurance provides coverage outside an insured’s home for personal items usually carried or worn while traveling.  Protection is for personal property (apparel and jewelry), not for real property or property not usually carried by the traveler (e.g.,a piano, household goods, etc.). 

 

The Personal Effects Floater (PEF) was designed for use by tourists who wish coverage on their personal articles while traveling. The Personal Ef­fects Floater provides "All Risks" Coverage on the Personal Property of tourists and travelers anywhere in the world, but only while the covered property is not on the residence premises.  Coverage will apply to the named insured, his/her spouse and any unmarried children who permanently reside with the named insured.

 

COVERAGE OF PERSONAL EFFECTS

 

Personal Effects refer to Personal Property normally worn or carried by an individual.  The Per­sonal Effects Floater is designed to cover the in­sured's Personal Effects, such as cameras, sports equipment, luggage and clothes, while the insured is traveling or on vacation.

 

PROPERTY NOT COVERED

 

The PEF will exclude coverage for certain types of property even though the article may be carried or used by travelers.  The following property is excluded:

1. contact lenses and artificial teeth or limbs,
2. merchandise for sale or exhibition, theatrical property, and property specifically insured,
3. automobiles, motorcycles, bicycles, boats, other conveyances and their accessories,
4. accounts, bills, currency, deeds, evidences of debt and letters of credit,
5. passports, documents, money, notes, securities and transportation of other tickets,
6. household furniture and animals,
7. automobile equipment, salesperson's sam­ples, physician's and surgeon's equipment.

 

In addition to the requirement that the property must be worn or used by the insured, the article must belong to the insured.  If the insured rents or borrows property, the coverage does not apply.

 

COVERAGE

 

Personal Effects are covered on an "All‑Risks" Basis.  Therefore, all Direct Physical Losses are covered except for certain losses that are specifically excluded.  The following losses are excluded:

1. breakage of brittle articles unless caused by a theft, fire, or accident to a conveyance,
2. damage to Personal Effects from wear and tear, gradual deterioration, insects, vermin, inherent vice, or any damage while the property is being repaired.

 

OTHER EXCLUSIONS

 

The Personal Effects Floater has the following limitations on coverage:

1. Personal Effects in the custody of students while at school are not covered except for loss by fire.
2. Property storage is not covered.  There is coverage of the property at points and places enroute during travel.  If the insured stores his/her luggage in a locker at an air­port, train station or bus terminal while out on a sightseeing tour, the exclusion would not apply.
3. Personal Effects are not covered while on the named insured's residence premises.

 

LIMITATIONS ON CERTAIN PERSONAL EFFECTS

 

1. Furs, watches and jewelry are subject to certain special limits.  Coverage on any single article is limited to 100% of the total amount of insurance with a maximum of $100.
2. Theft of Personal Effects from an unattended automobile is also excluded.  There would be coverage, however, if the automobile is locked.  and there are visible marks of forcible entry. The amount paid is limited to a maximum of 10% of the total amount of insurance or $250, whichever is lower.

 

 

 

SCHEDULED PERSONAL PROPERTY ENDORSEMENT

 

A scheduled Personal Property Endorsement is an addition to a Homeowners Policy (or other personal or business property policy) to provide extra coverage for listed articles.  These standard policies have dollar limits on certain items, such as jewelry, furs, art or guns.  This Endorsement allows a policyholder to purchase additional coverage for specific items of property, with each items or group of items, and the amount of coverages, listed.

 

When discussing Personal Inland Marine Floaters, the question arises ‑ when is it economical to schedule property?  "Scheduling" refers to describing and listing separately on another policy or on an Endorsement, particular items that must be listed separately.

 

ENDORSEMENT

 

The Scheduled Personal Property Endorsement is used to provide coverage for Risks of Direct Loss for certain classes of Scheduled Property.  Scheduled Coverage may be provided for jewelry, furs, cameras, musical instruments, silverware, golfing equipment, fine arts, postage stamps, rare and current coins.  The rating for this coverage is based on Standard Inland Marine Rating Procedures.  A different rate per $100 of value applies to each category of property.  The question will usually be asked ‑ "Doesn't my Homeowners Policy cover it?  Why do I need a separate endorsement?”  Thus, the question remains: "When should Personal Property be scheduled?"

