From hurricanes to lightning strikes, extreme weather events can lead to significant financial loss if a boater is not adequately prepared or insured.
The past year has been significant for the boating world. While the need for social distancing grew, so too did the interest in outdoor recreational activities, such as fishing, watersports and boating.
Approximately 100 million Americans go boating each year, according to the U.S. Bureau of Economic Analysis (BEA), and in 2020, more than 310,000 new powerboats were sold, according to the National Marine Manufacturers Association (NMMA), representing a 12% increase in sales from 2019. As new boaters enter the boating world and existing boaters upsize, agents and carriers are seeing these consumers dip their toes into the personal marine insurance marketplace.
While there are many facets to consider when shopping for boat insurance, one risk that has become particularly prevalent over the past number of years is extreme weather events. From tropical storms to hurricanes to lightning strikes, extreme weather events can lead to significant financial loss if a boater is not adequately prepared or insured.
“Even before any coverage is put in place, agents and brokers should be having a proactive discussion with new and existing clients about their plan to protect their boat in advance of a storm," says Jeremy Backman, vice president, recreational marine, Chubb. “Maybe that is hauling it someplace, maybe it is putting better protection around it, but having that discussion and presenting that risk management advice ahead of time is so important."
"While the 2021 Atlantic hurricane season was not on par with 2020, the 21 named storms, 11 hurricanes, and 5 major hurricanes made it the third-most active Atlantic hurricane season on record," according to the Insurance Information Institute. To ensure clients are adequately covered for such weather events, agents should present several steps to clients.
Firstly, “make sure the boat is fully insured to value, preferably at agreed value replacement cost," says Brook McGuire, product strategy lead, Safeco Insurance. “The issue here is that like cars, boats depreciate rapidly when they're brand new, but they rapidly plateau and hold their value."
“Long term, provided the engine hasn't timed out and the interior is in decent shape, we recommend agents do a periodic review to see if the customer has added equipment or updated the boat, refreshed the engine or the interior," McGuire continues. “All of those things impact the whole value and require increasing coverage over time."
Secondly, outlining deductible options is important. “A lot of companies have named storm deductibles versus all comparable deductibles," McGuire says. “It's important to make sure the customer knows what's going to happen if there's a major storm."
Lastly, “make sure the customer has a plan for extreme weather events," McGuire adds. “If there's going to be a major storm, some people prefer to store their boats in wind-resistant buildings or some people prefer to have them on trailers next to their house. But what's critical is to talk about what's going to happen ahead of time."
The majority of motorized boats on the water today are less than 26 feet long, according to NMMA, and as such “many are stored on land and are trailerable," says Rick Stern, boat product manager, Progressive Insurance. “Getting these boats away from the coast and the danger of storm surge is probably the most important thing an owner can do."
“Unfortunately, we know that most boaters are under a time crunch that involves preparing their home for an oncoming storm, gathering supplies and sometimes even leaving town, so they should remove everything that can be blown off the boat, take their boat to high ground if possible, and secure the boat and trailer to the ground," Stern says. “In-water boats should be removed from the water if possible, but if that isn't feasible, using double and triple lines to help secure the boat is sometimes all that can be done."
“Most insurers will require a storm plan that is part of the underwriting process," says Tom Conroy, managing director, Markel Specialty. “Failure to execute the plan could impact coverage or impact the ability to secure a renewal."
Olivia Overman is IA content editor.