Liability Insurance Limits

[chileoggie]

I have just purchased a 40 foot Trawler, I was curious as to what liability limits other tralwer owners carry?

[djmarchand]

Standard marine policy with a $300,000 limit plus a $2 million umbrella on top of that.

David

[Scabbydan]

Standard Marine Policy limit of $300,000, but when we move aboard for Great Loop trip this Spring, will increase General Liability to $2,000,000.

[eyschulman]

What you have to be careful with is pollution liability. Check the policy and see if you are covered. Also see if motor is covered.

[rw58ph]

The marine and/or bank might have minimum requirements. Amounts larger than required limits is you personal decision depending on what you are comfortable with. 1 million dollars is not much when it comes to clean up and/or being suited. We carry 1 million dollars masrine and 1 million personal general liability.

[BandB]

Your net worth and other insurance might be important in that determination. You need to talk to the insurer but perhaps also to your attorney. There are a lot of $10 million to $500 million boats out there that you could conceivable run into and sink. It also may depend on how you have the ownership of your boat set up.

[BandB]

A note if you carry a personal umbrella policy, it will generally dictate what levels of liability you cover on your auto, boat and homeowner's policies.

Insurers recommends a personal umbrella up to your entire net worth. I never fully understood why to stop there as you can easily get sued for more than your worth and still want to protect it touching your worth.

Typically cost is around $200 for the first million and $100 for each additional up to a point, then it decreases. So a $10 million policy might cost around $1000 per year and then dictate you have $500,000 liability on your boats, autos, and home.

We talk about accountants and lawyers you trust, an insurance professional that you can really trust is important too. Even if he doesn't sell all the insurance you need, for instance may not be your best route for boat insurance, he can at least help you look at your total protection.

[Stumble]

There is no good baseline advice I can give. I have clients who are all over the map for good reasons. Frankly I believe in personal umbrellas for everyone with a net worth over $1million roughly, and then match your specific policies to that policy.

Playing with the numbers can get a bit complicated, but to make it easy... Let's say you have five insurable toys (boats, cars, plane, motorcycle, and kid). Let's assume you could buy the first $500,000 for them all for $5,000, and the second $500,000 for $4,000. And you can buy an umbrella starting at $500,000 for $2,000 or starting at 1M for $1,500.

In this case you are better off buying the umbrella at $500,000 because the extra deductible savings from the cheaper umbrella is offset by the savings from the five policies. While if you only have one insurable toy the other way is best.

Not that the first dollar of insurance is always more expensive than the next, so low level deductible umbrellas are often a better option because of the number of policies you can trim.


As for how far to go... It depends on price more than anything, but I figure anything above 10M is excessive for most people. The number of lawsuits above this number are vanishingly rare. However if the policy were cheap enough...

[Dockhead]

For whatever it may be worth, I have 3 million pounds, or about 5 million dollars, of liability coverage in my boat policy.

[hellosailor]

You're in Florida, so let's suppose your shore power cord overheats (threads on that) and you burn up part of the marina and docks. Including the new Hatteras that just came in last night. Ka-ching, the damage can easily exceed ten million, the question is, what can you lose? A suit for that can take all of your assets and IIRC they can also levy 10% of your future income for the next 10+10 years.

So you can be wiped out, plus lose 10% of your future income for a long time to come.

Is it practical to carry a huge umbrella like that? Probably not. But your discomfort at premiums has to be measured against what you can lose, and the value of your immediate surroundings. If you're staying someplace with concrete docks and cheaper neighbors...there's much less to worry about. If you avoid shore power or pay good attention to it, again there's less to worry about.

A personal choice based on what's less uncomfortable, and what your insurer will offer.

[BandB]

Originally Posted by hellosailor

You're in Florida, so let's suppose your shore power cord overheats (threads on that) and you burn up part of the marina and docks. Including the new Hatteras that just came in last night. Ka-ching, the damage can easily exceed ten million, the question is, what can you lose? A suit for that can take all of your assets and IIRC they can also levy 10% of your future income for the next 10+10 years.

So you can be wiped out, plus lose 10% of your future income for a long time to come.

Is it practical to carry a huge umbrella like that? Probably not. But your discomfort at premiums has to be measured against what you can lose, and the value of your immediate surroundings. If you're staying someplace with concrete docks and cheaper neighbors...there's much less to worry about. If you avoid shore power or pay good attention to it, again there's less to worry about.

A personal choice based on what's less uncomfortable, and what your insurer will offer.

As Stumble alluded to though, the higher you go in the umbrella coverage, the lower the cost for each incremental dollar amount. Just as you know that suits over $10 million are rare, so do the insurers. Plus at a certain point the excess amounts are generally shared with other insurers. You just have to gather all the information, from multiple insurer, sort through it all with your attorney and your insurance agent or advisor and make the choice you're comfortable with.

[msponer]

Has anyone been able to get an umbrella policy without a home address? The carriers I contacted require either home owners or renters insurance, neither of which we have.

[40 South]

$500 million liability.

[reefhunter]

Originally Posted by hellosailor

You're in Florida, so let's suppose your shore power cord overheats (threads on that) and you burn up part of the marina and docks. Including the new Hatteras that just came in last night. Ka-ching, the damage can easily exceed ten million, the question is, what can you lose? A suit for that can take all of your assets and IIRC they can also levy 10% of your future income for the next 10+10 years.

Which is why we stay on commercial docks and not in private marinas. We carry $10-200M coverage and $500M umbrella with Lloyds.