As I write this, it is snowing. It is the last week of April and it is snowing! How Canadian! It just reminds me that as Canadians, we can play in any weather. And to play properly, we need to have the proper toys.
The genesis for this topic was that as it is April we are naturally heading into summer – time to dust off the boats, the sports cars, the motor bikes and ATVs and since this is a blog on insurance, making certain the right coverage is in place. I suspect that the snow machines are being prepped for summer storage so why not discuss appropriate “risk management” for the toys while they are parked as well?
It’s not enough to simply toss our toys into the toy box (read garage or shed here) at the end of the season or to simply pull them out of storage and hop on them at the beginning of a season. Managing the risk of owning toys is serious business because if it is not done properly there is a possibility of equipment failure, property loss and injury.
I will start with the obvious stuff first. And though it is what most of us would call common sense, it is frightening how easy it is to forget. The number one way to ensure safe use of anything with a motor that moves fast is taking the right lessons and getting licensed. We can maybe make an argument that as the government tries to legislate and control everything in our lives it takes away all the fun. But I became a believer in the need to get taught in how to use something a few years ago while at the cottage. My son, who was 15 at the time, begged me to take the wheel of a motor boat a friend had lent us. Being an old salt myself I thought that it would not hurt and I stood right next to him in the cockpit while we took a lazy motor down the Rideau. Despite my being there and being aware, I was not prepared when another boat passed us at high speed throwing a considerable wake. My son thought it would be really fun to take the wake at a right angle just as the other boat passed. My wife and daughter, who were sitting on the fore deck, were launched into the air and then landed hard on their backsides.
My son was not trained in the use of this boat and I realized how negligent I had been in assuming he would be cautious and that I would be able to anticipate any error in judgment he might make. Accidents always happen quickly and though there were no injuries this time there were very tender tailbones and a hard lesson learned. And the hardest truth here is that this sort of accident was totally avoidable. Taking the right courses to learn how to use a motorbike, boat, ATV, snow machine and then getting the right license if applicable is a an absolute must.
Practice makes perfect: Every biker I know will attest, all the experience we get on a bike is great, but the real threat ends up being the motorist who does not see you in his blind spot, is not paying attention, is changing lanes or coming out of a side street into the bike’s path. All the ability to ride means nothing unless it comes with a healthy respect and awareness for the potential risk of everyone else on the road. This applies to watercraft, ATV’s, Snowmobiles – it applies to cars as well. Since toys tend to be seasonal, there are months between their use. This may sound mother-hennish, but take it easy and practice at the beginning of the season, get used to the machine before pushing yourself too hard, keep your eyes open and do not take for granted that the other guy is paying attention or is aware of you. I sound like my dad.
When we sit down with new and sometimes long term clients, one thing is certain, many people make assumptions about the coverage they think they have already. Boats can be covered under a homeowner’s policy, but only up to a certain length and horse power. Sports cars, ATV’s and motorbikes, and since it’s snowing, show machines, all have road going exposure and therefore road going insurance requirements. You have heard this from me before – ask you broker if you have the appropriate coverage for any of the toys you already own. Get the right policy in place when you buy something new. What is worth noting here is that the premium charged to insure a boat, bike or sled will often be based on a full year’s coverage but rated on its seasonal use. The meaning here is that when you buy insurance for any of these toys, you will not necessarily get a return of premium if you cancel at the end of the season because the underwriter already knows you won’t be riding the hog in November or sailing the Boston Whaler in December and the premium you pay will be fully earned.
And when you park the Vette at the end of the summer and you ask your broker to remove “road coverage”, know that that means you have taken off collision as well as Third Party Liability and Accident Benefits. That endorsement should result in a return premium, but it also means that if that vehicle is stolen and you have comprehensive coverage left on the policy – there is coverage for the Vette, but there is no coverage for the liability claim that may result when the thief causes a serious injury or death joy riding your baby. So, disable it. Hide the keys, remove the battery and plugs, put it up on safe and tested jack stands, put a stabilizer in the gas tank, fog the motor and if I have not mentioned it before, disable it. For boat and snowmobile trailers, at the end of their respective seasons, remove the wheels, put tongue locks on them and chain the entire unit to something that will not move.
Valuation for this stuff can be contentious. If you have ever had an accident you know what I am talking about. Most of the things we have talked about here are inured on an actual cash value basis and not replacement cost. That may be Latin to you so here is the translation; when a loss occurs, insurers will give you a depreciated value for vehicles based on what they are worth at the time of the accident, not when they were new. If you buy a new car in 1999, you know that by 2012 it has depreciated to a point that insuring it for collision and comprehensive events may be a waste of money. Some policies will offer depreciation protection for two years if you buy new, but you have to be aware and again, talk to your broker. Some things like classic cars and rare bikes can be insured on an appraised value basis, which will at least recognize that depreciating a 50 year old, rebuilt, classic is worth “0” if on an ACV policy, but could be insured for $45,000 if appraised. But you have to get the appraisal done at your cost and with certain regularity to meet underwriting requirements.
Remember, insurance is part managing the risks and part transferring those risks to an insurer. That truth applies to your toys as much as anything else you own or do. It makes good sense to know how to safely operate your toys, protect and maintain them and properly have them insured. Summer is coming – be safe and enjoy the road you drive, the trail you ride or the river you sail.
Tim Tokrud has been a partner at Gifford Associates Insurance Brokers Inc in Ottawa since 2008 and has worked within the insurance industry since 1988.
He can be reached at firstname.lastname@example.org