Cruising Under the Insurance Radar

[kb79]

We'll be leaving to go cruising before we've got our boat paid off.

I know this means that I "have to" have insurance, but I'm wondering how true that is. I'm comfortable personally with the financial risk of losing the boat, and would prefer to just get local liability insurance when and where we need it.

Do customs agents check for this sort of thing? What would really happen if we just took off without full coverage?

[boatman61]

Originally Posted by kb79

We'll be leaving to go cruising before we've got our boat paid off.

I know this means that I "have to" have insurance, but I'm wondering how true that is. I'm comfortable personally with the financial risk of losing the boat, and would prefer to just get local liability insurance when and where we need it.

Do customs agents check for this sort of thing? What would really happen if we just took off without full coverage?

99% of Harbours, Marina's & B/yards insist on Liability/Third Party Cover.... apart from that you'll not be asked...

[daddle]

Some marinas ask for a liability policy. I can't see why customs would care if you have hull insurance. Sometimes checking into Mexico I've been asked for the Mexico Liability Policy everyone must carry.

I've never had hull insurance...many countries...

Never been asked at a boatyard either...

[kb79]

cool, thanks guys.

i guess the follow up question would be:

if i'm breaking the rules by not carrying hull insurance and we don't own the boat free and clear, will that present any problem when i'm applying for local liability insurance?

[ozskipper]

I would assume your finance company wont be too happy about you not insuring the boat. You may be in breach of some fine point. And. in the case of total loss you may be deemed negligent. Check your contract!

Cheers
Oz

[kb79]

Originally Posted by ozskipper

I would assume your finance company wont be too happy about you not insuring the boat. You may be in breach of some fine point. And. in the case of total loss you may be deemed negligent. Check your contract!

Cheers
Oz

i'm sure that's true - i was figuring that if i kept paying, they'd be none the wiser...

[meyermm]

It seems you want to take a lot of risk - WHY. It may not be you that makes a mistake so over confidense can be a mistake, a big one. If you can afford to cruise while still paying the boat off you can afford the insurance. If you were to cause damage to me I assure you my insurance will come after you world wide.

[boatman61]

Its also nice to have an Isurance company fight your corner for you if you get T-boned by some idiot... and thats from experience... go for the Liability... its cheap enough...

[denverd0n]

Originally Posted by kb79

i was figuring that if i kept paying, they'd be none the wiser...

I doubt you'll get away with it. Unless you borrowed the money from some fly-by-night operation they will have been checking on your insurance at least yearly. All reputable and well established finance companies do this. They will know soon enough that you let the insurance lapse and they will then come after you.

What's more, if you do get caught this will completely screw your credit rating for a good long time to come.

This is a REALLY bad idea!

[Hud3]

Does your current insurer send your lender notification that they're a "named insured" party on your policy each time you renew? I believe the lender is first to be paid out of insurance proceeds if the boat is totaled, and would want to have proof of insurance from the insurer to make certain they're covered.

[Captain Bill]

If the boat is the collateral on the loan you are probably obligated to keep full insurance coverage. Check your loan documents. Most agreements give the lender the right to purchase insurance to cover the asset if you fail to, and add the cost to the loan amount, so not only do you get to pay for the insurance, you get to pay the interest on the premium as well. Also they are under no obligation to shop for a cheap rate. I had a problem a few years ago just because my insurance company failed to send my loan company a notice that I had renewed. The Loan company bought a policy costing 5 times what I was paying and I had to fight them to prove that I had never let my coverage lapse and get the premium removed form my loan principal.

[bljones]

The minute you a) cancel the policy or b) miss a payment, allowing the policy to lapse, the insurance company fires off a notification letter to the financial institution holding the paper on your boat. The financial insitution will then contact you to ensure that you have simply decided to change carriers. If they cannot get in touch with you (likely, since by this time you will be happily working your way down the coast) they will assume, in this case correctly, that you have decided to leave the country with THEIR boat... in which case the repo process starts.
All of this occurs even if you have not missed a payment on the boat.

[kb79]

thanks, all.

i'm not going to cancel my existing coverage - you guys are right that the lender will be notified. if i keep the policy i have (even though it's worthless) and get local liability coverage, it sounds like i'll be ok. i'm going to do a little more research on what the premium would be for full coverage and i'll let you guys know what i decide.

thanks again for the input

[YOGAO]

Originally Posted by kb79

thanks, all.

i'm not going to cancel my existing coverage - you guys are right that the lender will be notified. if i keep the policy i have (even though it's worthless) and get local liability coverage, it sounds like i'll be ok. i'm going to do a little more research on what the premium would be for full coverage and i'll let you guys know what i decide.

thanks again for the input

Why is it "worthless"?

Fair Winds,
Mike

[kb79]

because my existing policy is only local (where i won't be)