Insurance for Floating Homes
by Samantha Fazio
Hawser Marine Insurance Services, LLC.
If you own or live on a floating home, you know how difficult and expensive the road to insurance coverage can be. You are not alone in Sausalito; this is a widespread problem for floating home owners and renters. Before you buy, it’s important to understand the difference in what is covered so you can make the best decision for your situation.
Three companies provide property insurance on floating homes: Red Shield, the California FAIR Plan, and, new to the market, Lloyd’s of London.
Red Shield offers a more broad coverage, but the cost to obtain this coverage means paying a substantially larger premium. One major coverage Red Shield offers, that no other carrier does, is the “Perils of the Sea” endorsement. In simple terms, Red Shield will cover damages and/or the sinking of your floating home due to a loss related to a peril of the sea. It is also helpful that this is written in one single package policy, including personal liability coverage. This simplifies things so you do not need to carry two policies to provide the coverage necessary to properly protect your floating home.
The California FAIR Plan was established so that homes in “high risk” areas could buy basic property insurance. While floating homes are not high risk, they are very different than insuring a dwelling built on land. Traditional insurance companies are not comfortable with the risk of floating homes. Thanks to the FHA, the Sausalito area floating homes are now permanently part of the CA FAIR Plan. The FAIR Plan does not have agents, but many licensed insurance brokers can assist you in obtaining a FAIR Plan policy. The FAIR Plan, however, does not include personal liability coverage. This must be placed in a separate policy that will include coverage that is based on a floating home. For more detailed CA Fair Plan coverage information, visit their website at www.cfpnet.com.
The newest carrier, Lloyd’s of London, has begun to write policies for floating homes. They offer a more traditional type of home owner’s policy that also includes personal liability, giving the ease of having your dwelling and liability coverage in one policy. They do have a specific appetite for the types of floating homes they will cover and can also include additional coverages depending on the insurer’s needs. At the moment, they do not cover “Perils of the Sea,” but an option for floating home owners may become available, so ask for details.
As a reminder, if you rent your floating home to others, either part-time or full-time, it is important that you inform your insurance agent. Many traditional renters property or liability insurance will not cover this floating home exposure. Insurance may be available, but always clear it through your agent. If you are a renter who lives in a floating home, there are also options for you to cover liability and personal property.
Below is a comparison of Red Shield, the CA FAIR Plan, and Lloyd’s of London. Please keep in mind this information is meant to highlight the major differences; you need to obtain your own quotes to decide which option is best for you and your home.
|Coverage||Red Shield||FAIR Plan||Lloyd’s of London|
|Home Structure (building) covered – building||Yes||Yes||Yes|
|Personal Property – building||Yes||Yes||Yes|
|“All Risk” except for excluded items – building||Yes||No||Yes|
|“All Risk” except for excluded items – personal property||No||No||Yes|
|Perils of the sea (excluding tidal waves||Yes, both building and contents||No||No|
|Fire, wind, hail, lighting, aircraft damage, riot, vehicle damage, explosion and smoke||Yes (these perils are included in the “all risk” coverage||Yes||Yes|
|Vandalism and malicious mischief||Yes||Yes||Yes|
|Additional cost to rebuild due to enforcement of building laws||No||Yes (optional coverage)||Yes (optional coverage)|
|Accidental discharge or overflow of water from plumbing (owner occupied homes)||Yes||No||Yes (up to $25,000, additional coverage may be purchased)|
|Replacement cost – building||Yes||Yes||Yes|
|Replacement cost – contents||Yes, as an option||No||Yes (optional coverage)|
|Damage from watercraft||Yes||No||No|
|Damage to owned small watercraft||Yes, up to $1,000||No||Yes. up to $1,500|
|Floatation (concrete barge, Styrofoam, fiberglass, etc.)||Limited to 5% of the home value insured and then coverage only provided for damage arising out of fire and collision||No||Yes|
|Debris Removal||Yes||Included in policy limit||Yes|
|Earthquake||Yes, as an option||Yes, as an option||Yes, as an option|
|Reimbursement for alternate living expenses while home is being repaired||Yes, $10,000 and option to purchase higher limit||Yes (10% of the building coverage). Option to purchase 20% limit.||Yes(10% of the building coverage)|
|Personal Liability||Yes||No (but available at additional cost from other insurers)||Yes|
|Premium payable in installments||Yes, installment fee charged per installment, also can pay online||Yes, if premium greater than $250. 40% down and two additional installments of 30% each. $2.50 per installment.||Yes, premium financing available but includes a fee)|
|Personal property covered worldwide||Yes, 10% of coverage C limit||10% of policy limit (Coverage A)||Yes (Specific limits apply. Check with your agent)|
In summary, one of the biggest differences is the lack of personal liability coverage under the FAIR plan. Fortunately, you can purchase a separate policy for this coverage. Since most marinas require that you carry liability insurance, you need to add the cost of liability coverage to any comparison with Red Shield or Lloyd’s.
On the property insurance side, the other biggest difference is the lack of sinking or “Perils of the Sea” coverage under the FAIR Plan and Lloyd’s. While it’s uncommon to see sinkings due to salt water leaks, there have been a number of sinkings due to fresh water (plumbing) leaks. Supplement Personal Property insurance may cover water damage to your belongings due to a fresh water leak.
An additional difference is the lack of theft coverage under the FAIR Plan. This coverage may be available with a supplement property insurance policy. Keep in mind that neither Red Shield nor the FAIR Plan provides a significant amount of coverage for fine arts and jewelry. If you want to insure those things, you need to buy a separate fine arts floater policy.
Below is a list of insurance brokers.
|Broker||Red Shield||FAIR Plan||Personal Liability||Lloyd’s of London|
|Hawser Marine Insurance Services, LLC.
|Sadler & Co.