A Complete Guide to Boat Insurance

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A Complete Guide to Boat Insurance

By: Boater's Choice Insurance
A Complete Guide to Boat Insurance
There are many joys of owning a boat. You can cruise with friends, fish, enjoy tow sports, island hop and more. On a more serious note, you also want to purchase the best boat insurance policy available to protect your passengers and your investment.

To learn more about what a boat insurance policy covers and where to get the best rate, you came to the right place. This all-encompassing guide covers everything you need to know about boat insurance and where to go for more information. 

What is Boater's Insurance?
Boat insurance provides financial protection against damage to passengers, other watercraft, as well as the equipment and machinery of your boat. The boat insurance industry doesn't use “collision” or “comprehensive” terms to explain their coverages.
  • Hull insurance covers damage caused by sinking, fire, storms, theft, and collision to the equipment and machinery of your boat.

  • Boat liability coverage pays for injuries to others as well as damage caused to other boats, docks, piers, and more.

If you are familiar with what collision and comprehensive coverage are for your automobile, hull insurance is the equivalent coverage. Boat insurance is also broad and may include dinghies/tenders, sails, spars, fittings, outboard motors, and other equipment used for the maintenance and operation of the boat. 

What Affects Boat Insurance Cost?
Before we can get into the cost of boater's insurance, there are a few factors you should be aware of. All boat insurance companies use different factors to determine if they will offer you a policy or not, and then the cost of your coverage.  

Factors that insurers incorporate when determining boat premiums:
  • Length of the boat
  • Vessel type
  • Vessel use (e.g., racing, fishing, towsports)
  • Age of the watercraft
  • Horsepower
  • Boat’s current value
  • Vessel condition
  • If the boat is used as a primary residence
  • How long you have owned the watercraft
  • Where you plan operate the vessel (inland lakes, rivers and causeways, offshore or open water)
The average cost of a general boat insurance policy can be influenced by the types of coverages you have on the policy. The premium will most increase if you have a larger vessel. In some instances, your insurance company may take your driving record into account. If you complete any safe-boating courses, you may receive an additional discount. 

Types of Boat Insurance
There are two kinds of boaters' insurance: agreed value policies and actual cash value policies.

Actual Cash Value Policy
With an actual cash value policy, the policy will only pay up to the current actual cash value of the boat when it is deemed a total or partial loss. That’s because actual cash policies factor depreciation into the replacement value. As your boat ages, your boat insurer will most likely reach out to you about switching over to an actual cash value policy to lower your premiums. 

Agreed Value Policy
Agreed value policies cover the boat based on the boat's value at the time of the policy creation. These policies cost more upfront, but there is no depreciation for the total loss of the watercraft. If there is a partial loss, you may have a depreciated loss, but these policies are still better in the long run. 

What Boats Can I Insure?
As mentioned earlier, you can insure almost any vessel – new or used. This includes personal watercraft, dinghies, yachts, sailboats, and inflatables. If you belong to a boat club, the vessels in the fleet are typically insured. If you plan to lease your vessel to a boat club, however, you can obtain your own personal boat policy as well, if needed. 

What Does a Boat Insurance Policy Cover?
Like car insurance, boat insurance policies provide financial assistance in certain situations. For example, if your boat gets into an accident and sustains damages, you can use your property coverages to pay for the repairs.

Property coverage also protects your vessel against theft or sinking damages. This coverage applies whether the boat is on land or in water. 

If you have an actual cash value coverage and your boat is a total loss, you will only receive the cash value of the boat at the time of the accident. Replacement cost coverage, also known as agreed value, reimburses you for the amount of money needed to repair your boat back to its condition prior to the accident. 

Liability Coverage
If your boat damages another person's boat or property, liability coverage will take care of those repairs if you are at fault for the loss. This also applies to any injuries caused by your boat. Plus, your boat insurance policy will cover legal fees resulting from a boating accident. 

Medical Payments Coverage
If you become injured while operating your boat, medical payments coverage can be applied to your medical bills. Passengers can also use it to help cover bills for injuries that occur while onboard your watercraft.  

Uninsured Watercraft Coverage
This coverage is similar to uninsured motorist coverages that are included in automobile policies. If an uninsured boater causes damage to your watercraft, you can use this coverage for the repair costs.

Uninsured watercraft coverage will also pay medical bills for you and your passengers. However, not every state provides this coverage. So, confirm eligibility with your insurance agent for more information. 

All Risk Policies
An optional "all-risk" policy provides additional insurance coverage. But this type of policy does not cover all kinds of losses. Instead, "all-risk" simply means your insurance policy can cover any risks not omitted in the policy. Of course, there are typical exclusions such as wear and tear and weather-related damage like anything caused by ice or freezing conditions. 

What Doesn’t Boaters’ Insurance Cover?
There is no such thing as a “one size fits all” boat insurance policy. Depending on where you boat, how the vessel is used, accessories and other customization, and where-and-how you store the watercraft, you may need to modify or add coverages to your policy to provide optimal protection to suit your boating lifestyle. 
Additional boat insurance modifications and endorsements to consider include:
  • Towing
  • Boat trailers
  • Boating accessories
  • Custom equipment
  • Special trip endorsements
Wear and Tear
Although most policies don't cover wear and tear, you can add consequential damages to your policy. This additional insurance will cover some losses that result from wear and tear to the watercraft. 

Special Trip Endorsements
If you plan to venture outside of U.S. waters in your boat – like to the Bahamas or Mexico – let your insurance company know. Most boat insurance policies will only cover your boat while it’s in U.S. territorial waters. So, you’ll want a special trip endorsement to provide temporary coverage while you boat in international waters.  

