Watercraft Property Exclusion you may not know about…

Did you know that watercraft insurance polices issued by State Farm Insurance exclude damage to property where the watercraft is kept/moored. This means that marina slip rental customers who insure their boats with State Farm Insurance do not have coverage in the event their boat damages a marina’s dock.

In the past several months, I have seen two separate cases where a slip rental customer’s boat had sunk while in the marina’s boat slip and damage of several thousand dollars was caused to the marina’s dock. In these two cases, the slip rental customer had a Watercraft policy with State Farm Insurance. In both cases, when the slip rental customer filed a claim with State Farm for the property damage to the marina’s dock, State Farm declined due to the policy exclusion referenced above.

This is the first insurance company that I am aware of that excludes coverage for damage to a rented boat slip but there may be others as well. Due to this situation, I would recommend that marina owners/operators change or add language in the boat slip rental agreement that will make it clear to slip rental customers that they must provide proof of watercraft liability insurance with a company that will not exclude damage to property where the boat is kept/moored/stored. Sample language could be… “Watercraft policies that will not be accepted are those issued by any insurance company that excludes property damage coverage to a marina’s boat dock where the boat is kept/moored/stored.”

Of course, a watercraft insurance policy may exclude coverage, but that doesn’t mean that the slip rental customer isn’t liable for any damage to the marina’s dock. By adopting language in the slip rental contract, a marina owner/operator can be proactive with all slip rental customers and educate them about this issue. Most slip rental customers are not aware that their watercraft policy excludes that coverage so notifying them of the possibility is a great way to educate slip rental customers.

If you are an individual who rents a boat slip at a marina, you should check your watercraft insurance policy to see if your policy offers this coverage or excludes this coverage.

Doug Timmons, CIC, CMIP

Marina Insurance Specialist

Commercial Risk Service
479-273-1376