Does your boat insurance cover your family? You might be surprised.
ST. PAUL—When Twin Cities TV reporter Courtney Godfrey lost part of her leg in a boating accident over the summer, she assumed the boat owner's insurance policy would help.
But she quickly learned the boat's liability policy excluded her.
Because the boat was owned by her husband.
"We were like: 'WHAT?!'" says Godfrey, a Fox-9/KMSP-TV reporter who lost the lower portion on her left leg in the propeller after she was flung overboard while the boat was making a turn on Christmas Lake in September.
That's correct: If Godfrey's sister, who was also aboard, had been injured, the $451-a-year policy would have covered her. "If it would have happened the summer before, when we weren't married, I would have been covered," she said.
But in Minnesota, like many other states, boat liability coverage can — and, it appears, nearly always does — exclude spouses and children.
"People are shocked when they hear that," she said in an interview.
Now Godfrey, who returned to work this week, is spearheading a proposal at the Minnesota Legislature to change state insurance laws to outlaw so-called "family exclusions" in watercraft liability policies.
The proposal has prominent supporters from both parties, including House Speaker Kurt Daudt, R-Crown, and Senate Minority Leader Tom Bakk, DFL-Cook, but it still faces an uphill climb. Among the opponents: the insurance industry.
Not like car insurance
If Godfrey's injuries had happened in her husband's car, she could have filed a claim. That's because family exclusions have been outlawed in Minnesota since 1974 — from auto insurance.
But boat insurance is different. Unlike auto insurance, boat insurance isn't required by law, and family exclusions are allowed.
There are no reliable estimates for how many people purchase various types of boat insurance, which can include liability for injuries stemming from negligent behavior, and so-called "hull insurance" for damage to the boat itself, according to state regulators and the insurance industry.
Nor is there data to precisely know how widespread family exclusions are. Godfrey said she informally polled her boat-owning relatives, friends and Facebook followers. "I haven't found anyone whose family is covered," she said.
Carla Ferucci, executive director of the advocacy group Minnesota Association for Justice, said her research suggests it's extremely rare for policies to offer coverage for family members.
"We've focus-grouped this issue, and when the general public finds out their family isn't covered, they're incensed," Ferucci said.
Boat policies often do offer coverage for medical payments, and family members are included. Godfrey's husband, Ryan Novaczyk, had such a policy. But such policies are often capped and don't cover non-medical expenses, such as lost wages, which can quickly add up in a life-altering injury. Similarly, personal health insurance doesn't cover such expenses. Liability insurance does cover those expenses.
Insurers fight it
Minnesota's insurance industry is fighting this.
The proposal would make boat insurance cost more, and create an incentive for fraud and abuse, said Mark Kulda, vice president of public affairs for the Insurance Federation of Minnesota.
Liability claims are based on accusing someone of negligence. That's how the system is set up. To allow family members to accuse each other of negligence creates a "moral hazard" wherein all involved — except the insurance company — could benefit from essentially lying about injuries or other damages.
The distinction between boat insurance and car insurance, he said, is that the analogous car insurance in Minnesota — personal injury protection (PIP) — is "no fault," meaning it doesn't matter whether anyone involved was negligent.
Even though it's been like that for decades, the insurance industry doesn't necessarily like it.
"The problem is we're overpaying for insurance right now in Minnesota," Kulda said. "We don't want that with boat insurance. People will stop buying it. That's not good for us or boat owners."
Despite the bill's bipartisan support, it has bipartisan skeptics as well. One is Senate Majority leader Paul Gazelka, R-Nisswa. Gazelka is an insurance agent as well.
He's in the process of scheduling a meeting with Godfrey, and said he wants to hear her out, but he's skeptical, for similar reasons as Kulda.
"It's a complicated issue, and I'm definitely willing to listen," Gazelka said in an interview Wednesday. "But I'm not sure it's wise to have a policy where you can sue yourself. ... It will dramatically drive up the cost of liability insurance."
Why should boat insurance be different from auto insurance?
"I would rather change auto insurance so we would have lower premiums," he said.
Regardless, Gazelka said at this stage in the legislative session, it's unlikely the bill could be acted this year. "I cannot imagine it happening this session," he said.
As a TV reporter, Godfrey is both media savvy and knows how a narrative works. She knows that by speaking out — she held a news conference on the issue and has been buttonholing lawmakers at the Capitol for weeks — she'll be the face of this story.
And she also knows what some will think: " 'Her claim was denied and she wants to get money,' " she said. "I'm not benefiting from this bill. I'm not here for myself. I don't want other people to go through a trauma like I've been through — and then learn the insurance they thought would cover them doesn't."