Specialty Insurance |
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Should I purchase an umbrella liability policy?
If you are ever sued, your standard homeowners or auto policy will provide you with some liability coverage, paying for judgments against you and your attorney's fees, up to a limit set in the policy. However, in our litigious society, you may want to have an extra layer of liability protection. That's what a personal umbrella liability policy provides.
An umbrella policy kicks in when you reach the limit on the underlying liability coverage in a homeowners, renters, condo or auto policy. It will also cover you for things such as libel and slander.
For about $150 to $300 per year you can buy a $1 million personal umbrella liability policy. The next million will cost about $75, and $50 for every million after that.
Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage. Most insurers will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability insurance on your homeowners policy before selling you an umbrella liability policy for $1 million of additional coverage.
Most companies provide limited coverage for property damage for small boats such as canoes and small sail boats or small power boats with less than 25 mile per hour horse power under a homeowners or renters insurance policy. Coverage is usually about $1,000 or 10 percent of the home's property value and generally includes the boat, motor and trailer combined. Liability coverage is typically not included - but it can be added as an endorsement to a homeowners policy. Check with your insurance representative to find out if your boat is covered and what the limits are.
Larger and faster boats such as yachts, and personal watercraft such as jet skis and wave runners require a separate boat insurance policy. The size, type and value of the craft and the water in which you use it factor into how much you will pay for insurance coverage.
For physical loss or damage, coverage includes the hull, machinery, fittings, furnishings and permanently attached equipment as part of either an actual cash value policy or on an agreed amount value basis. These policies also provide broader liability protection than a homeowners policy. But there are distinct differences between the two types of policies.
Actual Cash Value policies pay for replacement costs less depreciation at the time of the loss. In the event of a total loss, used boat pricing guides and other resources are used to determine the vessel's approximate market value. Partial losses are settled by taking the total cost of the repair less a percentage for depreciation.
Agreed Amount Value basis policies mean that you and your insurer have agreed on the value of your vessel and in the event of a total loss you will be paid that amount. Agreed Amount Value policies also replace old items for new in the event of a partial loss, without any deduction for depreciation.
Boat insurance also covers:
- Bodily injury - for injuries caused to another person
- Property damage - for damage caused to someone else's property
- Guest passenger liability - for any legal expenses incurred by someone using the boat with the owner's permission
- Medical payments - for injuries to the boat owner and other passengers
- Theft
Most companies offer liability limits that start at $15,000 and can be increased to $300,000. Typical policies include deductibles of $250 for property damage, $500 for theft and $1000 for medical payments. Higher limits may be available. Additional coverage can be purchased for trailers and other accessories. Boat owners may also consider purchasing an umbrella liability policy which will provide additional protection for their boat, home and car.
Boaters should also inquire about special equipment kept on the boat, such as fishing gear, to make sure it is covered and verify that towing coverage is included in the policy.
Boat owners should also inquire about discounts for the following:
- Diesel powered craft, which are less hazardous than gasoline powered boats as they are less likely to explode
- Coast Guard approved fire extinguishers
- Ship-to-shore radios
- Two years of claims-free experience
- Multi-policies with the same insurer, such as a car, home or umbrella policy
- Safety education courses, such as those offered by the Coast Guard Auxiliary ( http://www.cgaux.org ), U.S. Power Squadrons ( http://www.usps.org ), or the American Red Cross ( http://www.redcross.org )
Boat Safety
There are thousands of recreational boating accidents per year. Contributing factors to these accidents include traveling too fast for water or weather conditions, driving under the influence of drugs or alcohol, failing to follow boating rules and regulations, carelessness and inexperience.
To prevent boating accidents, we offer these safety suggestions:
Care and protection of vessel
- Check weather forecasts before heading out.
- Let someone know where you're going and when you expect to return.
- Check engine, fuel, electrical and steering systems, especially for exhaust-system leaks.
- Carry one or more fire extinguishers, matched to the size and type of boat. Keep them readily accessible and in condition for immediate use.
- Equip the vessel with required navigation lights and with a whistle, horn or bell.
- Consider additional safety devices, such as a paddle or oars, a first-aid kit, a supply of fresh water, a tool kit and spare parts, a flashlight, flares and a radio.
Care and protection of crew and guests
- Make sure that every person on board the boat wears a life-jacket.
- Know and obey marine traffic laws, the "Rules-of-the-Road." Learn various distress signals.
- Keep an alert lookout for other watercraft, swimmers, floating debris and shallow waters.
- Pay attention to loading. Don't overload; distribute the load evenly; don't stand up or shift weight suddenly in a small boat; and don't permit riding on the bow, seatbacks or gunwales.
- Don't operate a boat while under the influence of alcohol or drugs.
Skippers can obtain free advice and boating-safety courses from the U.S. Coast Guard Auxiliary. Upon request, the auxiliary will conduct a Courtesy Marine Examination (CME) on your boat, checking electrical and safety equipment and fuel hoses. Boats meeting safety standards are awarded the CME decal "Seal of Safety."