Boat Accessories 
Most insurance companies do not cover equipment and accessories unless it is otherwise specified in the policy.

Typical gear not covered by basic boater's insurance policies:
  • Electronic equipment, including radar, navigation/GPS systems, and fish finders
  • Life jackets
  • Boat modifications
  • Anchors
To make sure all areas of your boat are covered, talk to your insurer about accessories and customizations. Most will advise that you add personal effects coverage and supplemental boat coverage to ensure you have adequate protection. 

Most boat coverage won’t protect your boat against boat races or other special events. If you plan to use your watercraft for competitions, make sure you speak with a specialist about adding coverages to protect you and your boat.
You may also want to ask about additional liability insurance. Should a boat collision occur while racing, you want to have enough coverage for your vessel and the other driver's boat. 

Unnamed Boat Operators
Like an auto policy, boat insurance only covers specific drivers who are named on the policy. If you allow someone to drive your boat – and they are not listed on your policy – your insurance may not cover any damages. 

Boat Use Clause
A common question most boaters ask is, "how can I use my boat?" Most boater's insurance policies are administered with the assumption that you will only use the watercraft for private pleasure use. For instance, entertaining guests on your boat typically does not violate your "use clause."  

However, if passengers pay to ride your boat, you could violate your use clause. Similarly, if you rent the boat out for other uses, you will need to notify your insurer immediately. Otherwise, if you are involved in a boating accident and your insurer learns your boat was being used for business purposes, they may not pay for any damages. 

If zebra mussels, barnacles, or termites damage your boat, your insurance company might not cover the repairs. Most insurers exclude damage from mold, insects, and animals from watercraft policies. Proactive maintenance can help prevent such damage.

Faulty Machinery, Parts or Accessories
Basic boater insurance policies do not cover any parts or machinery that need repairs or replacing due to lack of maintenance or improper use. However, if boat machinery or parts are damaged by a covered peril, your insurance company may cover those damages. Since each insurance company operates differently, you will want to talk to your insurance agent to learn what’s covered and whether an extended protection plan is advised.  

Improper Transportation and Storage
Boat coverage is typically needed year-round, but discounts may be available while a boat is stored off-season – also known as a winter lay-up period. Most basic policies cover vandalism, theft, fire, and winter storms in the off-season. Check with your insurer to learn more.

However, if your vessel is damaged while stored incorrectly – or as the result of improper transport – you will be responsible for any damages. For example, if you don't tie down the vessel properly prior to transit to a storage center and it falls off the trailer, your boat insurance will not cover the resulting damage.  

What to Do After a Boating Accident
Whenever you are boating, keep a copy of your insurance policy onboard. If you are involved in a boating accident, there are a few key steps to follow.   

Check for Injuries
Assuming the boat is still afloat, check to ensure everyone is okay. Perform a head count to ensure that all passengers are accounted for. If anyone has fallen overboard, take immediate steps to locate the individuals and pull them back on board. 

Administer First Aid
If there are severe injuries, call emergency services immediately. For minor scrapes and bruises, utilize your onboard first aid kit. 

Protect the Boat from Further Damage
In areas with high boating traffic or where large vessels operate, you will want to move the boat out of harm’s way. If you cannot move your boat, call emergency services right away to make them aware of your situation.

Once everyone is safe and the boat is moved to a low-traffic area, you may need to file a police report. When reporting the details of what happened, do not admit fault. There may be other factors that you weren't aware of that could shed light on what happened and how. 

Document the Information
Even if the police arrive on the scene and make a report, you should document as much information as possible. Sometimes, police reports aren't available for days. 

Information to gather before leaving the scene:
  • Photos of damages
  • Names of passengers on your boat
  • Names of passengers on the other boat
  • Driver's information for the other boat
  • Boat insurance information
  • Contact information for all parties involved
  • Any witness information (if applicable)
  • Boat registration numbers
Capturing these details before you file a claim can help in the long run. Keep in mind that even after providing a statement to the police, you will also need to talk with your insurer, and the information above will streamline that process.

How to File Boat Insurance Claims

Hopefully, you won't ever have to file a boat insurance claim. But if you are involved in a boating accident, follow these steps to make sure your claim isn’t denied.

  1. Notify Your Insurance Company Immediately

  2. Take all reasonable steps to protect the boat from further damage

  3. Wait to begin permanent repairs; Do not dispose of damaged parts until the insurance company inspects the damage

  4. Refer to your policy booklet to comply with any other requirements set forth by your insurance company

Do I Need Boat Insurance?
Very few U.S. states require you to carry boater's insurance for your watercraft. However, marine lenders will require proof of insurance. Plus, you will likely need insurance to keep your boat docked at a marina.
Even if your state doesn't require you to carry boat insurance, you should still consider purchasing a policy. If you cause a boat accident, you will bear complete responsibility to repair your watercraft, damage to other vessels or structures, and injured passengers’ medical bills.

How Can I Get a Discount on Boat Insurance?
There are numerous ways to reduce your boat insurance premiums. For instance, some insurance companies offer discounts for people who complete boater education classes. Insurers will also reward good automobile driving records with lower boat insurance premiums.

If you store your boat in a boatyard or similar storage facility during winter, insurers will offer a discount for what’s called a “winter layup.” Depending on the insurance company, you may be able to bundle coverages with auto, renters, or home policies. But not all insurers offer boaters insurance. When in doubt, call your insurance company to confirm what’s covered. 

Purchase the Best Boat Insurance 
Protecting your vessel is more than routine maintenance and repairs; it is also about protecting your financial interests. Boating accidents happen all the time, so it is better to have the right amount of coverage before hitting the open water. Start by getting a free quote or speak with one of our insurance experts to find out how much money you can save on your boater's insurance policy.