Know the Basics to Get the Right Coverage
Whether you’re heading out to buy a boat or already have one, make sure you’ve protected your investment with insurance. Boating is a blast, but accidents happen both on and off the water. Make sure you’re covered ahead of time so you can focus on having fun.
Boat insurance can be quite different from automobile or home insurance, so it’s important to understand how it works.
What kind of boat insurance do I need?
Some states don’t require insurance for watercraft, but some require liability coverage for certain types of boats. For example, some states require insurance for boats with more than 50 horsepower. Check your state’s laws to make sure you comply with its insurance requirements, or ask an insurance agent for advice.
The type of insurance you purchase will depend not only on your state’s laws, but also on what type of boat you have. For insurance purposes, boats are generally categorized as personal vessels less than 26 feet long, while more expensive vessels longer than 26 feet are categorized as yachts. Your insurance policy will be tailored to the category your boat falls under. Specialized endorsements are also available for boats that fall outside those categories or include additional specialization, such as boats used for watersports or for fishing.
Personal watercraft, such as Jet Skis, Sea-Doos and WaveRunners, may be covered as personal property under your homeowners insurance policy’s property and liability coverage. The property coverage is limited by the language of the policy, typically up to $500, and the liability coverage is equal to your homeowners liability coverage. It is wisest to take out a policy specifically for your personal watercraft. If you need to file a claim against your homeowners policy — say, if you injure a swimmer — the claim will affect your eligibility for homeowners insurance. A claim filed against a stand-alone policy, however, will leave your homeowners insurance policy safe.
What will my boat insurance policy cover?
Boatowners and yacht insurance policies typically cover physical damage, liability and medical payments. You may also want to consider purchasing uninsured boat owner coverage in case you have an unfortunate run-in with a boater who lacks insurance or doesn’t have enough coverage to pay for damages.
Physical damage coverage covers the cost to repair or replace your vessel in the case of a collision, fire or lightning strike. It can also cover damage to motors, masts, anchors and other equipment permanently attached to the boat. It may include coverage for personal items stored in the boat. If personal items aren’t covered, an insurance rider can sometimes be added to the policy to cover them. Policies typically cover theft and vandalism as well, so you’re covered both in and out of the water.
Most policies include personal liability coverage in case you damage someone else’s property or cause personal injuries while operating your boat. Some policies may also include guest passenger liability to cover legal expenses stemming from someone else’s use of the boat with your permission.
Medical coverage offers payments for injuries incurred by non-family members during the use of your boat. The limits are often set low for minor accidents, so consider whether those limits are sufficient for your purposes. If not, you may be able to increase the coverage for an additional cost.
Uninsured boat owner coverage (also called uninsured watercraft coverage) ensures you’re not on the hook if you’re involved in a hit-and-run or a crash caused by an uninsured boater. It covers injuries to you or your passengers resulting from another boater with insufficient or no liability insurance. It may not be available in every state, however, and it doesn’t cover damage to your boat caused by an uninsured boater, although your physical damage coverage should cover you in that scenario.
How does an insurance company value my boat?
When it comes to replacing or repairing your boat, you may be wondering how much the insurance company will value the boat and how much money you’ll get if something happens to it. The value of a boat is less easily determined than the value of a car or a house, because the value of the hull is not the only factor insurance companies take into consideration. Equipment and customizations, personal property and the value of the engines can all affect the boat’s overall value.
If your policy covers the actual cash value of the boat, in the event of a total loss it will pay for the cost to replace the boat, minus depreciation at the time the loss occurred. If the boat can be repaired, it will pay for the total cost of the repair less a percentage of depreciation. On the other hand, you and the insurance company may be able to reach what is called an agreed amount value. In the event of a total loss, the policy will pay that amount.
Keep in mind that your policy may include exemptions for which the insurance company will refuse to pay. For example, a policy might not cover damages incurred because a vessel was poorly maintained. Additionally, a typical boat insurance policy won’t cover you if you use your vessel for business purposes, such as commercial fishing or sightseeing tours. If you intend to use your boat for commercial purposes, you’ll need to purchase a commercial marine insurance policy, which can significantly differ from a policy covering personal use.
How much are boat insurance deductibles?
Most boat insurance policies have deductibles of $250 for property damage, $500 for theft and $1,000 for medical payments, according to the Insurance Information Institute, although higher deductibles may be available. Most companies offer liability limits starting at $15,000 that can be increased up to $300,000. Umbrella liability policies may also be available, which provide additional protection for one’s boat, home and car.
An insurance agent can help you navigate all of these questions, determine what kind of policy fits you best and get quotes from insurance companies so you can focus on the waves.