INSURANCE CHECK-UP

Owning a lakefront home is a dream come true for many of us. Having a boat to explore your lake's waters, fish or enjoy water sports is an added bonus. But with such a wonderful life comes extra worries, burdens and potential pitfalls.

Having the proper insurance policies and clauses that cover the many misadventures that could arise with lake property and watercraft ownership can help you rest easy.

While the following information from Great Lakes area insurance professionals is generally acceptable, make sure you and your property are properly covered for where you live and for your specific situation.

Lakefront homes

"Everyone who owns or rents property, lakefront or inland, needs property coverage to protect their investment in the structures and personal property," said Ron Von Haden, executive vice president of the Professional Insurance Agents of Wisconsin. "Few people can afford to replace the structures or personal property out of savings or income without incurring a financial hardship."

The home should be insured to "replacement cost" figures, not market value, reminds Deb McCarthy, an agent at the Grand Haven (Mich.) office of Lighthouse Insurance Group. Having the replacement cost endorsement ensures the homeowner that, in case of a loss, the insurance company doesn't depreciate items.

Aside from basic property coverage, personal liability protection is a critical need for lakefront homeowners, the professionals say. Should a guest or stranger become injured on your property, and it is deemed to be the result of the homeowner's negligence, Von Haden said the liability portion of a home policy will respond to the damages asserted by the injured person. This is necessary coverage even for renters.

On the Water

"This liability protection extends to many ‘off-premises' activities of the owner/renter also, such as injuring someone while golfing or fishing," he explained. "Even if no negligence is found, the insurance policy will provide defense coverage, which can amount to thousands of dollars."

Lakefront homes are often fraught with what the legal system likes to call "attractive nuisances." An attractive nuisance is defined as something on the homeowner's property that could possibly attract a liable loss- such as a trampoline, hot tub, pool, floating dock, swim platform- just about anything that seems like fun or would attract people to use it has even a remote possibility to cause an injury.

Von Haden urges homeowners to discuss the liability section of their policy with their agent to see what kind of attractive nuisance can or can't be covered.

"Many companies will not insure homes with these items, while other companies will surcharge the premium accordingly," McCarthy said.

But what lakefront homeowners don't need to worry about is when someone is injured in the water offshore of their property, as long as they are not using the homeowner's equipment (attractive nuisance) or the accident is somehow the result of the homeowner's negligence.

"A homeowner is not responsible for the activities of others which take place off the owner's property," Von Haden explained. "Thus, someone injured in a boating accident 20 feet from the property owner's pier is not able to claim liability unless the property owner has some negligence which caused the accident,"

Lake homes shuttered up for the winter months are no different than year-round residences, when it comes to insurance coverage, the professionals say. However, the summer home's policy is sometimes endorsed to show that it is not the person's primary residence, which would lead to calculating the premium differently, McCarthy said.

According to Von Haden, "Most insurance companies will issue policies for seasonally occupied premises just as they issue policies for permanent residences. Many times, it is advantageous to have the seasonal property insured by the same company that insures the primary residence,"

The cost for insuring a lakefront home is really no different than that of suburban or city homes- in either case, the premium is calculated on the value and replacement costs.

"The normal considerations of fire protection, construction, heat devices, and amount of coverage apply the same to lake property and non-lake property," Von Haden said.

Boat Coverage

Most homeowner policies have built-in limited coverage for small watercraft, like sailboats and canoes. However, the property value coverage is typically restricted- about $1,000 or 10 percent of the home policy, according to the Insurance Information Institute- and likely does not include any liability coverage. Generally, boats over 16 feet in length, or those with a motor, will trigger the need for a rider or even a separate policy.

The premium for such policies or riders is normally based on the boat's age, type and construction, size of its motor, and whether it's solely used as a pleasure craft or for commercial use, Von Haden said. Some additional restrictions may apply if the boat is used on the Great Lakes or oceans.

McCarthy said your boat's trailer may also require a rider onto your car or truck policy.

A boat in storage will need property protection, but generally does not need liability coverage. Depending on its length and motor's horsepower, a boat can sometimes be simply added to a home policy, McCarthy said.

"The coverage on a separate boat policy is usually much broader than when endorsed to the home policy," she added.

A boating accident must first be reported to the authorities (police or Coast Guard), and then to your insurance provider.

"If your boat is damaged, or you negligence has caused injury to someone or damage to their property (the other boat, someone's dock, etc.), you may be held responsible just as if you had an auto accident," Von Haden said. "Your insurance will not pay the costs of any fines or court costs levied against you by civil authorities. Your insurance will pay for the cost to repair or replace your boat and damages to the other person's property or their injuries."

Should someone skiing or tubing behind your boat become injured, Von Haden said the insurance company will investigate and pay based on your boat's liability coverage and your negligence, if any. The same goes if you accidentally hit a swimmer with your boat.

"It is possible that violations of law which contribute to the injury could negate your insurance coverage," Von Haden warns.

Should your boat break down in the middle of the lake, your insurance policy may or may not include coverage for towing it home or to a marina for repairs. Ask your agent when you buy the policy about towing coverage.

A boat in storage needs to be protected in case of fire or theft, but it probably doesn't need liability coverage since it will not be in the water and operating during storage season. More good news is that some insurance companies offer a reduced premium when you agree to use the boat for certain seasons, or a set number of months, and have the boat in storage for the balance of the year. They reduce the premium because of the lessened risk during the storage period, Von Haden explained.

By Mark Brooky