 

An Unendorsed Homeowners Policy covers Unscheduled Personal Property on a Named Perils Basis; however, many clients own valuable Personal Property that should be scheduled and specifically insured under a Floater Policy.  It is generally agreed that, in addition to high value property such as diamond rings and fur coats, the following types of Personal Property may be appropriate for Scheduled Coverage:

 

1. Unique Objects - This includes works of art, rare antiques, paintings and collections of unusual property, such as a valuable Stamp or Rare Coin Collection.  The value of the property should be established in advance to avoid the problem of proving its value after the loss occurs.

 

1. Business or professional Equipment ‑ The Homeowners Policy provides only limited coverage for Business or Professional Equipment.  Business or Professional Property is covered only for a maximum of $2,500 while on the residence premises and $250 away from the residence premises.  Business and professional property can be more adequately insured‑by scheduling the property with a stated amount of insurance shown for it.

 

1. Portable Property ‑ Certain types of Portable Property (cameras and equipment, musical instruments, or sports equipment) can be scheduled and specifically insured under a Floater Policy.

 

1. Fragile Articles ‑ Certain Fragile Articles with high value could be scheduled and specifically insured, such as glassware, statuary, scientific instruments, typewriters, or home computers.

 

HAZARDS OF SCHEDULING PERSONAL  PROPERTY

 

 

The amount of insurance under a Floater Policy must be sufficient to pay for losses to Covered Property in full, since the exclusion rules out any contribution by the Homeowners Policy.  In addition, Unscheduled Personal Property under the Homeowners Policy may be insured on a Replacement Cost Basis by adding the Homeowners HO‑04‑90 Endorsement.  Replacement Cost Insurance on Personal Property that is scheduled and specifically insured, generally is available only under the HO‑04‑61 Scheduled Personal Property Endorsement when the underlying Homeowners Policy also is endorsed to provide Replacement Cost Coverage.  Thus, the advantage of Risks of Direct Loss Coverage under the Personal Property Floaters must be carefully weighed against the possibility of being underinsured at the time of loss.

 

COMPARISON OF THE PERSONAL PROPERTY FLOATER AND THE HOMEOWNERS (03) POLICY

 

The question often arises ‑ "Why do I need a Personal Property Floater when we have a Homeowner's Policy?”  Using the Homeowners Form 03 as comparison, the following specific areas of coverage should be considered when answering this particular inquiry:

 

1. With a Personal Property Floater, Risks of Direct Physical Loss Coverage are on Unscheduled Personal Property, while under a HO-03 Policy there is Named‑Perils Coverage on Unscheduled Personal Property.

 

1. Under the Personal Property Floater there is a $500 limit on securities, evidences of debt, valuable papers, passports, and tickets and stamp collection.  Under the HO-03, the limit is $1,000 for such coverage.

 

1. With the Personal Property Floater, there is a $500 aggregate limit on watches, jewelry and furs.  With a HO-03 Policy, the aggregate limit is $1,000.

 

1. Under Personal Property Floaters, there is an exclusion on property located at other than the insured's residence throughout the year.  HO-03 has no such exclusion.

 

1. With a Personal Property Floater, there are 13 categories of Property, with a specific limit of insurance for each category.  The HO-03 has no such provision.

 

1. With a Personal Property Floater, there is a $100 limit on money while the HO-03 has a $200 limit.

 

COMPARISON OF THE PERSONAL EFFECTS FLOATER AND THE HOME OWNERS POLICY

 

These coverages may be compared under eight specific areas:

 

1. Under the PEF.  “All-Risks” coverage is included, while the HO-03 has Named Perils coverage.

 

1. The PEF has coverage only while Personal Effects are off the residence premises while the HO-03 has coverage on and off residence premises.

 

1. The PEF has no coverage property of students while at school (except for fire) while the HO-03 covers the risk.

 

1. With the PEF, only Personal Effects are covered which is narrow, but with the HO-03 Unscheduled Personal Property is covered which offers broader coverage.

 

1. With the PEF, there is no coverage on passports, tickets, securities, or valuable paper.  The HO-03 has a $ 1,000 limit.

 

1. Under the PEF there is no coverage on money while the HO-03 has a $200 limit.

 

1. With the PEF there is no coverage for borrowed property while the HO-03 offers coverage for Borrowed Personal Property.

