Boat and Vessel Title Insurance – Protect Your Investment in Boats
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Boat and Vessel Title Insurance – Protect Your Investment in Boats

Just as property titles are subject to registration errors, pre-existing liens, and other encumbrances, boat and boat titles can have hidden issues that can present a liability to new boat owners. The best way for boat, yacht and boat buyers to protect themselves from these liabilities is to purchase title insurance. Agencies that provide this type of insurance conduct extensive background checks on the title to ensure that the ship’s title has a “good opinion.” Boat title insurance also ensures financial protection for boat owners in the event of a lawsuit or other financial loss due to title complications.

Why do boat boats need title insurance?

There are several types of problems that can occur on ship titles. Boat buyers are often unaware that any of these problems exist until they are faced with a property lawsuit or fees associated with prior liens. Insurance agencies hire title insurers and attorneys to investigate the chain of title ownership to discover these problems, and resolve them, before the sale occurs.

Common problems associated with yacht and boat titles include:

Fraud. Forged or fraudulent documents can occur at any point in the ownership history. Boat brokers or previous owners sometimes try to sell boats under false titles, defrauding both the boat’s mortgage lender and the new owner. In some rare cases, mortgages on the vessel’s ownership history can be revealed as fraudulent. In addition, vessels can be registered with both the US Coast Guard and the State, allowing vessels to carry more than one “valid” title. Multiple titles can precipitate multiple mortgages for which the boat owner may be responsible.

Property disputes. Even if a boat owner has a valid Certificate of Documentation and federal boat registration, they may still be subject to ownership disputes. These documents do not have the ultimate authority to determine ownership; only the underlying contract for the yacht or vessel can determine ownership. If the underlying contract for the title of the vessel is made up of fraudulent documents, the buyer’s ownership could be forfeited.

Pre-existing mortgages or bonds. A new boat owner is responsible for unpaid taxes, unpaid mortgages, and unpaid contract work associated with the boat title, even if he or she was unaware of them at the time of purchase.

Boat buyers can request a title opinion before finalizing the sale. While a good opinion provides some security against disputes, opinions and summaries of ship titles may not always be reliable. Erroneous records, inadequate documentation, fraud, and human error can lead insurers to write faulty title opinions. The only way a yacht or boat buyer can protect themselves against these complications is to purchase boat title insurance.

How does boat title insurance protect me?

In addition to conducting a thorough investigation of the vessel’s ownership history before the sale is complete, title insurance companies provide financial compensation in the event of a lawsuit. Vessel title insurance generally covers the cost of legal defense against attacks on the title of the vessel; In addition, the insurance will provide compensation for any financial or asset loss caused by a defective title.

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