When do I need boat insurance?
Unlike car insurance, not all states require boat owners to have boat insurance. Those that do, as a rule, require only minimal liability coverage, in case you or your boat cause damage to another person or their property. So from a purely legal perspective, how much insurance you carry, or whether you carry it at all, is largely up to the owner. That doesn’t mean you can, or should, try to get by with minimal coverage. There are a few situations that call for carrying larger amounts of boat insurance:
- If you have a loan on your boat, your lender will likely require you to carry a specified amount and type of coverage to limit their potential losses if it is destroyed.
- If you dock your boat at a marina, they usually require a specific amount of liability coverage in case your vessel somehow damages their facilities or other boats. Depending on the type and size of the marina, they may require you carry as much as $1 million in liability.
Many people think that they can simply use an endorsement on their homeowner’s policy to cover their boat – and this is true in some cases. But usually, it only applies to very small boats that either have no motor, such as rowboats and sailboats, or very tiny motors. If you go this route, you’ll want to carefully review your home policy to ensure that it provides the coverage and limits you truly need. Generally, if your boat costs $10k or more, your homeowner’s policy is unlikely to be sufficient.
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For larger boats that are stored on your property, your homeowners policy may provide some protection for damages incurred from, say, a falling tree branch. But again, the coverage limits will come into play and may not provide enough protection. If your boat will be on land a fair amount of the year, an umbrella policy, which offers additional coverage for these situations, may be a good option.
What does boat insurance cover?
Boat insurance isn’t that different in its structure from policies you would use to insure your car. But some of the terminologies are different and because a boat (and in this case, “boat” refers to any watercraft) spends most of its time in the water, and part of its time being trailered or stored, it faces different risks, which require different insurance policies.
The three basic parts of a marine insurance policy are:
- Hull insurance – coverage for damage to, or loss of, your watercraft, usually at what is called “agreed upon” value
- Liability insurance (also known as third-party liability) – coverage for any expenses incurred by others in accidents for which you are at fault
- Comprehensive insurance – coverage for other, non-accident damages and expenses, such as vandalism, theft, fire, emergency tow assistance and contents coverage.
First-time boat owners are often surprised by the high liability limits (usually starting at $500k or $1 million) that are recommended but considering the unique types of mishaps a boat can encounter the numbers make sense.
Let’s say you have you boat docked at a local marina and it becomes unmoored in a storm when you aren’t around. It is likely that the loose boat could get blown into other boats or waterside marina facilities like the docks, a snack bar, etc. It could spill its fuel into the water, sink, and someone could be injured in the process. A few minutes of chaos could leave you on the hook for liability damages to multiple parties, environmental cleanup costs, medical payments, and salvage operations to remove the wreck from the water.
The costs can add up fast, and you’ll want to have a policy that is broad enough to cover you for all these kinds of expenses.
Other watercraft insurance options
Aside from the main forms of watercraft insurance discussed above, there are some specialized issues that you should consider when determining what kind of boat insurance policy is best for you and your needs.
Consequential damage – Watercraft policies don’t pay for damage to a part that fails due to mechanical wear and tear or lack of maintenance. But if a small part below the waterline fails you could find your entire boat underwater – and your costs astronomically higher.
If your marine policy doesn’t include “consequential damage” coverage, then the carrier will not pay for the damage resulting from that original tiny mechanical issue. Policies that do have it provide extra protection – but at an extra cost.
Fuel spills – Any accident involving a watercraft runs the risk of having the fuel spill into the water – and when it does, you’ll need to pay to clean it up. Most boat insurance policies include coverage for this kind of expense under their liability protections. But some carriers are starting to include limits on this particular coverage; for example, they may only cover fuel spill expenses that occur during another covered event, such as a collision with another boat. If your boat spills fuel due to a mechanical failure, the policy may not cover it. Most policies offered by maritime insurance companies also will not pay for any fines or penalties you face (from the government or private organizations) related to fuel cleanup. Be sure to review your boat policy carefully, so you understand what is and isn’t covered.
Hurricanes – If you live, or just cruise in, hurricane-prone areas (yes, this includes low-risk areas such as the Northeast U.S.), make sure your boat policy includes coverage for hurricanes. And expect to pay more for the benefit.
Personal watercraft – If you have personal watercraft, such as a Jet Ski or similar item you need to make sure your policy includes that coverage. Typically, you’ll need to buy an endorsement to add it to your standard boat insurance policy. Policies like jet ski insurance are also available from many boat insurance companies.
Salvage operations and wreck removal – If your boat was displaced by a storm, or sunk in an accident, you’ll need salvage or wreck removal services to get it back where it needs to be. But many boat owners have been surprised to learn that while their marine insurance does provide coverage for these, it is a small limit – only a fraction of the boat’s value. Or those payments may be deducted from the rest of your payout for repairs, etc. And some carriers will leave you to figure out how to get the job done.
Ideally, you want a boat insurance policy that covers these services up to your liability limit, from a carrier that offers assistance in doing the work as well.