 

1. The PEF has a limit of 10% of the amount of insurance up to $100 on any single article.  The HO-03 will cover jewelry, watches and fur up to $1,000.

 

 

 

WATERCRAFT INSURANCE

 

INTRODUCTION

 

Insurance on Pleasure Boats is not subject to filing except that in some states, any boat 16 feet or under may require filing.  Generally, boats with inboard motors, and sailboats, have been insured under Marine insurance forms, and are referred to as Yacht policies.  Physical damage for smaller boats and outboard motorboats usually are written as Inland Marine insurance.  The Nation-Wide Marine Definition makes no distinction between Marine and Inland Marine insurance regarding boats.  Some states require filings for outboard motor boats of 16 feet or less (as indicated above).  In general, small outboard motor boats are covered under Inland Marine insurance, and all other boats are covered under Marine insurance.

 

Because they are a nonfiled class in most states, there is a wide variety of forms used to insure the smaller boats, and in most cases, they use Floaters that provide physical damage on the insured boat, and also provides for a limited amount of property damage liability.  Some insurers offer Boatowners (or Watercraft) Insurance policies, package policies that resemble automobile insurance, and which include bodily injury and property damage coverage, medical payments coverage, physical damage coverage and many offer uninsured boaters insurance.

 

Recreational Watercrafts include: yachts, houseboats, speedboats, sailboats, outboard and inboard motorboats, canoes, rowboats and dinghies.  This text will discuss the Loss Exposures from the ownership and operation of watercraft and insurance contracts for insuring these recreational watercraft.  There are different ways to insure pleasure boats, so the various methods will be discussed.

 

HULL AND TRAILER LOSS EXPOSURES

 

Watercraft and its equipment, furnishings and trailers are all exposed to a wide array of physical damage and theft losses.  Some Examples would be:

1. an explosion causes serious damage to a boat,
2. a storm causes a boat to sink,
3. boat trailer is stolen while a boat is out on a lake,
4. an outboard motor falls into a lake,
5. a speedboat collides with another boat,
6. a strong wind overturns a sailboat,
7. a houseboat hits a sandbar,
8. (anyone who has ever owned a boat can probably add a couple more to this list).

 

THE HOMEOWNERS POLICY AND PHYSICAL DAMAGE COVERAGE

 

Watercraft (and boat trailers) can be insured under Homeowners policies, but this is perhaps the least desirable method because of the following four important limitations:

 

1. Watercraft is covered only for a limited number of Named Perils.  Risks of Direct Loss, ("All‑Risks") Coverage is not available.
2. Theft of watercraft, trailers, furnishings, equipment and outboard motors away from the residence is excluded.
3. Coverage on watercraft including trailers, furnishings and equipment is limited to a maximum of $ 1,000.
4. Direct Loss to watercraft, trailers, furnishings, equipment and outboard motors from windstorm or hail is covered only if the property is inside a fully enclosed building.

 

The coverage available under homeowners policies is obviously designed for those small boats with the only real protection provided while the boat is garaged.  Those with larger boats  (if a 17-foot boat can be considered as “large”) will look elsewhere for more comprehensive coverage.

 

PHYSICAL DAMAGE COVERAGE UNDER THE PERSONAL AUTO POLICY

 

Under the Personal Auto Policy, only a boat trailer can be insured for Physical Damage Loss.  The trailer must be described in the declaration.

 

LIABILITY LOSS EXPOSURES

 

Owners and operators of watercraft face numerous Liability Loss Exposures – some of which can be devastating.  A few Examples:

 

1. A boat operator forgets to give a child a life preserver and the child falls overboard and drowns.
2. A speedboat creates a huge wave and causes another boat to overturn.
3. A boat collides with another boat and several occupants are critically injured.
4. A water skier is injured due to a high rate of speed.
5. A boat runs into and injures several swimmers. 

 

 

OUT‑BOARD MOTOR AND BOAT INSURANCE 

 

This coverage is basically designed for those boat owners who already have adequate Liability Insurance and desire to broaden the Physical Damage Coverage on the boat.  The coverage is usually provided by an Inland Marine Floater, which can take a variety of forms, but there are common features such as Covered Property, Covered Perils and Exclusions.

