Your Waterfront Home May Not Be Adequately Insured

If your home is on or near water, your home insurance policy may not be designed to cover losses that are unique to lakeside living. One of our top insurance companies, Auto Owners, can provide a special set of enhanced coverages that go a long ways to protecting your dock and other property that are often exposed to perils that are only a concern for lakeside homes. These coverages would need to be added to your policy and are not included with most home policies. We’d be happy to look at your policy or, if you would like to learn a little about how to analyze the problem yourself, please read on!

No insurance policy will cover everything that might happen and, inevitably, there will be losses that you will have to bear the full cost of repairing or replacing yourself. These are “gaps” in coverage and there’s a whole lot of gaps in every insurance policy. The key to selecting insurance policies is to choose the broadest coverage you can with the fewest gaps, and to understand the really important gaps that may apply to losses that you worry about.

These gaps in coverage are created a couple of ways. Every insurance policy has exclusions; things that the policy specifically lists out that it will NOT cover. Additionally, certain coverages on your policy might be worded in a way that coverage will only apply for certain causes of loss; We call those “perils”. Gaps in coverage are created by these exclusions and these sometimes-limiting lists of covered perils.

This particular coverage from Auto-Owners does a fantastic job of filling in some gaps in coverage that are present on just about every home policy out there and is incredibly relevant if your home is on a body of water.

You won’t find this information however by just looking at your declarations page. You have to read beyond that and get to the actual policy language. Your declarations page is a summary or, I like to think of it as a “highlight reel” of what your policy is. It is NOT the complete picture however.

Anytime you buy a new policy or your policy renews, you get a large packet of papers or if you are a little more “greener”, you may have opted to have those emailed to you. Either way, as you look through your policy, usually after the declarations page, you will start to see what is your actual policy language. It typically will begin with what is called the “Insuring Agreement”. If you’ve reached those words, you have reached the beginning of your actual policy language. Here you will find the details about how your entire policy works and when each coverage does or does not apply.

While reading your policy isn’t gong to be the most thrilling read, they are written so that with some patience and the will to take the time to really read through it, you can learn a lot about your policies benefits and it’s limitations.

Your particular policy might be worded slightly different however, when we look at home insurance policies, a common piece of wording for a homeowner’s insurance policy you might see will be:

2. PERILS WE INSURE AGAINST

a. Coverage A – Dwelling and Coverage B – Other Structures

We cover risk of accidental direct physical loss to covered property described under Coverage A – Dwelling and Coverage B – Other Structures except for losses excluded elsewhere in this policy.

This means that for damage to your dwelling and the detached, other structures, they will cover accidental direct physical loss, except for anything specifically excluded

You would then have to read further on for the exclusions:

EXCLUSIONS

Coverage A – Dwelling, Coverage B – Other Structures and Coverage C – Personal Property

We do not cover loss to covered property caused directly or indirectly by any of the following, whether or not any other cause or event contributes concurrently or in any sequence to the loss:

(1) Enforcement of any ordinance or law….
(2) Earth movement…..
(3) Water damage, meaning…

…and the list of exclusions will go on from there. This is a good example of policy exclusions

For Coverage C – Personal Property, below, you see an example of them listing only the covered perils.

Coverage C – Personal Property

We cover risk of accidental direct physical loss to covered property described under Coverage C – Personal Property caused by any of the following perils except for losses excluded elsewhere in this policy:

(1) Fire or Lightning.
(2) Windstorm or Hail….
(3) …

Those will continue from there, as well. In this instance, you would only have coverage if the cause of loss is in the list of covered perils.

So, knowing how the above works, most homeowners policies are going to have some exclusions and limited lists of covered perils that, if you live lakeside, might be of concern to you.

First, we have this common exclusion under Coverage A – Dwelling, Coverage B – Other Structures:

(7) Freezing, thawing, pressure or weight of water or ice, whether driven by wind or not, to a:

(a) Fence, pavement, patio or swimming pool;
(b) Footing, foundation, bulkhead, wall, or any other structure or device that supports all or part of a building, or other structure;
(c) Retaining wall or bulkhead that does not support all or part of a building or other structure; or
(d) Pier, wharf or dock;

The exclusion here is for damage done by water or ice that is caused by Freezing, thawing, pressure or weight, whether driven by wind or not, to those items listed. While this exclusion is pertinent to any home and is of concern, most homes do not have piers, wharfs or docks. Obviously, a lakeside property is much more likely to and the above exclusion is one of the more likely causes of damage to those things.