Yacht Insurance – Insuring a yacht is similar to insuring any other boat except, just like a yacht, the policy is bigger and a lot more complicated. If you have the fortunate problem of needing to purchase yacht insurance make sure you choose a policy that offers additional protection for things like contents/personal belongings (similar to the coverage provided by renters insurance policies) that is sufficient to the kinds of items you have on board. Typically, comprehensive coverage will be your best bet.
If you pay a crew or captain to work on or maintain the boat in the off-season, your policy should also provide coverage for worker’s compensation and related liability expenses (separate from your other liability coverage).
Advise your agent or broker of any other activities you use the yacht. For example, if you participate in boat shows, sport fishing or races, make sure your policy extends coverage to include those activities. Dinghy insurance coverage is typically included, but make sure it extends to secondary items you use like jet skis.
What doesn’t boat insurance cover?
No marine insurance policy covers everything – you need to be aware of this when seeking a boat insurance quote and pick the type of policy that works best for the type of boat you have and how you plan to use it. Keep in mind some of the following considerations when you are comparing your boat insurance policies and quotes.
When your boat is being towed or trailered, your auto policy automatically overrides your boat coverage. This means it is still covered, but now whatever limits are on your car insurance policy apply if there is an accident. So you whenever you buy a new boat that you plan to tow even occasionally, you should review your auto policy to make sure it offers enough protection to cover your boat or Jet Ski.
Where you plan to operate your craft can make a significant difference in which policy you select. Many policies restrict their coverage to U.S. coastal. So going out for a day trip cruise from your Florida home base would be covered. But if you have the desire (and the kind of boat) to keep on cruising and tour the Caribbean, your policy would no longer cover your craft. Not only would you be on the hook for any damages or even a vessel lost that occur in those international waters, but emergency tow assistance would not apply – not a situation in which you want to find yourself.
So even if you only think you might stray from U.S. waters, be sure you either have a policy written for international trips or one that you get an endorsement that covers such trips.
Note: If you have a “coastal waters only” policy and just want to take one trip outside those boundaries, you can usually get a temporary coverage extension. If this is a possibility, check with your agent or broker to see what options they offer.
What will boat insurance cost?
It’s hard to accurately predict cost of marine insurance because the size and type of the boat can vary dramatically – and that makes the boat insurance quotes vary significantly too. But a good way to estimate your costs is to plan on your yearly premium being roughly 1%-2% of the value of your boat.
For example, if you have a small boat for family fishing trips worth about $15k, your annual premium for a “standard” policy that includes hull, liability and emergency towing, will be about $150-300. If instead, you’re shopping for a yacht insurance policy on a vessel worth $300k, your premiums will be in the ballpark of $3k-$6k.
While you want to buy an insurance policy that’s as robust as you need it to be, there are a number of ways you can reduce your boat insurance rates. Most carriers offer discounts for taking certain safety-related steps or for differences in how you use and store you boat. Some of these include:
- getting a Coast Guard safety inspection
- having a boat license
- storing your watercraft out of the water and/or in a covered location, such as a garage
- taking a boat safety course
- demonstrating that you have adequate safety equipment onboard (life jackets, fire suppression, back up radios, GPS, etc.)
Where you use your boat matters too. If you only scoot around your local inland lake to fish and sunbathe, your watercraft faces much less risk than an ocean-going sailboat that is kept year-round at marina. Make sure you explain to your agent or broker exactly how you do – and don’t – use the boat, so they can find you the most appropriate policy at the right price.
You can sometimes get other discounts for bundling your boat insurance policy and others you have, like your car and/or home policy, with the same carrier. This is known as a multi-policy or multiline discount.
Some carriers will also offer discounts if you pay your entire yearly premium upfront and/or if you use electronic transfers to pay instead of check or credit card.
You can also lower your total premium if you opt for a high-deductible marine insurance policy. The deductible is the amount you have to pay out of pocket before your insurance starts to cover expenses. So for example, if you experience a $5k loss, and you have a $500 deductible, you would pay the first $500 in damages, and the insurance company would cover the rest. If you had a $5k deductible, you would be on the hook for the entire cost.
High-deductible policies provide a bit less coverage, but they can significantly reduce your total costs. They can be a good choice as long as you have the ability (financial and emotional) to handle paying for a large, unexpected expense, in case you do experience a loss that isn’t covered due to the deductible.
If you plan to stow your boat for part of the year, many marine policies offer an option to suspend your coverage for a given period of time each year and reduce your annual premium accordingly. But use this option carefully – if you say the boat will only be used during the months of April through September, but an early spring tempts you into a quick fishing trip at the end of March, your policy won’t cover any damages incurred.
How do I find the best boat insurance policy for me?
Given the diversity of boat types and the many ways and places they can be used, there is no one “best” type of policy. The needs of a boater seeking sailboat insurance will vary greatly from the needs of a yacht owner. Boat insurance companies are used to writing policies that are geared toward the unique needs of each buyer.
