By Damon Pesce
On the evening of January 9, 2019, a fire started on a boat at Constitution Marina in Charlestown, Mass. The fire is alleged to have started on a boat that someone was living on at the marina, which is known as being a liveaboard-friendly boating community. By the time the fire was extinguished, three boats were totaled with two of them sinking. The damage has been estimated to be about $1 million. As a marine underwriting facility, most of the losses we encounter involving liveaboard boats are during the winter, and most are either the result of a fire or sinking, just like what happened at Constitution Marina. This fire is a stark reminder that liveaboards, particularly in New England, pose their own unique exposures and underwriting considerations.
According to unconfirmed sources, the cause of the fire on the originating vessel at Constitution Marina was an overload of the shore power inlet due to corrosion buildup and high load from an electric heater. This is a common problem with liveaboards in the winter, since many of the boats are older and not as well maintained. Most water systems on boats are not winterized, so the entire vessel must be kept warm. Therefore, it’s not uncommon to have a very large draw on the AC electrical system, which can lead to fires.
Space heaters are also common on liveaboards, which also have a history of starting fires. I don’t have statistics
involving boats, but according to the National Fire Protection Association, space heaters are responsible for 32% of all house fires and 79% of all fatal house fires. In most fire cases involving space heaters, fire ensues because the heaters are placed too close to flammable materials, i.e. upholstered furniture, clothing, mattress or bedding. Most boats offer even tighter living quarters than houses, making this exposure very real!
Wintry Conditions
In addition to fire, there’s a much greater chance of the boat sinking in the winter. Boats heavily laden with ice and/or snow sit lower in the water, which can result in the potential for down-flooding through scuppers and/or freeing ports, which can eventually sink the boat.
Even very experienced boat owners need to learn a unique set of skills if they plan to liveaboard a boat over the winter as the operational requirements of a boat in the winter months are quite different from those in the summer. Thruhulls and seacocks must be closed when the vessel is not attended. Cabinetry needs to be ventilated to allow warm air to circulate around the hoses to prevent freezing. Bilge pumps and bilge pump discharge hoses also need to be kept warm enough not to freeze.
In addition, a bubbler system under the boat is also a good thing to have and is usually an underwriting requirement for boats in the water during winter months. A bubbler system can be mounted under the boat to circulate warmer water from the bottom to the underside of the boat to keep the boat free from ice.
There are also additional liability concerns. Icy decks and docks certainly increase the exposure for slip and fall activity. Should that fall lead to a person in the water, the threat of death is far greater and quicker in the winter due to hypothermia.
Traditional Boat Policies vs. Liveaboard Coverage Form
A significant concern for agents insuring liveaboard owners is to understand the distinction between a traditional boat policy verses the broader liveaboard coverage form. A typical boat policy will only cover accidents that occur aboard or while boarding and disembarking the boat. For those whose boat is their permanent residence, they do not get the benefit of any liability protection ashore, as one would typically get through their homeowners policy, unless they purchase a special liveaboard policy form that broadens the liability clause. New Hampshire Insurance Company (AIG) has a liveaboard program that addresses this exposure by attaching a personal liability form to the yacht policy that is similar to an HO-4 renters form, providing off-boat liability, including med pay to others, personal liability, liability for vacant land, coverage for personal property off the boat in storage, loss of use and special assessment coverage.
Agents take note! Boat policies in New England typically contain a lay-up warranty that requires the boat to be laid-up ashore and decommissioned for the winter. If a boat is being used and occupied as a residence over the winter, chances are they are in violation of their warranty, and any claim will be denied, unless you’ve disclosed the use to the underwriter and secured a special liveaboard policy.
Some liveaboard policies merely remove the lay-up warranty and expressly grant permission for the vessel to be used as a residence, but do not extend the liability to cover shore-side exposures. This is a significant coverage gap that may be closed through your errors and omissions insurance policy should you not perform your due diligence in reviewing the various products that are available. As with so many other areas of specialty insurance, liveaboard boat owners are unique and require both specialty coverage and agents who understand the difference in their exposures from that of a typical boat owner. With a little help, you can be the agent who caters to this niche market, setting yourself apart from the rest of the fleet!