A cautionary tale of boat insurance gone wrong
Not too many people like buying insurance. To most, insurance is a necessary evil that sucks up dollars now to prevent what hopefully never happens. That said, if you ever have to file a claim, all that money you spent is supposed to be worth it with the insurance company fixing or replacing your asset (boat) or covering you for any liability/damage you may have caused. It may be painful to pay the premiums, but the concept is good—we pool our money together to cover individual incidents. When it all works out the way it is supposed to, it can be fine but sometimes things turn in a different direction.
Peter Swanson’s Substack Loose Cannon published an article titled Boat Insurers Are Now Suing Clients Who File a Claim that brings up disturbing questions about insurance coverage and a policy holder’s interaction with the company that is supposed to be covering them. Not only are some insurance companies rejecting claims by citing stipulations in their insurance contract regarding policy holder’s responsibilities, but in some instances, they are now suing the people they are supposed to be insuring. This declaratory action is a preemptive way for insurance companies to avoid coverage, pick and choose the venue and jurisdiction of any litigation, and maximize their chances of winning in court (denying coverage or a paying a claim).
Not all insurance companies are the same, but finding a reputable insurer can be easier said than done. Even the largest boat insurers in the US (Progressive, GEICO (partnered with BoatUS), and State Farm) have at times used declaratory action. Sometimes it is for something as simple as proving the boat was operating beyond the area it was insured to be in, but these lawsuits can also be more complex.
I feel comfortable saying that most people don’t want to get involved in a lawsuit with their own insurance company. To prevent this, it is important to check your policy carefully and understand its limitations. This includes making sure you are aware of any policy holder responsibilities as they might be able to be used against you even if they seemingly have nothing to do with a claim. Discussing your policy with your agent and then getting any clarifications in writing can also help avoid miscommunications.
Before you renew your boat insurance policy, you may want to do some homework and compare more than just the pricing and deductibles that most people focus on. If that doesn’t sound like much fun, please read the full and somewhat horrifying details in Peter’s article for a better idea of what it looks like when it all goes wrong.
https://loosecannon.substack.com/p/boat-insurers-are-now-suing-clients
