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What Does Boat Insurance Cover?
By Joan Pabón MONEY RESEARCH COLLECTIVE
Unlike car insurance, boat insurance isn’t legally required in most states — including Florida. Still, it may be wise to insure your watercraft against common perils such as theft and storms. Moreover, if you’re financing your boat or plan to dock in a marina, you will need a minimum level of liability insurance.
Not all insurance companies cover all types of boats, however. And the policy and coverage amount you purchase should depend on the size, type and value of your boat, as well as where and how many months out of the year you plan to use it.
This guide contains information on what boat insurance covers, common types of coverage and key differences between policy options you need to know to get the best boat insurance for your watercraft.
Table of contents
- What boat insurance covers
- Common additional coverage
- Types of boats covered
- Agreed Value vs Actual Cash Value coverage
- Bottom line on boat insurance coverage
What boat insurance covers
Boat insurance can offer financial protection against risks common to boaters, including weather-related losses, collisions with other boats or submerged objects, running aground, sinking, fires, theft and lawsuits.
Coverage limits and exclusions vary by policy. However, boat insurance policies will not cover wear, tear or corrosion, lack of maintenance, damage caused by mold or animals (including birds, insects, rodents, zebra mussels, etc.) or mechanical breakdown.
Most boat insurance policies typically include:
Physical damage coverage
As the name suggests, physical damage coverage can help you repair or replace your boat if it sustains damage due to:
- A collision with another boat or object
- Capsizing
- Running aground
- Vandalism or theft
- Fires
- Weather-related damage (wind, waves, hail, lighting, etc.)
Some policies may even cover your boat against perils while being transported over land and while in storage.
If you live in Florida, your boat insurance may have a named storm deductible (NSD) you must meet before you are covered for partial or total losses resulting from a named storm. The deductible amount is typically a percentage of the value of the boat (up to 10%).
Liability coverage
Liability coverage can pay for injuries or damages you cause another person or their property while boating. This type of coverage is usually divided into two components:
- Bodily injury liability – Can cover medical bills and lost wages for injured parties as well as your own legal fees.
- Property damage liability – Covers the cost of repairing or placing someone else’s boat or property.
Most marinas require slip owners and renters to carry a minimum amount of liability coverage. Some may even require the boater to list the marina or port in their policy as an additional insured party. Requirements vary, but most marinas will accept up to $1 million in coverage. Similarly, if you plan on financing your boat, your lender will likely require you to purchase liability insurance.
Those looking for additional liability protection may consider an umbrella insurance policy. Umbrella insurance can protect your assets in the event of a lawsuit or claim that exceeds the limits of liability of your auto, home or boat insurance policies. It can even cover situations typically excluded from coverage, such as false imprisonment and defamation.
Property coverage
Personal property coverage can help you replace belongings stored in your boat — or being loaded into or out of it — in case of loss or theft. Covered items may include clothing, sporting and fishing equipment, boating accessories, radios, and radar and navigation systems, among others.
Coverage for special equipment and gear varies by company, however. Additionally, your homeowners insurance policy may cover up to a certain amount for lost or stolen belongings kept in your boat or vehicle. Check with your insurer to see what’s covered under your policies.
Medical payments
Medical payments coverage can help you and your passengers with medical expenses — hospital bills, ambulance costs, etc. — if you are injured aboard your boat. Some policies may also cover funeral expenses were you to die in a boating accident.
Check whether your policy covers you while getting on or off the boat. And if you plan to ski, tube, wakeboard or take part in a similar activity where you are towed behind your boat, you may need to purchase additional coverage for water sports. Sports where you become airborne, like parasailing and kiteboarding, aren’t generally covered, even under that additional coverage.
Salvage coverage/wreckage removal
Salvage coverage and wreck removal can help you cover the costs of recovering your boat if it sinks or is wrecked due to a covered reason, such as a storm or collision with another boat or object. Not all companies offer this coverage, so if your policy does not include it, you could be liable to cover salvage and removal charges out of pocket.
Salvaging a watercraft — or removing an unsalvageable one from a waterway — often entails hiring lifts, cranes and trucks, via service providers, at a cost that can run to thousands of dollars depending on the size of the boat. Salvage coverage will pay for these services up to the limits stated in the policy, which is typically a percentage of the insured boat’s cost.
Pollution liability/fuel spill cleanups
If you are responsible for an oil or fuel spill — or the discharge of chemicals or other hazardous materials being transported on your watercraft — you are liable for cleanup and containment costs. Depending on the size and nature of the spill, cleanup and disposal may have to be carried out by licensed professionals.
A dedicated pollution liability policy can help you cover the costs related to an oil or fuel spill, which can be hefty. According to Chubb, under the Oil Pollution Act of 1990, responsible parties are liable for cleanup costs and damages up to the statutory limit: the greater of $1,100 per gross ton or $939,800.
