What to Consider When Buying Boat Insurance

Whether you currently own a boat or you’re thinking about buying one, it’s essential that you protect your personal property. You also need to ensure that your legal obligations are met in case you get into a boating accident. No one wants to think about getting into a watercraft accident, but it is a possibility. There are currently thousands of accidents involving boats each year in the US.

Though you can practice safety while boating to keep the risk lower, there’s always a chance something bad could happen.

Who Should Buy Boat Insurance?

If you own your home, you might be under the impression that your boat is covered through your homeowner’s insurance policy. While that might be true, it isn’t always the case. Sometimes, your homeowners’ insurance will offer some protection, but it might not be enough. This means you are under-insured. Those with expensive boats or newer models may find that a separate policy specifically for your boat is the best choice.

You should also be aware that if your boat is stored in a marina, you may be required to carry a marine policy that features specific liability limits. It’s important to check with the marina to find out any particular requirements that you may have to meet.

Every boat owner isn’t necessarily going to need a personal watercraft or boat insurance policy. Remember that boats will depreciate in value quite quickly, much the same as an automobile will depreciate once it’s driven off of the car lot. If you have an older boat, you may find that the cost of buying insurance outweighs the benefits you’d receive if you suffered a total loss of the vessel. It might be possible not to purchase boat insurance at all or purchase an add-on to your homeowner’s insurance policy to get lower insurance premiums and not have to buy a separate policy for your boat.


Generally, you should expect to pay about one to two percent of the current market value of your boat as your insurance premium. However, you could qualify for discounts through the company, which will lower the premium. Just as with automobile insurance, if your boat’s make and model are more expensive, you can expect to pay a higher insurance premium each month. Newer models might also cost more to insure. Plus, you have to consider whether or not you live in a hurricane-prone area. If you do, insurance coverage is likely to cost much more. Many factors are used to determine how much it will cost to insure your boat. These include:

  • Age of the boat
  • Length of the boat
  • Value of your boat
  • Horsepower or speed
  • Condition of the vessel
  • Houseboats
  • Primary residence (are you going to live on the boat?)
  • Location of operation (bay, river, lake, ocean, etc.)
  • Type (performance boat, fishing boat, cruiser, inboard, utility, outboard, etc.)
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Types of Insurance Options

Just as there are many types of boats out there, you’ll also find various boat insurance options available. These can include:

  • Hull Insurance. This covers any damage to the boat or damages that your boat causes to other’s property. It will also cover any boat repair costs. Plus, if there is a total loss, hull insurance can pay the agreed-upon value for the boat.
  • Third-party Liability. You’ll find that this insurance can cover damages that your boat might cause to other’s property. It might also cover incidental damages caused by liabilities happening because of towing, fuel spills, rescue operations, and medical expenses. In some cases, the marina requires you to have third-party liability insurance through the marine.
  • All Risk Policy. This option typically covers you for any risk that’s not excluded from your boat insurance policy. That can include freezing, ice damage, reef damage liability, pollution liability, and mechanical breakdowns. Often, medical insurance is available as riders to the policy.
  • Agreed Value or Actual Cash Value. These terms refer to boat policy packages and will determine whether the insurance company pays an actual cash value of the boat or an agreed-upon amount, which is predetermined when the policy is purchased. In some cases, actual cash value policies might cost less. However, the agreed value policy will help you secure the full amount you can get for the boat if total loss happens. This is regardless of depreciation, though sometimes, partial losses could be depreciated.
  • Yacht. Yacht insurance is designed to cover boats that are longer than 27 feet. You’ll need a special policy because these bigger ships usually have more exposure than a smaller one.
  • Boat Club. This type of insurance can cover all of the members in a boat club, but only when they are operating that particular vessel. In most cases, it only covers liability and property damages.
  • Professional Anglers, Charters, or Fishing Guides. Policies for these people/companies are designed to cover equipment and travel required for fishing tournaments.

Types of Boats Requiring Insurance

While there are seemingly endless boat styles, they can all be summed up in a few options. Boats that do not need insurance can include anything with a small engine, canoes, and slow, inexpensive, or small boats.

Those that will need boat insurance can include personal watercrafts, such as WaveRunners. Also, jet boats, large sailboats, yachts, and boats that go faster than 25 miles per hour need some kind of insurance.

Possible Discounts

Sometimes, you may be qualified to receive a discount. This can help to reduce the cost of insurance for your boat. Many times, companies offer discounts to owners of vessels with a boating license. Often, you might get a discount if you store the ship under a structure, including a shed. You might also qualify for discounts if the boat is regularly inspected by the CGA (Coast Guard Auxiliary). When you use all available rebates, you’ll get the best value on your insurance policy and pay a lower premium.