Additionally, later on in the policy, we see another exclusion that applies to Coverage A – Dwelling, Coverage B – Other Structures and Coverage C- Personal Property:

3. Water damage, meaning:

(a) flood, surface water, waves, tidal water or overflow of a body of water. We do not cover spray from any of these, whether or not driven by the wind;

Finally, homeowners insurance policies will also apply limits in coverage to specified types of personal property. Here we have a Special Limit of coverage that is applied to Coverage C – Personal Property:

(c) $1,000 for watercraft, including their equipment, accessories or parts, trailers and outboard motors.

Your policy will have other types of personal property that are limited in coverage such as limits to theft of jewelry, furs, guns etc., but this is the specified limit that is pertinent to this discussion.

Ok, so now we know what the pertinent exclusions and limitations are for Coverages A, B and C, as it pertains to lakeside properties. We have exclusions for damage to common lakeside property like docks and piers as well as a limitation in coverage for watercraft that is not scheduled on the policy.

A dock, wharf or pier, depending on its construction could be a permanent structure where it stays and is never removed or quite commonly, you see people that have removable docks that they take out of the water for the winter. Companies will consider a permanent dock, wharf or pier to be Coverage B – Other Structures. A removable dock is considered to be Coverage C – Personal Property as it is not permanent and could be easily taken out or off the property.

If you remove your dock, the above exclusions are going to be of less concern, unless you just remove the dock and set it near the shore. I guess in that instance, there could be damage still excluded above. Or, maybe you forgot to remove them before the lake froze!

I think the biggest concern becomes if you have a permanent wharf, dock or pier. As we see in the above exclusions, that will be excluded from the most likely causes of damage, particularly in the winter.

The Lakeside Living endorsement with Auto-Owners helps with these exclusions and this specified limit of coverage.

First, it adds a couple pertinent definitions to the policy:

A. Lakeside permanent structures means permanently installed:

(1) piers;
(2) wharfs; or
(3) docks;

built on posts extending from land, over water, including any permanently attached equipment.

B. Lakeside personal property means personal property including but not limited to portable docks, floating docks, stationary rafts, ice shanties, water slides, floating trampolines, boat hoists and any equipment not permanently installed.

Next, we get a revised specified limit for “Certain Personal Property”:

A.COVERAGES, c. Coverage C – Personal Property, (3) Special Limits of Insurance for Certain Personal Property, (c) is deleted and replaced by the following.

(c) $2,000 for watercraft, including their equipment, accessories or parts, trailers and outboard motors.

Finally, they add to the Additional Coverages in Section I – Property Coverages:

(1) We will pay for loss to:

(a) a bulkhead or lakeside permanent structure caused by freezing, thawing, pressure or weight of water or ice, whether driven by wind or not.
(b) lakeside personal property caused by wind driven ice. This does not include coverage for covered property that is not properly maintained or stored on land prior to the winter season.
(c) lakeside personal property that is a portable dock or floating dock, involving collapse if caused by the weight of rain. Collapse does not include settling, cracking, shrinkage, bulging or expansion.

(2) The ADDITIONAL COVERAGE, h. Collapse is amended for purposes of this additional coverage only. The following is added.

We will also cover risk of direct physical loss involving collapse of lakeside permanent structures if caused by the weight of rain, ice, sleet or snow.

So, it is going to add coverage back on, with a couple exceptions, the exclusions that were present in the base policy as well as provide an additional $1,000 for watercraft not already scheduled. I think it’s important to note above where I said “Or, maybe you forgot to remove them before the lake froze!”, in the Lakeside Living endorsement, there is an exclusion, should you forget to remove them from the lake:

This does not include coverage for covered property that is not properly maintained or stored on land prior to the winter season

Yikes! Take those temporary docks out of the water!

Hopefully this shows the importance of this coverage as it pertains to lakeside properties and what this coverage does.

Recently, we had a client with a permanent dock valued around $20,000. This coverage comes in $1,000 increments and adding this to his home policy to protect his dock was about $200 for the year.

Not too shabby.

If this is a coverage you are interested in, give us a call! We’d love to give you a quote and show you how it can work for you.

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Darin Mohrman

Sales and Operations Manager, Personal Insurance at Al Bourdeau Insurance Agency

“Education is what you get from reading the fine print; experience is what you get from not reading it.“

I’m a former aspiring “ski-bum” turned insurance professional.I was licensed in 2002 and in 2013 I obtained my Certified Insurance Counselor (C.I.C.) designation. I'm married to an amazing woman, have a wonderful son and a cat.I enjoy travelling, music, craft beer, woodworking, collecting and restoring antique tools and all things computer and tech related.