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How Technology Is Changing the Boat Insurance Market

Technological improvements make taking to the water safer. Such modernization brings a variety of boat insurance considerations for agents and clients.
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how technology is changing the boat insurance market

In the last 20 years, technology has revolutionized every industry. In the boating world, technological improvements make taking to the water safer, provide more precise navigation and facilitate a more comfortable experience overall.

Technologies such as radar, sonar and global positioning systems (GPS) help boats avoid dangers on the water. There are also “phone apps that help with navigation, dock to dock navigation and even ones to help you find a fishing hole," says Brook McGuire, product strategy lead, Safeco Insurance. “There are also weather apps to help you avoid incoming storms or to allow you to call for a tow right from the water."

Handheld connectivity has also become widely used in the boating industry helping to improve safety and navigation.

“Manufacturers are looking at new technology to inform clients of system gauge levels and alarms and to help them be connected to their boat in real time when they're away from it," says Jeremy Backman, vice president, recreational marine, Chubb. “All the conveniences of being connected to a home and an automobile on land are now going on the water through your mobile device."

Yet, convenience and safety through modernization brings a variety of insurance considerations for both agents and clients. “Like cars, boats have become much more sophisticated," says Rick Stern, boat product manager, Progressive Insurance. “Not only does this increase their purchase price, but repair costs go up as well—two factors that can obviously impact premiums." 

“We require that all motors and electronics be included in the overall value of the boat," Stern says. “Agents should also make sure that they include the value of all permanent and portable boating equipment in the insured value. As long as they do those things, their customers will have complete coverage up to the policy limits after deductibles." 

Nevertheless, a significant concern for insurers, agents and clients lies in the fact that a lot of the technological systems are “complex systems that interface," says Tom Conroy, managing director, marine, Markel Specialty. “If there is a power surge due to a lightning strike or other cause, the cost of repair can increase significantly."

“I see technology as an emerging risk—certainly how to protect technology on boats as well as how to insure it," McGuire says. “It will ultimately have an impact on long-term claims prices, like physical damage claims."

While new technology may be improving safety, comfort and the precision of boats, it is human error that accounts for between 75% and 96% of maritime accidents, according to Techaeris, a technology website.

This data is even more alarming when advancing technology is making boats travel at faster and faster speeds. While boats used to have “twins, two engines, three engines on board, now we're seeing center consoles with perhaps five or six engines," Backman says. “As insurance agents are looking at clients with these types of boats, it's really important that they have strong, direct and transparent discussions about their boating experience and their ability to navigate and safely operate the boat with such speed capabilities."

Further, with the sale of new boats in 2020 reaching highs not seen in over a decade, new boat owners were 142% more likely to need ungrounding services, 108% more likely to need fuel delivered to them and 11.2% more likely to need a battery jump, according to a survey by Sea Tow Services International, highlighting that boat owners need to rely on themselves, not the latest gadgets and gizmos.

Agents need to make clients aware that while technology “may make it appear that boats are simpler to navigate, in actuality, it is firsthand experience that is really needed to competently and safely operate a boat," Backman adds. “Being able to handle all of the other various conditions that impact navigating a boat, such as weather, currents, as well as other distractions, is essential for safe boating."

Olivia Overman is IA content editor.