Posted on: April 1, 2022
Why is houseboat insurance so hard to get and how can I use risk management to ease insurer concerns?
Life on the water could be the realisation of a long-held dream, but it’s not all smooth sailing. In your journey to break free from brick and mortar, whether it’s for a never-ending adventure or a weekend getaway, you might encounter an unfriendly hurdle: houseboat insurance.
If you’re thinking of switching to houseboat life or have already set sail on your floating pride and joy, marine insurance should be a key consideration. But a few factors are causing dark clouds to form on the houseboat insurance horizon. It’s getting harder for insurers to place risk, and owners are facing the consequences.
We’re here to help you understand what’s causing the scarcity of — and increase in —premiums, while sharing our top tips for getting the best cover for your houseboat.
The current houseboat insurance crisis
Having a hard time getting your water home insured? You’re not the only one. Some insurers are saying that they don’t even insure house boats, others say that you’ll need a recent marina survey, while others are quoting *really* high premiums. But why? Insurance policy premiums are based on value, coverage, and element of risk — and it’s becoming increasingly difficult for insurers to place risk.
The global marine insurance sector is undergoing a huge period of change not experienced in decades. In Australia, local premiums are also seeing a trend upwards, and cover is being restricted in certain areas.
Many boat insurance providers for the past five years and counting have paid out more in claims than they’ve received in premiums. As a result, premiums as charged are no longer considered sustainable and have started to climb, if even offered at all.
So, what’s causing the crisis? Let’s take a look at 3 major causes that are making it difficult for insurers to place risk.
The 3 major causes of houseboat insurance premium increases
- Repair costs
As the cost of repairs for houseboats continues to increase, so does the cost of insurance premiums. Labour and parts for boat repairs or maintenance are getting more expensive. For older boats, these costs can be more regular and quickly put pressure on the system, while newer models often have more sophisticated technology that costs more to repair or replace. Not only this, but the cost of disposing of damaged vessels or parts continues to increase to comply with newly imposed disposal regulations. All of these elements are making it increasingly difficult for insurers to calculate the cost of insured risks.
The older your marine vessels get, the more difficult it can be to source parts, and in many cases they’re unavailable. This could either be a purposeful move from suppliers, or a reflection of the rapidly changing technology within the industry. Planned obsolescence is a well-known and dishonourable feature when it comes to cell phones and other electronic equipment. But did you know that it can affect all industries?
Where once something could be repaired, replacement at a higher expense is often the only option — putting additional pressure on houseboat insurers and making the cost of a claim ever-more unpredictable.
- Climate-change and events
Severe weather events including hurricanes are now more frequent and more severe. These events have resulted in more weather-related claims, and the cost of damage replacement and repairs is greater in times where climate-change-related events are becoming the norm.
When Cyclone Debbie hit the Queensland coast in March 2017, insurers faced significant losses from high impact claims. The cost of premiums became unsustainable for insurers, and the rising unpredictable costs of repairs made the marine insurance account an unprofitable one for underwriters. As a result, a large proportion of insurers hung up their sailor hats and ceased underwriting marine vessels.
Flash forward to today, where there are only a handful of insurers willing to provide cover for houseboats. The laws of supply and demand means that, with those who are left, there is less competition, and they may adjust the premiums upwards.
Our top tips for getting the best insurance for your houseboat
Having adequate houseboat insurance is important for financial security, but we know that it’s not always a simple process. You need to ensure that your search is effective while mitigating insurers concerns of difficult to place risk so that your options are broader. Here are our top tips for getting the best cover:
- Use a broker from the get-go: To have the best chance of getting cover for your houseboat, speak to your insurance broker before you even begin an online search. If you request a quote from an insurer yourself, you could limit the negotiation potential for your broker later.
- Start your houseboat insurance search early: Begin your search as early as possible when you identify the potential need for insurance. If you’re starting the process the week before you use or rent out your water home, your options will be limited, and you could end up with a poorer level of cover for a higher price.
- Reducing the risk of medical incidents: For your personal, guest and community’s protection, having a fully stocked medical kit on board is a given, as is knowing basic first aid and CPR. The risk of drowning can be minimised by guide rope, grab rails, and handrails throughout the exterior of your houseboat to avoid slips and falls. Through this, you can show insurers that you’re taking a proactive approach to incident management, managing risk not only for the public but for insurers too.
- Protection from harsh weather: Shrink wrapping a boat where possible can guard items such as batteries, engines, and lower units from adverse weather. You can also install things like a lightning dissipator and/or lightning rod to reduce the risk of lightning strike damage. Protecting your vessel can reduce the likelihood of weather-related pay-outs, which can make insurers more willing to insure your vessel.
- Regular inspections: You can manage the risk of unexpected and unwanted costs down the line by having the floating home checked out by a professional surveyor to determine its condition and value regularly. If you can show insurers that these are regularly conducted, it can give them more confidence to cover your vessel by knowing that issues can be identified early.
We can help you find insurance for your houseboat
At GIA Insurance Brokers, we specialise in providing houseboat insurance packages that are tailored to your needs. We’re experts in risk management, negotiation and mitigating concerns about difficult to place risk.
We won’t leave you up the river without a paddle — so contact us today and find out how we can help you.