Boat & Vessel Title Insurance - Protecting Your Watercraft Investment
Just as real estate titles are subject to record errors
, preexisting liens and other encumbrances, boat and vessel titles may have hidden problems which can pose a liability to new vessel owners. The best way for buyers of watercraft vessels, yachts and boats to protect themselves from these liabilities is to purchase vessel title insurance. Title agencies which provide vessel title insurance perform thorough investigations of vessel title histories to ensure the vessel title is in "good opinion". Vessel title insurance also ensures vessel owners financial protection in the event of a vessel title lawsuit or other financial losses due to complications with the vessel title.Why Do Watercraft Vessels Need Title Insurance?
There are a large number of problems which can occur on vessel titles. Buyers of vessels are usually unaware that any of these problems exist - until they are slapped with a title ownership lawsuit or fees associated with prior liens. Vessel title insurance agencies hire vessel title underwriters and title attorneys to investigate the vessel titles chain of ownership to uncover these problems - and resolve them - before the sale occurs.
Common problems associated with yacht and vessel titles include:
Fraudulent titles. Forged or fraudulent documents can occur at any point in vessel title ownership history. Vessel brokers or previous owners sometimes attempt to sell vessels under false titles, defrauding both the vessel mortgage lender and the new owner. In some rare cases, the mortgages in the vessel titles ownership history may be revealed as fraudulent. Additionally, vessel titles may 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 vessel owner can be held responsible.
Yacht title ownership disputes. Even though a vessel title owner carries a valid Certificate of Documentation, valid record titles and Federal boat registration, he or she may still be subject to ownership disputes. These documents do not have the ultimate authority to determine vessel title ownership; only the yacht or vessels underlying contract can determine ownership. If the vessel titles underlying contract is drafted on fraudulent titles or documents, the buyers ownership could be rendered void.
Preexisting mortgages or liens. The new owner of a vessel is held responsible for any unpaid taxes, unresolved mortgages and unpaid contract work associated with a vessels title, even if he or she was not privy to them at the time of purchase.
Watercraft buyers may ask for a vessel title opinion before finalizing the sale. While a good vessel title opinion provides some assurance against vessel title disputes, vessel title opinions and abstracts may not always be reliable. Erroneous records, improper documentation, fraud and human error can lead vessel title underwriters to draft faulty vessel title opinions. The only way for the buyer of a yacht or boat to protect him or herself against title complications is to purchase vessel title insurance.
How Does Boat Title Insurance Protect Me?
In addition to performing a thorough investigation of the vessels title history before the sale is complete, vessel title insurance companies provide financial compensation in the event of a lawsuit. Vessel title insurance typically covers the cost of legal defense against attacks on the vessels title; additionally, title insurance will provide compensation for any financial or asset losses caused by a faulty title.
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