If you own a boat, you probably think about skimming across the waves or spending long afternoons out on the water. Boat insurance is probably the furthest thing from your mind. But boats need insurance, too. Just like cars and homes, boats can be damaged or cause injury or damage to people or property.
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Many states require a minimum amount of liability insurance on your boat. And if you have a boat loan, your lender probably requires you to carry insurance for the boat itself. Additionally, many marinas and yacht clubs won't allow you to dock your boat unless you're insured. Whether required or not, it's a good idea to protect your investment.
Homeowners insurance usually includes limited coverage, such as $1,000 for damage to your boat while stored at your home. Home insurance may also provide a small amount of personal liability coverage to protect against claims from accidents you cause with your boat. Jet skis and other personal watercraft are typically excluded from homeowners insurance coverage.
What boats can I insure?
Most typical insurance companies insure most types of boats. These include small fishing boats, speedboats, sailboats, canoes and houseboats. You'll probably need to search for a company specializing in boat insurance if you have an unusual boat, such as:
- Houseboats used as a main residence.
- Amphibious or exotic boats.
- Boats with excessive horsepower or capable of speeds over 75 mph.
- Boats used for business or commercial purposes.
- Boats traveling beyond 75-125 nautical miles from shore.
- Personal watercraft (e.g., jet skis).
What does boat insurance cover?
Boat insurance policies often resemble auto insurance policies. Just like car insurance, policies vary between companies, but the main types of coverage are bodily injury/property damage liability coverage and physical damage coverage. Other optional coverages often include medical payments coverage and uninsured/underinsured boater coverage.
- Property Damage liability - can pay for expenses resulting from property damaged in an accident you cause, like replacing or repairing a boat, a dock or other structure, as well as defense costs.
- Bodily Injury liability - can pay for expenses related to injury to others in an accident you cause. These expenses could include medical bills, lost wages, and pain and suffering, plus defense costs.
- Uninsured/underinsured boaters coverage - similar to Uninsured/underinsured motorist (UM/UIM) coverage. It can pay for things like bodily injury, lost wages, and pain and suffering for you, your passengers and your family members in an accident caused by a boater with no insurance or insufficient insurance. With the economy still souring, it's likely that people are dropping boat insurance as well, so this coverage is essential.
- Medical Payments coverage - can pay for a smaller amount of medical or funeral expenses for you, your passengers and others on your policy. Water sports coverage extends this protection to waterskiing and similar activities outside of the boat.
- Physical Damage coverage - protects your boat itself - and its towing trailer, if you want. The options for this coverage, from highest cost to lowest, are total replacement, agreed value, and actual cash value.
- Total replacement will replace your boat with a new boat of the same type and is usually only available for boats less than two years old.
- Agreed value will pay the amount listed on your policy, but is lower than the replacement cost of the boat.
- Actual cash value pays you the market value of the boat.
These options all have deductibles.
Special boat insurance coverages
Because boats live on the water and have special needs, there are some specialized coverages you can add.
- Fishing equipment coverage - covers fishing supplies on the boat or while being transferred on or off the boat.
- Personal property coverage - covers personal effects on the boat or while being transferred on or off the boat.
- Roadside assistance - covers the boat during towing, and sometimes even the tow vehicle.
- Fuel spill/accident cleanup - covers removal of debris from an accident.
Many boat insurance discounts are similar to auto insurance discounts. Here are some specific to boats:
- Fire suppression system discount - fires on the water can quickly destroy a boat, so these systems can be lifesavers.
- Diesel fuel discount - diesel isn't as flammable as gasoline, so it's safer.
- Safety device discount - depth-finders and other safety devices make boating less risky.
Boat insurance may not be required, but it's always a good idea. If you're lucky enough to have a boat, protecting it and your assets with boat insurance is a smart choice.
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Originally posted September 16, 2004.