Boat Insurance 101

Insuring Boats and Personal Watercraft

Boat Insurance 101
July 22, 2014

Summertime is the perfect time of the year if you are a boat owner. You can beat the heat by heading out to the lake with family and friends – and if you have a boat, you will definitely have plenty of friends. Time on the water is supposed to be carefree and enjoyable, so spend some shore time making sure that your boat is properly insured for your summertime fun.

Do you even need boat insurance? For the majority of people, the answer is yes. Homeowner's coverage may cover the value of a simple craft with a small engine or none at all, but a boat of any significant value requires separate insurance. Personal watercraft will be outside most home coverage as well.

Insuring a boat entails different risks. There are risks on the water, risks in transporting it to the water, and risks in storage on and off the water. In addition, since boat insurance is not required, you have a higher risk of damage caused by an accident with an uninsured boater.

As a result, you can find a wide variety of boat insurance policies tailored to specific crafts and risks. However, they are going to have basic similarities:

  • Damage – Includes coverage for damage to your boat, typically while on the water – although some policies extend to transport and storage off the water. Without such coverage, your auto policy would cover transport damage while towing your boat on land.

    Storage policies must be clarified between boat and homeowner's policies if stored at home, or between boat insurance and any contracts signed for storage at docks or winter storage at in land-based facilities.

    Policies may be "all risk" (covered if not specifically excluded), or they may extend to specific listed conditions such as fire, collision/sinking, weather-related damage, and theft or vandalism. Choose a damage plan that best fits your budget and conditions.

    Payments may be either "agreed value" (ignoring effects of depreciation of the craft and many parts, and paying for replacement as if new) or "actual cash value", which includes depreciation and condition of the craft for cash payments. As you might expect, premiums are higher with agreed value policies. Remember that your insurance premiums could also depend on your credit score. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.

  • Liability – This covers injuries or property damage caused to others, as well as lawsuit protection, based on your boating actions. It is similar to auto liability policies but has some unique coverage elements, such as costs to remove your boat if it is a navigational hazard or to clean up any environmental hazards such as spilled fuel.

    Medical liability coverage may be split based on coverage for you and your passengers vs. third-party injuries, so be clear on who your policy covers and to what amount.

Additional coverages can include Personal Property for stolen or damaged personal items, Assistance policies for roadside assistance in transport to the lake or towing assistance if stranded on the water, Liability for dock contracts while stored on the water, Extended Cruise Coverage outside traditional US waters – even Pet Insurance. Check your options and buy what you need, but make sure you understand what you buy.

How can you save money on boat insurance? Discounts are often available in ways similar to automobiles – for example, through safe boating classes and a history of safe boating or personal watercraft operation. There may also be a "lay-up" period where your coverage is suspended while your boat is out of the water, saving money – but in that case, make sure your off-water storage is covered by other means.

Since most leading car insurance providers offer some form of boat insurance, you may be able to save money through bundling your policies. However, it is worth comparing such a policy with one provided by a marine insurance specialist. They may be able to provide policies that are more specific to your craft and situation. Then you can decide if the extra or tailored benefits you receive are worth the cost.

With proper boat insurance (and life vests, of course), hopefully all you will have to worry about on the water is sunburn and running out of food and drinks. A little planning in those areas is also a good idea.

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