 

COVERED PROPERTY 

 

When outboard motorboats are written as Inland Marine, insurance normally applies to the following property, provided the property is owned by an individual and is used only for pleasure and recreational purposes:

 

1. rowboats, canoes, boats not exceeding 16 feet in length, and designed to be propelled by outboard motor(s).
2. outboard motors, including peripheral equipment (tanks, lines, etc.).
3. boat trailers, boat carriers, and other such equipment designed or used with the above.

 

The coverage is written on an Actual Cash Value Basis and usually contains deductibles ranging from $25 to $250 or more.  The property must be scheduled, except auxiliary equipment can be written on a blanket basis, subject to separate limit of insurance.

 

COVERED PERILS

 

The Floater is extremely flexible as it can be written to cover Named Perils or Risk of Direct Loss (“All‑Risks" Coverage).  The majority of floaters are written on an "All‑Risks" Basis and will cover all Direct Physical Losses except those that are excluded.

 

Typically excluded are the customary ones of wear and tear, latent defect, mechanical or electrical breakdown, war and nuclear hazards.  Some policies will also exclude coverage for damages resulting from repair or servicing (unless covered under the fire or explosion provision), freezing or ice, and dishonesty of persons that have legal custody of the property.  The “dishonesty of persons” may be written so that carriers for hire or marina operators are not excluded.

 

Many motorboat policies exclude coverage during any organized race or speed test.  Fortunately for Bass fishermen in particular, this exclusion is not considered to apply to an informal or unorganized race.  (Bass fishermen during tournaments, go as fast as their “sometimes overpowered” boats will take them, to get to their preferred fishing spot).

 

When motorboats are insured for Named Perils, they will generally be insured for damage or losses caused by fire, explosion, lightning, windstorm (sometimes restricted to only those storms while the boat is on land), collision, theft and loss of the motor from marine perils.  (The term “marine perils” may be defined as the “perils of the sea” that is in Marine policies.  The most obvious example would be losing equipment overboard).

LIABILITY COVERAGE

 

Typically, liability coverage is usually limited to property damage liability.  The coverage will not include Liability Insurance for bodily injury, loss of life, or illness.  It is always assumed that the insured will have adequate Personal Liability Insurance under a Homeowners or Personal Liability policy, to cover third‑party claims.  The Floater may be used to provide Collision Damage Liability Insurance that will protect the insured from a claim for property damage from the owner of another boat if the insured's boat collided with another boat while afloat.

 

Protection and Indemnity (P&I) coverage for small boats is offered by many companies.  The coverage is quite broad and can pay for damages that the insured may have to pay, including damage to property others, loss of life, and personal injury.  Some policies provide coverage for the expense of raising, destroying, or removing a wreck if the insured’s boat sinks and has to be removed. 

MEDICAL PAYMENTS COVERAGE

 

Usually offered in conjunction with P&I coverage, it is quite similar to the Medical Payments Coverage in the Personal Auto Policy.  Medical Payments Coverage pays the necessary medical expenses incurred or medically attributable within 1‑3 years from the date of a watercraft accident that causes bodily injury to a covered person.  A covered person is defined as the insured or a family member, or any person occupying the covered boat.  Medical expenses are the reasonable charges for medical, surgical, x‑ray, dentist, ambulance, hospital, professional nursing and funeral services.  Prosthetic devices would also be covered.  Example: if occupants in a covered boat are injured in a collision with another boat, the medical expenses are paid up to the Medical Payments limits of the policy.

 

EXCLUSIONS

 

The Exclusions for this type of insurance will vary according to the insurer.  Three common exclusions are:

 

1. Business Pursuits ‑ There is no coverage if the boat is used as a public vessel for carrying passengers for compensation.  Also, there would be no coverage if the boat is rented to others or if the covered property is being operated in any official race or speed contest.  The Policy is meant to cover the boat for pleasure purposes and obviously not for business purposes.
2. Repair or Services ‑ Loss or damage from refinishing, renovating, or repair is not covered.  The person repairing the boat or equipment should be responsible for any damage.
3. General Risks of Direct Loss ‑ there is no coverage for loss or damage from wear and tear, gradual deterioration, vermin and marine life, rust and corrosion, inherent vice, latent defect, mechanical breakdown and extremes of temperature.

