insurance for boats

BOAT INSURANCE

There are two types of coverage available: Liability insurance and Hull insurance. These policies are designed primarily for yachts ‑ anything greater than a dinghy ‑ and they stop short of cruise ships.

Applications. For both the Liability and Hull insurance applications it usually takes about one month for the red tape to proceed and for the policy to come into force. Except for the specific application forms which must be used, the procedure for both types of policy is the same.

1. The owner of the craft applies for the policy directly at an INS office or through an insurance agent. Appropriate forms describing the craft have to be filled out and signed. A copy of the Certificate of Navigability is often required by INS, so it is well to have one on hand. A small inspection fee, usually ¢ 8,000 is paid by the applicant at this time.

2. The INS receives the application and the inspection fee, and then sends an inspector to check out the vessel. This can be quite trying for the owner and the inspector alike: the inspectors do not always arrive at the appointed place at the appointed time; the description of where to find the boat is not always lucid; sometimes the boat is not at the appointed place; sometimes the vessel is there but there is no one around to show it to the inspector.

3. Once the craft has been eyeballed by the inspector, the INS accepts the risk, and establishes the premium.

4. The policy comes into effect immediately after it is paid.

LIABILITY

Coverage: This type of insurance will not cover the craft, at all. It can cover death or injury that may occur to persons on or in proximity of the boat, and/or it may cover material damage inflicted by the craft on property belonging to persons other than the owner of the insured craft.

The policy pays if the owner of a boat is ordered by a court of Law to pay indemnity to a person or persons affected by an accident or event. In most cases, the INS will legally defend the policy holder in order to protect their own interest, but in indefensible cases they have been known to pay without waiting for the legal proceedings.

The liability policy has two different coverages: Personal Liability, and Property Damage. Although separate limits can be selected for each, the usual practice is for a combined limit to be stipulated, as this allows more flexibility for a claim. For example, you may take out ¢30 million coverage for personal liability, and ¢ 20 million for property damage; total coverage, ¢ 50 million. If there were to be an event where the insured boat were to ram and sink another craft worth, say, ¢ 30 million, and at the same time inflict bodily damage on one its crew to the tune of, say, ¢ 15 million, it might be supposed that as the total damage adds up to ¢ 45 million, which is within the total insured amount, and that the insurance would pay. But if separate limits were set as outlined above, the policy would pay up to the amount of ¢ 20 million for the sunken boat plus ¢ 15 million to the injured party, so the policy holder could be compelled to pay the difference. But if he had selected a combined limit, all the personal liability and property damage would be paid for, regardless of the mix, up to the combined limit of ¢ 50 million.

Limits. The usual coverage for a vessel carrying ten people or less is a combined limit (personal liability and property damage) of ¢ 50 million.

Exclusions. This is a liability Policy and will not cover injury or death of the policy holder, his immediate family or employees. The reasons for this: family members of the policy holder are unlikely to sue him if they were to be injured in an accident; his employees, by law, should be covered by Workers' Compensation. ,

Cost. Premium cost depends on the amount of coverage selected, on the amount and type of safety equipment the craft itself incorporates (life saving equipment, fire extinguishers, lights, signalling equipment, etc.), ‑on the size and power of the craft, on the number of people it may carry, and on the number of the crew members. The premium also differs according to the use the craft is going to have: if it is to be used commercially ‑ for cruises, for example, the premium is higher than if it were going to be used privately. 

HULL INSURANCE

Coverage.

1. Partial or total loss due to: perils of the seas, lakes and other navigable waters; explosion; lightning; fire; accidents in loading, unloading and transshipment; grounding; collision; latent defects in hull or machin­ery.
2. Salvage costs ‑ up to 25% of insured value up to ¢ 1 million, and 10% of the excess over ¢ 1 million.
3. Emergency towing of the insured vessel is paid based on a scale comprising the towing time and horsepower of the vessel that towed the insured vessel.

Exclusions.

1. Loss or damage due to inherent defects; rodents; mechanical failure or wear; leakage; delays; war or hostilities; confiscation; piracy; mutiny; strikes; insurrection; lockout; negligence on the part of outfitters, captain, crew members, agents, or owners.
2. Events occurring when the vessel was carrying contraband, explosives, flammable or dangerous items or substances.
3. Events occurring when the craft was towing or being towed, except in cases of dire emergency, to the nearest harbor.
4. Loss or damage to goods or items being transported or kept on the vessel.
5. Expense for removal of wreckage.
6. Outboard motors dropping off or falling overboard.
7. Ship's boats having a maximum designed speed over 17 knots.
8. Personal effects, stores, fishing gear, moorings.
9. Payments or losses incurred because of errors of design.
10. Total theft of the vessel, its boats, or outboard motors.

Special Provisions.

1.        Covers in Costa Rican waters or in the area defined on the Certificate of Navigability.
2.        Owner must keep craft in reasonable condition.
3.        Safety equipment specified on Certificate of Navigability.
4.        No overloading.
5.        Changes of vessel's activity or ownership must be notified to INS.
6.        Repairs paid by policy must be effected in a port and yard jointly agreed
by owner and INS.

Insured Value and Coinsurance. The insured value of the vessel is established jointly by the owner and the INS inspector, and should include the vessel and all its fittings, gear, equipment, etc. Of course, if you disagree and are unable to reach a happy medium, you can insure for less than the inspector recommends ‑ but if at the time of a loss it should be determined that the insured value of the vessel was less than the real value, the owner would be considered to be a co‑insurer for that proportion of the loss.

Premium Cost. The cost of the policy is based on the value of the craft being insured. In general terms, the premium is about 2.5 to 3% of the value of the boat, per year. It is usual to pay semiannually in advance.