Form HO 24 75: Watercraft Endorsement
1. What the form is
The HO 24 75, known as the Watercraft Endorsement, is an optional endorsement to a Homeowners (HO) policy. Its primary purpose is to provide scheduled liability coverage (Coverage E - Personal Liability and Coverage F - Medical Payments to Others) for certain watercraft that are otherwise excluded or limited by the standard Homeowners policy. Specifically, it addresses watercraft powered by outboard motors exceeding 25 total horsepower, inboard or inboard-outdrive powered watercraft, and sailing vessels 26 feet or more in length (with or without auxiliary power). This endorsement effectively removes the standard watercraft liability exclusions found in the base HO policy for the watercraft specifically described in the endorsement's schedule. It is important to note that this endorsement typically provides liability coverage and medical payments, not physical damage coverage for the watercraft itself; separate coverage would be needed for that.
2. Classes of business it applies to
This endorsement is designed for personal lines, specifically for individuals who own and operate watercraft that exceed the size and horsepower limitations of their standard Homeowners policy. It's not for commercial operations. Examples of when this form would be used include:
- An individual who owns a ski boat with a 150 horsepower outboard motor.
- A family that owns a 30-foot sailboat used for recreational purposes.
- A person with an inboard-powered pleasure craft used on lakes and rivers.
The endorsement is suitable for watercraft that are too large or powerful for basic HO coverage but may not be substantial enough to necessitate a separate, comprehensive yacht policy.
3. Special considerations
There are several important considerations when using the HO 24 75:
- Scheduled Coverage: The watercraft must be specifically described in the endorsement schedule, including details like its description, horsepower, length, and the navigation period (the time the boat is typically in the water and available for use). This means coverage doesn't automatically extend to any watercraft the insured might use; it only applies to the scheduled ones.
- Navigation Period: The defined navigation period can be crucial, as insurers may rate differently if a boat is only in the water for a specific season rather than year-round. Operations outside this period may not be covered.
- Exclusions: Even with this endorsement, certain activities are typically excluded. These often include:
- Operating the watercraft in a prearranged or organized race or speed contest (an exception may apply for sailing vessels or predicted log cruises).
- Renting the watercraft to others.
- Using the watercraft to carry people or property for a fee.
- Any business use of the watercraft.
- Bodily injury to an employee whose principal duties involve the maintenance or use of the scheduled watercraft, if the injury occurs during their employment.
- Physical Damage Not Included: This endorsement primarily addresses liability. Insureds needing coverage for physical damage to their boat (hull, motor, trailer) will typically need a separate boatowners policy or a specific physical damage endorsement if available.
- Relationship to Base Policy: The HO 24 75 modifies the existing Homeowners policy (like an HO 00 03 or HO 00 05). The general conditions and definitions of the underlying HO policy will still apply unless specifically modified by this endorsement.
Real-world example for exclusion: If an insured uses their scheduled ski boat to give paid waterskiing lessons, any liability arising from that business activity would likely be excluded under the HO 24 75, even though the boat itself is scheduled.
4. Key information for agents and underwriters
Agents and underwriters should pay close attention to the following when dealing with the HO 24 75:
- Accurate Scheduling: Ensure all details of the watercraft are accurately recorded in the schedule, including make, model, year, length, horsepower, and serial numbers. This is critical as coverage only applies to specifically described watercraft.
- Underwriting Guidelines: Insurers will have specific underwriting guidelines for accepting watercraft on this endorsement. These may include limitations on the boat's age, value, speed, condition, and type of use. For instance, some insurers may require a marine survey for older or larger vessels. Maximum horsepower or length limits may also apply.
- Navigation Territory: While the form itself might not specify navigational limits, the underwriter should understand where the boat will be operated (e.g., inland lakes and rivers vs. coastal waters) as this can significantly impact the risk. Some company guidelines may restrict coverage to specific bodies of water or geographical areas.
- Operator Experience and History: The experience and claims history of the operators may be an underwriting consideration, similar to auto insurance. Some insurers may require operators to have completed boating safety courses, especially for high-performance boats or younger operators.
- Pricing: The premium for this endorsement will be influenced by factors such as the type, size, and horsepower of the watercraft, the navigation period, and potentially the operator's profile.
- Coverage Gaps: Agents should clearly explain the limitations, particularly the exclusions related to racing, commercial use, and the absence of physical damage coverage. This helps manage client expectations and identify potential needs for a separate, more comprehensive watercraft policy (e.g., a yacht policy for larger or more valuable vessels or those with broader navigational needs).
- Comparison to Standalone Boat Policy: For some clients, particularly those with higher-value boats, extensive use, or broader navigational needs, a standalone boatowners or yacht policy might offer more comprehensive coverage than the HO 24 75 endorsement. Agents should be prepared to discuss these alternatives.
Real-world example for underwriting: An underwriter might decline to add an older wooden-hulled boat to an HO 24 75 due to its age and potential maintenance issues, or they might require a recent satisfactory marine survey before offering coverage. Similarly, a high-performance boat with a very high horsepower rating might be deemed too risky for this endorsement and require a specialized marine policy.