Other discounts can include:

  • Owning a diesel-powered vessel
  • Not having made previous claims against the insurance company
  • Taking appropriate safety courses (and passing)
  • Carrying other policies through the insurer, such as homeowner’s or car insurance

Of course, the price you pay is dependent on how much insurance you get, as well as other determining factors. It’s possible to choose your deductible, as well. This is the amount that you pay out of pocket when there is a claim. Often, it is deducted from the check you receive, so you don’t actually have to give money to anyone.

Typical policies have deductibles of around $350 for any property damage, $1,000 for any medical payments, and $500 to cover theft. For liability claims against you, there are no deductibles that you are required to pay.

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What Your Insurance Will Cover

Though every policy is likely to be different, you can expect most of them to cover and not cover certain things. Generally, liability insurance is what you’ll get, which will pay for any damage your boat might do to others. Amounts can range anywhere from $15,000 up to $300,000.

Your policy is likely to cover:

  • Damages or destruction from fire, collision, theft, vandalism, and lightning
  • Damage to boats and any permanently attached equipment, including anchors
  • Property damage liability that can pay for damages that your boat causes to the property of someone else
  • Bodily injury liability that can pay for expenses when someone gets hurt while on your boat
  • Medical payments that pay the expenses for your passengers and yourself if injured
  • Guest passenger liability that can pay for any legal fees for someone who drove your boat with your permission

Generally, your boat insurance will not cover:

  • Normal wear and tear
  • Damage from insects, mold, or zebra mussels
  • Damages from other creatures, including sharks
  • Machinery damage or defective machinery

Also, it is important to check about additional coverage for any accessories or trailers, as well as towing and damages caused by uninsured or underinsured boaters.

There are two options for damage coverage. Actual cash value pays the value amount of your boat when the damage occurred. If the boat is completely destroyed, the insurance company will determine market value and only pay you that amount.

The other option is the agreed amount value. You and the insurance company decide ahead of time what value should be attached to the boat. If it is destroyed, the insurer pays that amount. Sometimes, the boat can be repaired. When that happens, the insurer is likely to replace any old items for newer ones and won’t deduct for depreciation.

You should also be aware of what your insurance covers before you head out on the water. Consider whether or not your policy covers these scenarios:

  • Salvage. If the boat is disabled and basic towing won’t help, you may need to call on a salvage company to pick it up. Generally, these companies ask for a percentage of your boat’s value for payment. This can get very expensive. It’s important to note that not all insurance companies provide this coverage. You can ask about it or see if it can be added on.
  • Mechanical breakdown coverage. This type of coverage will pay to replace or repair the outboard motor, just as long as it wasn’t caused by wear and tear. However, most insurance companies do not offer this option because most engines do end up needing to be replaced because of routine wear.
  • Gadgets. Most boat insurers will not cover any expensive accessories, which can include fancy coolers and fishing equipment – that is unless they are permanently attached to a boat. For example, one popular insurance company provides personal property coverage that will pay you if the equipment is lost or stolen while you’re out on the water. You may also have endorsements, which are additions to the policy. This can help to increase the value of personal property limits.
Photo by Trace Hudson on

There are also some things to know about your policy and boating. These include:

  • Layup periods. If you take your boat out of the water during cold weather, this is considered a layup. You might get a credit from your insurance company because you’re clearly not using the boat during this time. However, if you choose to take the boat out, such as on a particularly warm winter day, and the layup period hasn’t ended, you aren’t covered by the insurance policy. Therefore, if anything happens, you will have to pay for the damage yourself.
  • Navigational limits. If you own a large boat or yacht, your policy is likely to have limits that tell you where you can take your vessel. Venturing outside the territory to which you agreed in the policy means that the insurance might not cover your ship. Generally, if you have a broad navigational area, your insurance costs are likely to be higher.
  • Underage operators. It might be tempting to let a 12-year-old drive your boat every so often. However, if your child does meet the license and age requirements in the state, your insurance policy for your boat might not cover any damages done while your child was driving. It is important to note that license and age requirements for operating a personal watercraft can vary between states. For example, in Florida and Virginia, people under age 14 can’t drive a personal watercraft. In Texas, the age limit is 13 and under from driving. However, if a licensed operator of 18-years or older is on board, that limit is void. You should check the boating regulatory agency for your state to see requirements.
  • Marine inspections. Most insurance companies want you to have the vessel inspected by a marine surveyor if it is older. This ensures that the vessel is in good condition and can determine market value.

Boating is a great way to relax with your family and friends. However, you won’t feel comfortable on the water if your property isn’t protected. If you aren’t sure if you need insurance yet or you don’t know which policy is best, you can always talk to your local insurance agent. Schedule a consultation and talk about what you require and need so that you get the coverage you want.

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