Marina Dock Age

Because of the specialized nature of marina insurance, choosing an insurance company requires special considerations. Furthermore, the unstable economy adds even more concerns to that list. This article will discuss some of the most important factors that marinas should consider when choosing an insurance company. 

Marina insurance: a special breed

No two marinas are the same, and each requires specific insurance coverage to fit individual needs. The coverage provided in traditional business insurance policies won’t cover most of a marina’s assets, including its customers’ boats. The marina operation legal liability insurance typically closes the gap between what property and general liability insurance won’t cover.

In addition, marina insurance differs from other types of business insurance because of its specialized market, said Ed Wilmot, Great American Insurance Companies vice president of the Ocean Marine Division. In addition to the gamut of amenities available at marinas, many facilities have other retail businesses, such as restaurants, boat dealerships, even retail shops, all of which require special consideration when choosing insurance.

“That makes it a complex kind of insurance,” said Fred Fazand, vice president of marketing at Universal Managers Inc., a wholesale insurance brokerage firm. Because marinas have so many different kinds of exposures, very few companies specialize in marina insurance, he added.

Mark Yearn, Norman-Spencer national program director for the recreational marine division, added that only a handful of companies have a long-term commitment to the marina industry.

Financial stability

 A long-term commitment to the marina industry begins with a successful track record. In choosing an insurance carrier, marinas should first and foremost check on a company’s financial stability. Wilmot added that marinas should even investigate a company that appears in good financial standing because insurance conglomerates often do more than just insurance. He points to AIG, one of the world’s largest insurance companies, as a prime example. Its recent struggles arose not from its insurance division but from poor decisions made by its investment arms.

Wilmot and Fazand recommend investigating companies through A.M. Best Co. Inc., a credit rating organization serving the financial service industries. Its ratings and analysis assess the financial strength of risk-bearing entities and can help determine if an insurance company is worthy of business. Marina businesses want insurance from a longtime player, said Wilmot. Fazand suggests that marinas should only deal with companies that have an A or A+ rating.

Industry knowledge

Marinas should next consider an insurance company’s specific experience within the marina industry. Because marinas need specialized coverage, which requires specialized knowledge, an insurance company’s experience within the industry becomes very important.

For example, Wilmot said that insurance companies must understand very specific aspects of a marina’s business, such as how a facility stores and loads boats, what equipment it uses, what kind of employee training it provides, and/or what maintenance services it provides.

And insurance companies need firsthand knowledge about how the business works, not just to provide the right coverage but also to give loss prevention advice to its customers. Although an insurance company is there to reimburse losses, it should also provide guidance to prevent claims from happening in the first place. For this reason, marinas should ask: Does an insurance company have a loss prevention specialist who can inspect the facility for liabilities?

Price considerations

With the economy plaguing almost every business, many are looking for ways to cut expenses, possibly off insurance. Yearn warns against this, urging marinas to work with a specialized marine insurance carrier. He said that marinas should  not automatically choose the carrier with the lowest price because some companies are coming into the marina market with attractive prices that leave out important coverage. “With the potential to get attracted to a low price, you may be giving up something important in return.” He suggested thoroughly reviewing the coverage and proposals, not just the price. “Know exactly what you’re buying,” he said.

Handling claims

Finally, facilities need to consider a company’s underwriting process. Does it outsource its claims department? Do different underwriters handle individual aspects of the insurance policy, such as fire or fuel spill protection or coverage for docks? If so, this can make the claims process long and arduous, Wilmot said. With just one underwriter, who deals with the entire policy and can see the entire picture, “there’s no finger pointing when you have a claim,” Wilmot said.

Marina’s responsibility

No matter what insurance company a marina chooses, it can always help the claims process by keeping detailed inspection records on a daily basis. “For example, when there’s a trip and fall, the first thing the insurer is going to ask is ‘Was the board broken? When was it last repaired’?” Wilmot explained. In a litigious society, businesses need to protect themselves, and showing due diligence through written records can go a long way in court.

For more information, look for additional coverage on current marina insurance market trends and tips for eliminating unnecessary coverage in the Nov. issue of Marina Dock Age.

Anna Townshend is assistant editor of Marina Dock Age. She can be reached by phone at 847/647-2900 ext. 1308 or via e-mail at: atownshend@prestonpub.com.