Insurance can be very confusing for those of us who are not in the insurance business.
Often, our insurance agents start babbling about liability, comprehensive coverage, third party liability, and more and we feel like they are speaking a language we have never heard before. Well in a sense they are.
Again, it is very confusing to those who are not in the insurance business. Unfortunately, if you are to get the coverage that you need, at a price you can afford, you must start learning some of the terminology.
For instance, many people do not understand what the difference between third party liability insurance and full coverage insurance is. Third party liability coverage and full coverage insurance are much the same, but in other ways they are uniquely different. Before you determine which one you need, it is important to understand exactly what each type of coverage is.
Third Party Liability Coverage is essentially coverage that protects you in the event of an accident that is your fault.
It generally covers other people and their property that is damaged in a covered accident. It does not cover you, your passengers, your boat, your motor, or your trailer. Furthermore, third party liability coverage only goes into effect if your boat is in an accident that occurred when the boat was being used in a private capacity, as opposed to a commercial capacity.
Third party liability coverage is required by most states, and each state will have its own requirements as to the minimum liability coverage amounts that you have.
This type of insurance is generally required whether your boat is financed or not. Third party liability insurance coverage is often simply referred to as liability insurance, or in the case of boats, watercraft liability insurance. Talk to your agent to find out how much coverage is required in your state.
Full coverage insurance, on the other hand, will cover you, your boat, your motor, your trailer, and your passengers.
It is often referred to as comprehensive insurance, and it is available in different coverage amounts, with different options that are available for the policy. This type of insurance will be required by most lenders who finance boats, and most lenders will have their own requirements as to which optional insurance is purchased.
Essentially, what it comes down to is that third party liability insurance coverage protects other people and their property in the event of an accident that is your fault, while full coverage insurance protects you and your property in the same way that the third party insurance protects others.
In fact, full coverage insurance will cover you whether the accident was your fault, someone else’s fault, or even no-fault. In most cases, it is in your best interest to have both third party liability insurance coverage which is required as well as full coverage insurance which may be required if you have financed your boat.
Again, even if the boat has not been financed, you should strongly consider purchasing a full coverage or comprehensive policy. Many people even continue to carry the full coverage policy long after the boat has been paid off.
Boat repairs are expensive, and anything can happen.
Most full coverage policies will cover you in the event of mechanical failure, theft, and vandalism, as well as losses caused by storms, fires, explosions, sinking, and much more. Talk with your insurance agent to find out about the different options available for full coverage policies, and make sure that you get the coverage that you need!
CopyRight Ian D. Major 2005.