Your boat is more than just an opportunity to spend time on the water. It’s a valuable investment; one that can lead to expensive out-of-pocket expenses if catastrophe hits.
That’s why it’s important to protect this asset with quality boat insurance coverage.
What Is Boat Insurance?
Boat insurance provides a financial backstop if the watercraft or personal equipment aboard sustains covered damage or a covered loss. It will also protect against the costs associated with an accident or injury to another person that you’re ultimately deemed responsible for.
Essentially, boat insurance offers coverage for…
- Repairs or replacement for the watercraft.
- Repairs or replacement for certain structures and/or personal property added to the policy.
- Personal liability protection for damage to someone else’s property or an injury to someone else.
While boat insurance is not required in most states, it is a necessary component to protect both the watercraft and your wallet. Plus, many outside entities, like lienholders or marinas, will require you to maintain insurance.
What Does Boat Insurance Cover?
Standard boat insurance policies will offer distinct types of coverage. Here are some common options available.
Coverage for Hull Damage
This will cover damage to the watercraft itself. Typically, this includes accidental, physical damage from fire, theft, collision, storms, trailering and other common covered losses.
Coverage for Other Structures
You can choose to insure additional items on board as well. Coverage will then be extended to stand-alone structures such as a wakeboard tower and personal property/equipment on the watercraft.
This can include water skis, wakeboards, fishing equipment, or other valuables. If those items are stolen or damaged during a covered event, they can be repaired or replaced.
This type of coverage can help pay for damages if you unintentionally injure someone or cause damage to someone else’s property. This includes repairs or replacement to another party’s boat or other property, or protection for bodily injury to a third party.
It can also extend to other damages you may be found liable for arising from the ownership of operation of your boat, like pollution and contamination, wreck removal, and other items under maritime law.
» RELATED: A Breakdown on Liability Coverage
If a third party is injured arising out of the ownership or operation of your watercraft and requires medical treatment, this coverage may help pay for such care.
» RELATED: Medical Payments Coverage – Explained
What’s Not Covered by Boat Insurance?
Sometimes, even the most comprehensive boat insurance policy will not cover everything that could possibly go wrong while aboard the vessel.
Here are some things that a boat insurance policy may exclude:
- Natural wear and tear
- Intentional damage
- Infestation from inspects, mold, or animals
- Machine deterioration
- Lack of maintenance
- Mechanical/ production defects
- Boating beyond navigation limits
How Much Boat Insurance Do You Need?
You want to be confident that you have enough insurance to fund a repair, damage, or even a loss, and that you’re not paying for more coverage than is needed.
Here’s a rule-of-thumb that’s good to follow – a comprehensive boat insurance policy includes enough protection to cover the cost of replacing the watercraft. This should also ensure that you’re protecting any amount borrowed from a lender.
There is typically a separate coverage limit for personal property and equipment. You can always look to adjust this limit to account for the amount of personal property aboard your boat.
The best way to put a number on your personal property is to check inventory every so often. Calculate how much it would cost to replace those items. This amount can serve as the desired limit for your personal property coverage.
Boat Insurance Deductibles
Most boat insurance policies include a deductible. This is essentially the amount that the policyholder self-insures and above which the policy will pay for a covered first-party loss. It can be either a flat dollar amount or a percentage of the insured value.
When receiving a claims settlement from the company, the deductible will be subtracted from the total amount given.
Here’s an example:
Your insurance policy has a deductible of $1,000. The insurer approves a claim for $5,000 in damages to your watercraft. You would receive $4,000 from the insurance company after accounting for the policy deductible.
When getting a policy, you will be able to choose a deductible amount. Choosing a higher deductible will reduce the cost of premium and vice versa.
A higher deductible adds more of a financial burden when filing a claim. But a lower deductible will increase your premium. There is no right choice when evaluating which route is right for you. It all depends on your situation and what you’re comfortable with.
Actual Cash Value Versus Agreed Value Versus Replacement Cost
Different policies provide different payout options in the case of a total loss.
Actual cash value policies may pay up to the actual cash value of the watercraft at the time of loss for any damages to the watercraft.
Agreed value policies will pay the the amount stated on the policy in the event that the boat is a total loss, and up to that amount for a partial loss. This number is agreed upon by the insured and insurer at the time the policy is issued.
Replacement cost coverage policies may even pay more than the amount stated on the policy to replace your boat in the event of a total loss, and up to that amount in the event of a partial loss.
How Much Does Boat Insurance Cost?
Boat insurance prices can skew higher or lower depending on the coverage limits on the policy, along with a number of other factors, like:
- Past claims
- Driving record
- The type of watercraft
- Other risk factors
If your premium seems too high, there are easy ways to save on boat insurance. You may qualify for a discount, like completing a certified boating safety course, navigating your boat in a limited territory, and more.
Before you get too stressed about the cost of the policy, shop around for a lower rate. We can say (with confidence) that SkiSafe offers some of the most affordable boat insurance coverage options in the biz.
And remember – your premium is only a fraction of the cost compared to paying for a major repair or replacement out-of-pocket. In fact, it’s one of the most affordable, yet rewarding bills associated with owning watercraft.