Boat lender as insurance "loss payee", is it ok?

[Chotu]

Originally Posted by Dave Lochner

Marinas usually want to be "named insured" and not loss payee. This protects the marina in the event your boat is liable for damages to something or somebody. As a named insured your insurance covers the marina.

This is a pretty standard request even outside of the marina world. When our YC held events that required a municipal permit or used municipal grounds we would have to have them listed a named insured.

actually, you are correct. I stand corrected. The correct term is named insured. Shouldn’t be posting when I’m rushing around.

I was still pretty shocked about it.

[Rumrace]

It is surely for a total loss and yes they will screw for as much as you let them.
Boat insurance is so you can get a slip in a marina. That’s why it’s reasonable cause it is useless unless you litigate and end up getting jacked in rates or worse.

[jmschmidt]

Standard procedure.

[DEAN2140]

No, the owner is the sailor, the bank has a secured interest in the boat, which means any proceeds from a loss must first be applied to the loan. Ownership is a nebulous concept, as I learned in my first year property law class at law school.

[AKA-None]

Originally Posted by AKA-None

Well to be clear they want to be sure there damage to them gets covered too

Sorry my bad wrong term

[Moontide]

Very routine for pretty much any item that has a loan on it (cars, boats. planes, houses, etc.).First thing is to read your specific policy as companies write their own policies.

In most cases any check for a claim will be a joint check made out to you and your lender.

If the loss is total and the check is for more the lender will want the amount of the loan and you will get the rest.

If making repairs the lender will normally/often agree to have a two party check to you and the repair company. That way they know the repair will be paid for and you will have approved the repairs.

Of course the above is the "normal" or common procedure and no guarantee that you company will do that.

[BuoyCall]

Originally Posted by flee27

The lender doesn't want to get involved if you have a claim for a repair. They want to make sure if the boat is totaled they aren't chasing you trying to recover money for their asset. They are protecting their interest. The boat is not yours until you pay off the loan. The boat belongs to the bank and you are just the caretaker until it is paid off.

Good luck with the new boat.

Foster

You got that right. Lenders dont care as long as you"re makin those psyments.

[BuoyCall]

Originally Posted by paulg222

Ok, thanks that makes a lot more sense to me. I'll also ask insurance agent to explain.

I was clueless a couple years ago about yacht insurance so I became an agent and made sailboats, motor yachts, and small boats my niche. Still learning as the amount of carriers shrinks to just a few...because they can. Its getting harder and harder but it is what it is. Alot of people are just getting the liability to satisfy the marinas of which some ask to be listed as "additional insured" so they are covered as well under you policy along with thier marina policy... double coverage for them. Some carriers tack on additonal premium to add the additional insured to. Anything to charge a little more. Def learned alot for when we move aboard. Good luck!

[TabbyCat]

Originally Posted by paulg222

I'm buying a used boat and planning to finance it. The finance company has told me the insurance for the boat must list the finance company as the "loss payee". I'm not familiar with that in my home insurance (maybe it is there but I'm not aware of it).

Has anyone had issues with insurance claims on financed boats where the money goes to the lender and then its a pain in the ass to get them to actually fund the repairs or other bad scenarios like that? Does the financial contract with the lender stipulate that they will actually use insurance claim $ to repair the boat.

If the boat is a total loss, and the boat is not repairable, then the Loss Payee [bank] listed on the policy gets paid the outstanding amount of the loan and you get the rest. And the insurance company get the title to the boat (if they choose to exercise that right). So you walk away with no outstanding debt to the bank, plus any equity you had built up.

If it is a partial loss claim, in which the boat is repairable, the Loss Payee does not come into play at all, since the insurance company will be making payments to the repair vendors (or you). So listing a Loss Payee will not affect the ability to repair the boat.

And yes, it is perfectly normal practice to list the bank as the Loss Payee. They won't usually give you a loan unless you do. They may also require you to have a minimum 2% hull deductible.

[wesevans]

That the lender requires that they be a named insured is standard if the boat is the collateral for the loan.

[merrydolphin]

This is quite normal. They just want protect themselves. You will see this quite regularly. Marinas sometimes want to be “named also”.