Imagine one of your clients walks into your agency to discuss their homeowners policy and mentions they just bought a used bass boat for $3,000. The client tells you they’re not worried about getting it insured because the boat was so cheap—if it sinks or gets stolen, no big deal.
How do you respond?
If it’s something along the lines of “Yeah, I probably wouldn’t insure it either,” you could be making a big mistake for your client—and opening your agency up to an errors & omissions claim in the process.
“That customer is only thinking about self-insuring the physical boat. What about the liability piece?” points out Rick Stern, boat product manager at Progressive Insurance. “A lot of boaters look out on the water and it’s peaceful and calm, and they think, ‘What can happen out there?’ But you look at that same body of water on a 4th of July weekend and it looks like an anthill. People are going in a zillion different directions, and there aren’t traffic lights on the water.”
Progressive estimates that at least 35% of registered boats in the U.S. are uninsured—and Stern has seen approximations from competitors that place that number closer to 50%. “Think of the new business volume we all could start to write if people realized self-insuring a boat is more than just paying for the boat if it sinks,” Stern says.
Interested in reaping the benefits of a lucrative market that’s hiding in plain sight? Here are three personal marine insurance sales tips to keep in mind.
1) Ask questions. “When you’re in the recreational space, whether it’s boats or motorcycles, understanding usage is incredibly important,” says Jeff Bair, head marketing officer at Foremost. “A pontoon boat is a totally different exposure than a go-fast boat, which means different coverage requirements.”
“From a rating perspective, underwriters are looking to capture the characteristics of the boat—top speed, length, type of boat, things like that. But from the agent side, you need to know how they’re going to use it,” agrees David Knapp, marine product manager at Foremost. “Do they need Bahamas navigation? Are they going to have the inland rate, or do they need coastal coverage? Is the boat going to be kept at a marina, and if so, do they need that additional pollution coverage?”
A word of caution: The location of the boat may not always be what you expect. “A lot of agents just assume, ‘I’ve got the client’s home address, and I’m going to rate the boat as if it’s located at that address.’ But the client may live in an inland area and dock or moor the boat in a coastal area or another state, or any number of places,” explains Cathy Smith, chief underwriting officer at American Modern Insurance Group. “Agents need to know what they’re getting themselves into based on the actual location of the boat, then rate it for that actual location.”
2) Compare policy language. Once you understand your client’s specific exposures when they’re out on the water, you’ll be in a better position to tailor coverage that suits their exact needs. Just like personal auto and homeowners policies, not all personal marine policies are created equal—some may include territorial restrictions, for example, while others may limit an insured’s option to secure coverage for replacement cost on parts.
“We’ve seen a continuation of extended coverages and features,” Knapp says. Whether it’s diminishing deductible options, coverage for boat lifts or hurricane haul-out, or reimbursement of fishing tournament fees, “today’s boaters want broader coverage.”
Smith says it’s a matter of awareness: “If you’re selling against a certain coverage, know what that other policy includes and what you can offer that might be better,” she suggests.
3) Go after it. The most common mistake agents make when trying to sell personal marine insurance: not trying to sell personal marine insurance. Stern says many agents still treat personal marine insurance as an afterthought—which contradicts his statistic that one out of five homes in the U.S. has either a boat, motorcycle or RV.
“If you do the math, that means for every 10 homeowners policies you have at your agency, you should have two special lines policies along with that,” Stern points out. “It’s always surprising how many agents concentrate on auto and home, but don’t think about what we call the toys.”
Bair adds that about 60% of new vehicles fall into the SUV or towable-capable space. “If they’ve got a hitch, what are they towing where are they going?” he points out.
“Just ask,” Stern concludes. “Just ask your customer what they do in their free time. I’ve always found it fascinating that if you go to a marina or you sit around a campfire at an RV park, inevitably somebody’s going to start to talk about insurance. That’s something you never, ever see on the auto side. But on the recreational lines side, people always want to know who you insure with and what you think of them. Word of mouth is very powerful in this market. An agent could enjoy the benefits of that by interacting more with these customers.”
Jacquelyn Connelly is IA senior editor.