Personal marine & recreational vehicle: Markets abound

Rough Notes, Feb 1998 by Clapp, Wallace L Jr

Insurance on yachts and pleasure boats, personal watercraft, houseboats and marinas and recreational vehicles are special classes of business not usually written by retail agents in their standard companies. For this reason, a number of specialty managing general agents have been established to handle yacht and pleasure boats or recreational vehicles as specialty lines. Many of these offices provide facilities only for watercraft. Others are exclusive managers of insurance for marinas and watersports rental. Some facilities handle all classes, while others, that offer a general line of property and casualty insurance products include yachts and pleasure craft and recreational vehicles in their offerings to agents and brokers.

The following is a description of the classes of business for personal marine and recreational vehicles coverages, as well as a list of markets that offer coverages for these units.

Antique and Classic Boats

Antique and classic boats are defined as vessels other than the ordinary manufactured pleasure boat. Standard insurers writing pleasure boats and yachts are not interested in most wooden-hull boats, custom-builts or boats of a highly unusual nature. Antique and classic boats are those built 25 or more years ago. Most wooden boats and some older classic fiberglass boats would qualify for this category. The boat must be seaworthy to qualify for coverage on an all-risk, full marine basis. Coverage is written for agreed value on the hull. The policy also includes liability coverage, uninsured boaters, medical payments, personal effects and trailers. Business is often produced on an association basis, i.e., all owners of Chris Craft antique boats.

High Performance Boats This is a type of pleasure boat designed to provide high performance for cruising, waterskiing, etc. Insurance is a broad form marine policy covering personal and businessowned vessels capable of speeds up to 100 m.p.h. Hull and liability coverage, including medical payments, personal effects, and uninsured boaters is usually sold as part of a package.

Limits generally extend up to $500,000 for hulls and $1 million for liability. Policies are issued at agreed value with named operator warranty Extended land transit coverage, transit and storage only, and machinery damage coverage are available as options. Extended navigation areas are available. Single or multi-hulls are eligible.

Houseboats Insurance underwriters consider houseboats in the same category as yachts and pleasure craft. Rates, insuring conditions and coverages are similar. Hull and liability coverages are written on the yacht form. Because of the construction of houseboats, they are more unwieldy than the sleeker yacht and therefore are not easily navigated and are less seaworthy in rough water.

The houseboat is usually powered by an inboard/outboard drive with single or twin engines up to 400 h.p. Values, including luxury fittings, may range up to $50,000 or more. The policy is underwritten on the basis of the experience of the owner or pilot, use of the boat, length of time in the water, and the rate area in which the boat is navigated. The policy includes hull, boat equipment, personal effects, liability, medical payments and uninsured boaters coverage. The policy is subject to a minimum deductible. Houseboats are rated according to the value of the boat. Most underwriters rate houseboats higher than sailboats but lower than powerboats. The liability and waterskiing/towing liability is rated as a flat charge in accordance to the limit of liability. Additional flat charges are made for miscellaneous boat equipment, personal effects and medical payments.

Personal Watercraft (Jet Skis) This class of watercraft encompasses a wide range of single-engine, inboard-powered vessels no greater than 16 feet in length and using a water-jet pump as the primary source of propulsion. Operators/passengers may either stand up, sit upon (motorcycle style), or sit in the unit depending on the manufacturer. Included in this class are jet ski, waverunner, tigershark, wet bike and sea dog "cycle" style models, as well as jazz and rage "mini boats."

Exposures include high performance and handling characteristics coupled with minimum operator and passenger protection. Waterskiing and other towing activities have become additional exposures as the power of these units increases. Coverage includes hull, liability and medical payments. Units are valued on an actual cash value basis. Trailers and waterskiing liability can be added. Personal watercraft insurance is rated on the basis of engine size for physical damage coverage. Liability, waterskiing liability, trailers and medical payments are added as a flat rate. Liability limits are available generally to $300,000.

Marinas This is an important class of business for yacht and pleasure boat owners. Marinas provide mooring facilities, repair, alteration, maintenance, storage, fueling, and many other services for the pleasure boat owner. Coverage under a marina package policy includes property, general liability, marina operators legal liability, protection and indemnity insurance, boat dealers inventory, work boat hull, and piers, wharves and docks coverage. The marina operators legal liability policy covers the legal liability of the marina operator for loss of or damage to private pleasure boats while in the operator's care, custody or control. The policy closes the gap left by the "care, custody and control" exclusion of the general liability policy. The premium is based on gross receipts. Watersports rental insurance is available for marinas that rent out personal watercraft, pleasure boats, kayaks, water skis and wind surfers. Insurance operations such as parasailing and chartered boats can be arranged.