 

 

 

 

 

 

 

PERSONAL YACHT INSURANCE

 

Personal Yacht Insurance refers to larger boats such as yachts, inboard motorboats, cabin cruisers and all boats more than 26 feet in length.  The following Coverages are available

 

HULL INSURANCE: 

This refers to Physical Damage Insurance on the boat.  This coverage applies to the boat, sails, tackle, machinery, furniture and other equipment and may be written on a Named Perils Basis or an "All ‑Risks" Basis.  A deductible will apply to all Physical Damage Losses.

 

PROTECTION AND INDEMNITY COVERAGE

 

1. This coverage is a form of Marine Liability Insurance.  The owner of the boat is covered for Bodily Injury and Property Damage on an Indemnity Basis.  Example:  if the boat owner falls asleep at the wheel and negligently crashes into a marina and injures a number of people, the loss to the dock and any Bodily Injury Claims would be covered.

 

OPTIONAL COVERAGES

 

There are several optional coverages that are available that can be added to the Personal Yacht Policy:

 

1. Boat Trailer Insurance,
2. Water Skiing Clause that provides Liability Protection if the boat is used for water skiing,
3. Land Transportation Insurance that extends the insurance to cover the insured vessel while being transported by land conveyance,
4. Medical Payments Insurance for covered persons,
5. Possible liability of the insured to maritime workers injured in the course of employment who are covered under the United States Longshore and Harbors Workers Compensation Act.

 

WARRANTIES

 

Personal Yacht Insurance contains several warranties (better known as 'promises').  If a warranty is violated, higher premiums will be charged or the coverages will not apply.  The major warranties are:

1. Lay-up Warranty  ‑ the insured promises when the vessel will not be in operation during certain periods, such as winter months.
2. Navigational Limits ‑ the vessel will be used only in the territorial waters described in the declarations.
3. Seaworthiness ‑ insured warrants that the vessel is in seaworthy condition.
4. Private Pleasure Warranty ‑ the insured promises that the vessel will be used only for Private Pleasure purposes and will not be hired or chartered unless the insurance company approves.

 

 

UNINSURED BOATERS COVERAGE

 

Uninsured Boaters Coverage is quite similar to the Uninsured Motorists Coverage in the Personal Auto Policy.  The insurer agrees to pay the damages that a covered person is legally entitled to recover from an uninsured boat owner or operator because of bodily injury the covered person sustained on a boating accident.  However, the Uninsured Owner or "Operators Liability" for the damage must arise out of the ownership, maintenance or use of a watercraft.

 

The Uninsured Boaters Coverage contains several exclusions.  Bodily injuries from the following are excluded:

 

1. using or occupying watercraft without reasonable belief that one is entitled to do so if the Bodily Injury Claim is settled without the insured's consent;
2. while occupying or struck by a watercraft owned by the insured or by any family member not insured under the policy;
3. when occupying a covered watercraft when it is being used to carry persons or property for a fee or is rented to others.

 

There is an arbitration provision that states that if there is disagreement about whether a covered person is legally entitled to recover damages from the uninsured boat owner or on the amount of damages, then arbitration is used.  Each party selects an arbitrator.  If they cannot agree within 30 days, a Judge in a Court of Law appoints the arbitrator.  A decision by any 2 of the 3 parties is binding on all.

 

 

STUDY QUESTIONS

 

1.  Which of the following is not an Inland Marine coverage that is used to insured personal items?

      A.  Personal Articles Floater.

      B.  Stamp and Coin Floater.

      C.  Personal Effects Floater.

1. Personal Property Floater.

 

2.  Which type of personal Inland Marine coverage is used to insure jewelry, furs, cameras and       musical instruments, inside or outside of the home?

      A.  Home Owners insurance.

      B.  Jewelry Floater.

      C.  Personal Effects Floater.

      D.  Personal Articles Floater.

 

3.  Which of the following articles would not be covered under the Personal Articles Floater without adding an Endorsement?

