Does My Marine Insurance Policy Cover Earthquake Damage?

I just renewed my homeowner’s insurance policy and it reminded me that I have never seen an earthquake insurance policy offered for a boat. I know that homeowners have to take out separate earthquake policies through the California Earth­quake Authority to get coverage. Are boat owners eligible for anything similar? If my boat suffers damage during an earthquake — whether it’s in dry storage, on a trailer at home or tied to a dock at a crowded marina — will my marine insurance policy cover it?

Generally speaking, the limits and exclusions of any insurance coverage will be spelled out in the language of the policy document that is issued by the insurance company.

Here, the reader is referring to a requirement of California law (section 10081 of the California Insurance Code) that provides that no policy of residential property insurance may be issued in California unless the named insured is offered coverage for loss or damage caused by earthquake.

The law in its current form was enacted in 1994 after the Northridge earthquake. Prior to that event, insurance companies were required to include earthquake coverage in residential insurance policies, but no provision was available to offer the insurance under a separate policy. After the Northridge earthquake, many insurance companies pulled out of California entirely, rather than being forced to include coverage in their standard residential homeowners’ policies.

The new law offered a compromise. Insurance companies may now exclude coverage for earthquake damage, so long as they offer a separate policy to the homeowner that does provide the coverage. The separate earthquake policy is therefore only required if the homeowners’ policy itself excludes coverage for earthquake damage. This helps the insurance companies because they may charge competitive rates for the homeowners’ policy without regard to the risks associated with earthquake coverage. The separate earthquake policies may better target the risk by charging substantial premiums, and requiring a deductible of up to 15 percent of the value of the insured structure.

Like homeowners insurance, the coverage and exclusions of a marine insurance policy will be spelled out in the language of the policy document. Marine insurance policies vary widely in the scope of coverage offered, but they do not typically exclude damage caused by an earthquake. However, even if such an exclusion were included in a policy, the insurance company would not be required to offer separate earthquake coverage, since the law that requires the coverage does not extend to marine insurance.

The reader asked whether his marine insurance policy would cover earthquake damage to his boat under various scenarios, such as in dry storage, on a trailer or in a marina. The answer is that the damage may be covered, or it may be excluded if his insurance policy does list a specific exclusion for earthquake damage, or it may be excluded by some other provision of the policy that has nothing to do with earthquakes.

Unfortunately, there is no simple, universal answer to this question. The reader will need to review the language of his policy, to determine the scope of coverage offered by the policy and the exclusions and other limitations (such as geographic limitations) that may apply. A maritime attorney experienced in insurance coverage issues should be consulted for more specific information.