North Carolina Adjuster Practice Exam

What area is not covered by a Watercraft Policy?

1. The Great Lakes

2. International waters

3. Mexico

4. Coastal waters

The correct answer is: Mexico

A Watercraft Policy typically provides coverage for various waterways and regions where vessels operate, but there are specific limitations regarding where that coverage applies. Mexico is commonly excluded from this type of policy. When a Watercraft Policy is written, it generally includes coverage in domestic waters, such as the Great Lakes, coastal waters, and often international waters, especially where vessels operate close to the U.S. coast. However, coverage in Mexico may not be included because insurers frequently impose geographical limits to manage risk exposure. Insurers may be hesitant to cover incidents occurring in Mexico due to varying legal and regulatory frameworks, potential for different maritime laws, and challenges in claims settlement. As a result, it is critical for anyone operating or traveling with a watercraft in those waters to obtain additional, specific coverage for that area if they plan on navigating there.