Before you start gathering watercraft insurance quotes, spend some time getting an idea of exactly which types of coverage you will need – and with what limits. If you are looking for boat insurance quotes online make sure you know the type of coverage you are looking for. Factors you should consider when making this list, include:
- the type of boat you have, its age, and condition and whether you still have a loan on it
- where you plan to use the boat, for what portion of the year, and whether it will be stored on land or docked when not in use
- the insurance requirements of any commercial marina you may use
- whether you live in, or will frequently be boating in, an area that is hurricane prone
- whether you want a high- or low-deductible policy
- if you need the additional protection provided by a comprehensive policy, or if you only need hull and liability
- whether your boat will have jet skis, a dinghy, other personal watercraft or similar high-value items that must also be covered
- if your auto policy is sufficient to cover any towing/trailer-related accident or if you need an additional endorsement for extra coverage.
How do I compare boat insurance quotes?
That’s a long list to go through, but once you know what you need, it will make it easier to ensure you are comparing apples to apples when you start to compare your boat insurance quotes.
Always get multiple quotes from different carriers. Each carrier uses slightly different criteria when determining your claim risk, and thus, your premium. Plus, in the boat insurance world, different carriers have different areas of specialty. If you are planning to live on your boat, or travel internationally, some policies will have more benefits related to those specific issues, even though the basic coverage is the same as those offered by other boat insurance companies.
Also: Some carriers have stricter limits on what they will cover, so if one quote seems much lower than the others, make sure it offers all the same protection. When comparing insurance policies, you tend to get what you pay for, so the lowest cost isn’t necessarily the best bargain.
As you narrow down the number of quotes you are considering, you should also check the carrier’s quote includes any discounts that may apply to you – whether those are for safety certifications, having multiple insurance policies with the carrier, etc.
What are the best marine insurance companies?
Most large insurance carriers and many smaller ones offer a variety of boat and marine insurance policies. Each company has slightly different specialties but may not offer every kind of policy. Here are five of the best all-around marine insurance companies as reviewed by boating information hub, All Things Boat. All of these carriers offer online boat insurance quotes to make comparing quotes easy.
Allstate – a large, national insurer known for competitive rates and paying boating insurance claims fairly quickly. Note: It only offers policies that cover boat use within 100 miles of the U.S. coast.
Boat U.S. (a GEICO company) – this carrier, recently purchased by GEICO, only sells boat and marine insurance and that specialty means it covers the spectrum of policies types for vessels ranging from jet skis to yachts, including boats that are used as a primary residence. It’s known for its competitive rates and emergency tow service.
Charter Lakes – a smaller, specialized carrier, it’s known among boaters for its high-quality service and a 24-hour claim response time. The company is particularly popular with fishermen as it offers specialized policies geared toward vessels ranging from small bass boats to large offshore fishing boats.
Blue Water Yacht Insurance – a niche insurer, but backed by Lloyd’s of London, this carrier offers specialized policies for boaters who plan to sail internationally, including around the world trips, Panama Canal crossings, and more. Their flexible policies also provide coverage for things like two-person crews, captain chartering, and single-hand sailing.
IMIS – another specialized marine-only carrier, every agent at this company is also a boater. It is particularly popular with boaters who travel internationally and/or in areas with frequent storms and hurricanes. It offers policies designed to maximize boater safety, and they include medical coverage options for international travel. It’s known for great service, especially post-storm, but has somewhat higher premiums than other carriers.
Adjuster – a professional who examines the damage to a vessel to establish the financial loss from a covered event
Agreed upon value – a boat insurance option that allows the insured to get a pre-set value (usually the purchase price or close to it) in the even of a total loss of watercraft, despite any depreciation it may have incurred. It is similar to replacement cost coverage in home/auto insurance policies.
Boat/marine/watercraft insurance – a general term for an insurance policy that covers various costs related to the insured person’s vessel which may include liability, hull, medical payments, or emergency towing coverage among others
Carrier – the company underwriting your insurance policy
Coverage caps – a limit on the amount of insurance benefit provided for certain items or expenses
Covered event – incidents including theft, fire, and water damage that are included in the coverage of a specific insurance policy
Deductible – the amount of a covered claim that must be paid by the insured person
Exclusions – items or types of damage not covered by an insurance policy
Hull insurance – coverage for damage to, or loss of, your watercraft
Insurance agent or broker – the individual or agency from whom you buy your policy. They may be independent and sell policies from many different companies, or they may work solely with one insurer.
Liability insurance – coverage of costs incurred by a third party because of damage caused by the insured person’s watercraft or actions or negligence related to that vessel
Live aboard – a term for someone who lives full-time on a boat. It may refer to a houseboat designed as a permanent residence, or a small yacht or powerboat that is moored at a marina.
Riders – additional coverage for specific benefits over and above what the standard policy offers, purchased at additional cost
Umbrella coverage – additional coverage that provides excess liability coverage, purchased at an extra cost