Common additional coverage
The following are additional coverage options available from some boat insurance carriers:
On-Water Towing and Emergency Services
Some insurance companies offer add-on coverage for emergency services like towing, fuel delivery and jump starts if your boat is disabled on a waterway. You may also purchase a towing membership directly from a towing network. Towing rates can vary widely depending on where you’re stranded, the time of day and weather conditions, so this type of coverage could be worth the added cost if you boat regularly.
Roadside assistance
Your boat insurance policy won’t cover roadside assistance for your tow vehicle, but many of the best car insurance carriers include roadside assistance coverage with their auto policies. Depending on your plan, coverage may include towing, fuel delivery, tire changes, locksmith services and jump-starts.
Uninsured/underinsured boater
If you are in an accident with an underinsured or uninsured boater, you could end up covering your own medical expenses and lost wages — unless you have uninsured/underinsured boater coverage or medical payments coverage.
Mechanical breakdown coverage
Mechanical breakdown coverage is another add-on or rider you can add to your boat insurance. This policy pays to repair or replace certain parts of your inboard or inboard/outboard motor in the event of a breakdown caused by wear and tear.
Ice and freezing damage
Most policies don’t include coverage for ice and freezing damage during the winter layup period, but you can purchase this coverage for an added cost.
Even if you keep your boat in an indoor storage facility, improper winterization could result in costly damage to your boat’s engine and fiberglass components if the facility’s heating system were to be compromised. Without additional coverage, you could end up shouldering the burden.
Hurricane haul-out
Not all boat insurance policies will pay to have your boat hauled out of the water if a named storm is predicted for your area. In such cases, hurricane haul-out coverage will cover the expense, up to a specified amount.
Extending your navigation limits
Generally, boat insurance will not pay for covered losses that take place outside the geographical limits stated in your policy. To extend your navigation limits for particular trips while maintaining coverage, you’ll have to purchase an additional rider. Check with your insurer to verify which perils are covered under this optional coverage.
Types of boats covered
Your homeowners or renters insurance policy may afford limited coverage for smaller watercraft like canoes, some sailboats and motorboats with limited horsepower (up to 25 HP). However, small watercraft coverage under even the best homeowners insurance policies may have very low caps and exclude liability protection.
A stand-alone boat insurance policy generally covers the following types of vessels, and up to the limits you select:
- Bass/fishing boats
- Pontoon boats
- Sailboats
- Cruisers
- Dinghies
- Bowriders
- Jet boats
- Yachts
- Personal watercraft (PWC)
According to the Insurance Information Institute, larger and faster powerboats, such as yachts, may require separate insurance. Personal watercraft like Jet Skis may also need their own policies.
Agreed Value vs. Actual Cash Value coverage
In the event of a total or partial loss, your policy may cover either the agreed-upon value of your vessel or its current market value. Your premiums and settlement payouts will depend on which of these options you choose.
Agreed Value Coverage
If a total loss occurs, an agreed value policy will pay you the amount you and your insurer agreed upon based on a survey of your boat. If you experience a partial loss, the policy will replace damaged parts with new ones — without deducting a percentage for depreciation. According to Chubb, depreciation may be factored in only for parts more likely to suffer wear and tear, such as sails and marine canvas.
Actual Cash Value Coverage
Actual cash value policies are more affordable than agreed value policies, but they also provide less coverage. After a total loss, this type of policy will reimburse you for the current market value of your boat, taking into account depreciation. Similarly, depreciation is also deducted from payments on partial losses.
The bottom line on boat insurance coverage
- Unlike car insurance, boat insurance isn’t required in most states. However, if you’re financing your boat or docking in a marina, you’ll likely need to have liability coverage.
- Your homeowners insurance policy may provide limited coverage for small watercraft such as canoes, sailboats and low-speed motorboats. To cover more valuable and higher-speed boats, you will need boat insurance.
- A dedicated boat insurance policy can cover your motorboat, sailboat and other watercraft against damage caused by storms, collisions with other boats or objects, fires, weather damage and theft, among other perils.
- If you live in Florida, your policy may have a named storm deductible (NSD) you must meet before your policy will cover damages caused by a named storm. This deductible amounts to a percentage of your boat’s value.
- Beyond liability protection and coverage against physical damages to your boat, there are many other coverage options available. Consider your risks and the value of your boat and property when building your policy.
- Boat insurance will cover you within the navigation limits stipulated in your policy. You have to purchase a rider to extend your navigation limits for any given trip.
- Depending on the type of policy you choose — whether full replacement cost or actual cash value — payouts on total or partial losses may or may not include a deduction for depreciation.
Joan is a professional translator, writer and editor with a special interest in personal finance and insurance topics. She has been a contributing author and independent researcher at ConsumersAdvocate.org since 2017 and an editor at Money since 2019. Her work has been featured in MSN Money and Apple News.