Related Information
- For more information on boating accidents, see Facts and Statistics: Recreation
Standard homeowners policies do NOT cover flooding. You can purchase flood coverage directly through your homeowners insurance agent. However, the policy is provided by the Federal Flood Insurance Program ( 888-379-9531, http://www.floodsmart.gov ).
Replacement cost coverage is available for the structure of your home, but only actual cash value coverage is available for your possessions. Replacement cost coverage pays to rebuild your home as it was before the damage. Actual cash value is replacement cost coverage minus depreciation so that the older your possessions are, the less you will get if they are damaged. There may also be limits on coverage for furniture and other belongings stored in your basement.
Flood insurance is available for renters as well as homeowners. You will need flood insurance if you live in a designated flood zone. But flooding can also occur in inland areas and away from major rivers. Consider buying a flood insurance policy if your house could be flooded by melting snow, an overflowing creek or pond or water running down a steep hill. Don’t wait for a flood season warning on the evening news to buy a policy - there is a 30-day waiting period before the coverage takes effect.
The federal flood insurance program provides only limited coverage. If you need more coverage than the federal program provides, additional coverage known as "excess" flood insurance is available from specialized insurance companies. Depending on the amount of coverage purchased, an excess flood insurance policy will cover damage above the limits of the federal program on the same basis as the federal program - replacement cost for the structure and actual cash value for the contents.
Excess flood insurance is available in all parts of the country - in high risk flood zones along the coast and close to major rivers as well as in areas of lower risk - wherever the federal program is available. It can be purchased from specialized companies such as Lexington Insurance Company, part of American International Insurance Company, and Lloyd's through independent insurance agents, or from regular homeowners insurance companies that have arrangements with a specialized insurer to provide coverage to their policyholders.
Choosing the right insurance policy is much like choosing the right motorcycle. You want it to fit your needs and lifestyle, but at the same time be within your budget. Although most states require you to carry a minimum amount of liability coverage, other types of coverage are usually optional. Always ask your insurance agent or company representative which laws apply in your state.
In order to find out what coverage is best for you, it is important to understand all the options available.
Liability coverage
Liability insurance covers bodily injury and property damage that you may cause to other people involved in an accident. It doesn't cover you or your motorcycle. Find out if your coverage includes Guest Passenger Liability, which provides protection in the event that a passenger is injured on the motorcycle. Whether or not this is included depends on the laws of your state and the company issuing the policy.
Collision coverage
Collision insurance covers damage to your motorcycle if you are involved in an accident. Your insurance company pays for damages, minus your deductible, caused when you collide with another vehicle or object. Collision insurance usually covers the book value of the motorcycle before the loss occurred.
Comprehensive coverage
Comprehensive coverage pays for damages caused by an event other than a collision, such as fire, theft or vandalism. However, just like collision coverage, your insurance company will pay for damages, minus your deductible, and will cover only the book value of the motorcycle.
Keep in mind most comprehensive and collision coverage's will only cover the factory standard parts on your motorcycle. If you decide to add on any optional accessories such as chrome parts, a custom paint job, trailers or sidecars, you should look into obtaining additional or optional equipment coverage.
Uninsured/underinsured motorist coverage
Uninsured/underinsured Motorist Coverage covers damages to you and your property caused by another driver who either doesn't have insurance (uninsured) or doesn't have adequate insurance (underinsured) to cover your damages.
This coverage typically pays for medical treatment, lost wages and other damages. If your uninsured/underinsured motorist coverage includes property damage, then your motorcycle would also be covered under the same circumstances. Check with your insurance professional to see if property damage is included or needs to be purchased separately.
Tips for the cost-conscious rider
Many factors can play a role in determining what your insurance costs will be such as your age, your driving record, where you live and the type of motorcycle you own, or being a graduate of a rider-training course.
- Many companies offer discounts from 10 to 15 percent on motorcycle insurance for graduates of training courses, such as the Motorcycle Safety Foundation (MSF) rider course. Riders under the age of 25, usually considered a higher risk, may see some savings by taking this course. It's also a good idea for cyclists who have already had accidents.
- Maintaining a good driving record with no violations will also help reduce your premiums.
- In many northern states, riders may save money by buying a "lay-up" policy. With a lay-up policy, all coverage except comprehensive is suspended during winter months.
- Find out what discounts your insurance representative offers. Multibike discounts for those insuring more than one bike, organization discounts, if you’re a member of a motorcycle association, and mature rider discounts for experienced riders, are just a few possibilities. Discounts can range anywhere from 10 percent to 20 percent, depending on the company and your state. Availability and qualifications for discounts vary from company to company and state to state.
- Keep in mind that the type, style (such as a sports bike vs. a cruiser) and age of the motorcycle, as well as the number of miles you drive a year and where you store your bike may also affect how much you pay for your premium.
Choose the agent or company that's right for you. If you already have auto insurance, you can contact the same insurer. Otherwise, ask friends, relatives and co-workers where they bought their auto or motorcycle insurance. Your local motorcycle shop may have a company they refer customers to. Or you can check local motorcycle magazines and newspapers for insurance professionals advertising motorcycle insurance.