Boat Insurance Guide

When it comes to insuring your boat, it can be confusing and challenging, especially if you’ve never had boat or watercraft insurance before. If you are a new boat owner, it might surprise you to learn it could be better to separate your boat insurance from your homeowners’ policy, depending on your specific situation.  Some homeowners’ policies limit or don’t cover marine-specific risks such as salvage work, wreck removal, pollution or environmental damage. However, there are exceptions.

Some homeowners’ policies do, in fact, include perfectly good coverage for smaller boats and motors, usually with a horsepower limit of from 25 to 100-horsepower. While homeowners’ riders are normally adequate for these boats, it is important to understand what happens if there is damage to your vessel and how any insurance claims would be paid. Also, most homeowners’ insurance riders apply only to use in inland waterways, lakes and rivers. Coverage seldom extends outside a coastal inlet or along the beach! If you plan to boat outside the inlet, you definitely need an experienced marine insurer and United Agencies can help!

We will address, on this page, types of boat insurance, costs, and include some Frequently Asked Questions that will help shed light on the matter.

Insurance Factors

Types of Boat Insurance Coverage

This will depend on the type of policy, but common coverage add-ons (in addition to basic ones above) include:

• Specialized Coverage: Coverage for something specific on your boat like an expensive prop or navigation equipment.
• Salvage: Coverage that pays to remove your boat due to damage, from substantial to minor.
• Consequential Damage: Covers a loss that was the result wear and tear rather than an accident (rot, mold, corrosion).
• Towing: Towing your boat across a body of water to safety can cost $400 per hour.
• Cruising Extension: You can get temporary, additional coverage if you plan on leaving the USA (typically to Mexico or the Bahamas).

Insurance Claims

Hopefully, you will never need to make a claim but if you do, it’s good to be prepared. You are not required to carry proof of insurance on your boat, but it’s a good idea keep claim information handy for an emergency. Ask how the claim process works when you’re shopping for policies. Naturally, it should be quick and easy. In addition, find out if your agent (or other representative) will be available if you need help dealing with the aftermath of a claim, such as arranging for towing or salvage, rather than just cutting a check and leaving.

Boat Insurance Cost Factors

 Many factors are used to set the cost of a policy, and they vary among insurers. Here are some items to consider:

• Cruising Area: Where you boat.
• Good Driving Records: Both boating and driving.
• Boating Safety Education: If you have been formally trained or certified.
• Liability Limits: The higher the limit the higher the cost.
• Deductible: The higher the deductible the lower the premium.
• Towing Insurance Requirements for Offshore Fishing (for example, a 20-mile tow could cost $3,000).

Frequently Asked Questions (FAQ)

Boat Insurance Coverage FAQ For Small Boat Insurance (29′ or less)

What is the best coverage for my boat?

It is best to have what is known as an “All Risk” policy, which will provide coverage for all types of losses except those specifically excluded in the policy. Typical exclusions may include wear and tear, gradual deterioration, marring, denting, scratching, animal damage, manufacturer’s defects, defects in design, and ice and freezing.

How much should I insure my boat for?

You should insure your boat for the amount it would cost you to replace it with like kind and quality. This is called “Agreed Value” or “Stated Value” coverage, and in the event of a total loss, will pay the full insured amount. Beware of policies providing “Actual Cash Value” (ACV) coverage, which means the value of your boat will be replacement cost less depreciation.

What other coverages can I expect with my policy?

The following are standard coverages with standard deductibles and average limits:

• Medical Payments: $5,000
• $1,000 Limit Personal Effects: $250 deductible
• Uninsured Boaters Liability: Between $300,000 and $500,000
• $500 to $1000 Limit Towing and Assistance: No deductible
• $1,000 limit Fishing equipment: $250 deductible

Who is allowed to operate my boat?

Most policies will allow anyone to operate your boat so long as you have given them permission. There are exceptions, of course, especially with high performance boats or personal watercraft so always read your policy. But beware! Too many additional drivers can result in increased premiums.

I live in an area where I can’t use my boat in the winter, but my lender requires it be insured year-round. What can I do?

Ask your insurance agent if they offer what is commonly referred to as a “lay-up” discount. You have year-round coverage with a discount for the months your boat is in dry storage.

For Large Boat Insurance (29′ or more)

What are the differences between boat and yacht insurance?

Generally, boats are considered to be 26′ and smaller, and “yachts” are 27′ and larger. Generally speaking, yacht coverage is broader and more specialized because larger boats travel further and have more unique exposures.

What should I look for in a yacht policy?

There are two main sections of a yacht policy. Hull insurance is all risk direct damage coverage that creates a very broad insuring agreement. It will include agreed amount hull coverage, meaning all parties agree at the time the policy is written on the value of the vessel and that value will be paid in the event of a total loss.

A true yacht policy also includes replacement cost (new for old) coverage on partial losses, with the exception of sails, canvas, batteries, outboards and sometimes outdrives, which are depreciated. Protection and indemnity insurance is the broadest of all liability coverages, and because maritime law is unique, you will need coverages that are designed for those exposures. Such things as Harborworkers and Longshoreman’s coverage and Jones Act (crew) coverage can be critical, as an uncovered loss in this area could run into hundreds of thousands of dollars. Besides providing payment of judgments against you, P&I also provides for your defense in Admiralty Courts.

What is a normal deductible?

A yacht policy usually carries a percentage of the insured value deductible, for instance a 1%, deductible means a boat insured for $100,000 would have a $1,000 deductible. Most lenders allow a maximum deductible of 2% of the insured value. Beware of “named special deductibles” such as storm damage of 10% or more.

What are some of the other standard coverages I can expect?

These standard coverages have standard deductibles and average limits:

• Medical payments, $10,000 limit
• $5,000 limit personal effects, $250 deductible
• $500,000 limit uninsured boaters liability, no deductible
• $1,000 to $3,000 limit Towing and assistance, no deductible
• $1,000 limit Fishing equipment, $250 deductible
• $1,000 Hurricane haul out coverage. Small percentage of limit as deductible. Hurricane warning must be posted by NOA. Payment made to move boat to safe location, haul out or make special preparations to withstand storm.

What is Breach of Warranty?

That is coverage that primarily protects the lienholder’s interest in your boat, paying off the balance owed but nothing more. If you breach the warranties in the policy, such as promising not to go outside your navigational limits, not to use your boat during the lay-up period, not to use your boat for anything but private pleasure use, and you do NOT have this coverage and experience a loss, you don’t get paid for that loss and neither does the lender. You could end up making payments on a boat you cannot use.

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