      A.  A painting done by a famous French impressionist.

      B.  A silver cornet used by the insured who is a member of a philharmonic orchestra.

      C.  A necklace of gold and rubies, once owned by Queen Mary of England.

      D.  A set of Men & Women’s Ping golf clubs.

 

4.  Bill leases an apartment and purchases a 62-inch screen television set, complete with sound-around stereo system.  He wants to insure his personal property in the apartment.  Which type of Inland Marine insurance will provide him with the coverage he wants?

      A.  Personal Effects Floater.

      B.  Personal Articles Floater.

      C.  Personal Property Floater.

      D.  Electronic Equipment Floater.

 

5.  The Smythes have a Personal Effects Floater policy as they travel frequently and they have a rather expensive array of jewelry and watches that they take with them.  Which of the following would NOT be covered under this Floater?

1.       A.  A 4-carat diamond ring which Mrs. Smythe frequently exchanges with a Zircon ring that is identical with the diamond, except for the stone.

      B.  An antique gold pocket watch that Mr. Smythe wears most of the time.

      C.  A necklace of gold, diamonds and rubies, formerly belonging to a queen, that the Smythe’s daughter has with her in college as it is her favorite piece of jewelry to wear.

      D.  A matched set of alligator hide luggage.

 

6.  Janet has Homeowners insurance and it sufficiently covers her personal items in the home.  She inherits a small Swarovski crystal collection, and continue to add to it – a lot of new pieces were given as birthday and Christmas presents, etc.  She soon has a value of over $25,000 in crystal.  Her Homeowners policy has a limit of $1,000 on the crystal.  She wants an All-Risks coverage as she will sometimes sell or give away a crystal piece, or purchase an expensive piece, and does not want the hassle of having to do paperwork all the time.

      A.  She should purchase a Personal Articles Floater.

      B.  She should purchase a Personal Property Floater.

      C.  She should purchase a Scheduled Personal Property Endorsement to her Homeowners policy covering the crystal.

      D.  She should purchase a Personal Effects Floater.

 

7.  Insurance on pleasure boats usually is not subject to filing, however in some states

      A.  any boat over 26 feet may require filing.

      B.  any boat under 16 feet may require filing.

      C.  all boats require filing.

      D.  only inboard or inboard/outboard boats require filing.

 

8.  When outboard motorboats are written as Inland Marine, insurance does not usually apply to

      A.  22 foot flats fishing boats with outboard motors.

      B.  gas tanks and lines that provide fuel for an outboard motor.

      C.  a 4 wheel boat trailer of stainless steel, used for carrying a 15 foot ski boat on long trips.

      D.  a fiberglass canoe of 15 foot, with oars and carrier.

 

9.  The “Whirligig” is a 46 foot yacht covered by Personal Yacht insurance.  The new owner panics while attempting to berth the yacht at an unfamiliar marina, and crashes into a waterfront restaurant, injuring 3 people.

      A.  The Yacht insurance will only cover the injured people up to a pre-determined amount as stated in the policy. 

      B.  The insurance will cover the damage to the boat (Hull insurance provision), damage to the marina and restaurant (Property Damage), and any bodily injury claims (Bodily Injury).

      C.  The insurance is not designed to cover any liability, and the owner of the yacht should have personal liability insurance to cover any such situations.

      D.  The Yacht insurance will cover damage to the boat but not to the marine, and will cover any bodily damage to the injured parties.

 

10.  John is concerned about pleasure boats berthed at the marine where he keeps his yacht whose owners do not really know how to operate their boats and do not carry insurance, so he purchases Uninsured Boaters coverage.  Later, his 20-year old dependent son is driving his own speedboat, when he loses control and crashes into the yacht, inflicting considerable damage to the hull of the yacht.  John’s son did not have insurance on the speedboat as when John gave it to him, the son was to purchase the insurance with his own money, and he just had not gotten around to getting the insurance.

      A.  Not to worry.  The yacht insurance will cover the damage under the Uninsured Boaters coverage – that is why John bought it.

      B.  The Uninsured Boaters coverage will not cover the damage to the yacht.

      C.  The basic yacht insurance will cover the speedboat also since the speedboat is owned by a dependent of the owner who has had the boat for only 6 months.

      D.  If the insurance company does not agree with John, then John can take it to court where he will probably win a suit.

 

ANSWERS TO STUDY QUESTIONS

 

1B     2D     3B     4C     5C    6B     7B     8A     9B     10B