Boat Insurance Advice

The average homeowner’s insurance policy has liability exclusion for boats of a certain specification. This usually includes boats with inboard motors (i.e. where the propulsion system is enclosed within the hull) or a boating ship that is longer than 26 feet and is owned by you.

Some types of boats are covered by automatic homeowners liability coverage, such as boats with outboard motors (i.e. where the motor is fitted on the outside of the hull or craft), boats under 25 HP or boats less than 26 feet in length.

However, your homeowners policy for watercraft coverage may vary, so you should consult your insurance agent to be certain of exactly what sort of coverage you are receiving and what you are not.

Taking Out Boat Insurance

Insurance companies are increasingly beginning to exclude high-powered jet-ski type watercraft and speedboats from liability coverage. This is due to the large numbers of injuries and death that occur with such craft which are often operated by young teens or young adults for their high speed.

If you use such high-powered watercraft, it is advisable to check with your insurance agent to see what sort of coverage you can receive.

Insuring Boats You Own

Boat liability coverage in your homeowner’s insurance policy automatically provides coverage for boats that you own which have an outboard motor of 25 HP or less or sailboats less than 26 feet long.

If you own such a vessel, you therefore do not need to purchase separate boat liability coverage.

Automatic insurance coverage is not provided for other types of boats under your homeowners policy, so you will need to buy separate marine vessel liability coverage to insure your watercraft. This can be purchased as a homeowners endorsement or in a separate boat insurance policy.

Insuring Boats You Borrow

A boat you borrow is defined as a boat which you neither buy nor rent. Borrowed boats of virtually any size fall under automatic liability coverage.

For example, such coverage would be provided by your homeowners policy if you went out on a friend’s boat, were asked to drive, but later you accidentally damaged the vessel or caused injury to a swimmer.

Insuring Boats You Rent

Boats that are rented, for example whilst on vacation, receive automatic coverage for liability for injuries or property damage.

However, this coverage is not provided for boats with an inboard motor or more than 50 HP, or sailboats longer than 26 feet.

To receive insurance coverage on such watercraft you can:

• Get boat insurance from the boat rental agency.

• Ensure coverage under your liability policy if you have one.

• Get insurance coverage from a supplemental personal-liability policy, also know as an umbrella insurance policy.

Using Your Homeowners Insurance

In the large majority of homeowner insurance policies, boats and marine equipment are normally limited to $1500 of coverage in addition to no wind coverage and no theft coverage away from home. There is also no coverage provided for collisions, sinking or hitting submerged rocks.

Insuring Water Vessels Worth Less Than $1500

If your vessel is worth less than $1500, you may want to forgo purchasing additional boat insurance and use the standard protection provided to you by your homeowners insurance policy.

Of course, if you do this, then any losses you suffer outside the coverage provided by your homeowners policy will have to be covered at your expense.

To reduce the risk of damage, it is advisable to store your boat in an enclosed shelter so that your boat does not get damaged by the wind, and also to secure your boat any time you leave it unattended to prevent theft.

If you only sail occasionally and can live with the limitations in your homeowners insurance coverage policy, then you can save yourself additional expense by not having to purchase extra marine insurance.

Insuring Sea Vessels Worth Over $1500

If you need greater insurance coverage for your boat than that provided by your homeowners policy, then you may want to consider purchasing a special watercraft policy or a homeowners endorsement with open perils coverage.

This will protect you against virtually all types of boating hazards such as accidental damage, collisions, sinking and theft. For this extended coverage, you can expect to pay premiums which are equal to 1-2% of the value of your boat and marine equipment.

When taking out extended insurance coverage, most insurance policies will ask you to declare a separate value for each item on your boat such as the hull, motor, deck, cabin, sail, on-board electronic navigation equipment, emergency equipment and the trailer that you use to transport your vessel when on land.

It is advisable to declare the retail value of each item at this stage, and to also include an additional valuation of $300-$500 for miscellaneous boat equipment and accessories such as anchors, life jackets, flares and seat cushions.

Having individually valued items in your insurance policy will make it much easier later on should something become damaged or stolen and you need to make a claim. Finally, don’t forget to keep a photographic record of each item and part of your boat that you insure as having this documentation will be required by your insurer.

Types Of Coverage

In general, most insurance policies will allow you to insure your vessel at an agreed upon value or actual cash value.

With an agreed upon value your vessel will be covered at an amount that both you and your insurer agree upon. So for example, if you buy a boat that cost $30,000 and your insurer agrees with that valuation, then your vessel will be insured for that amount against any losses that you may suffer in the future.

An actual cash value policy will cost you less upfront, however, in the event that you need to make a claim you will only receive compensation for the actual current market value of your vessel. This is usually substantially less than the price you originally paid for your boat as the insurer will take depreciation into account when determining the present value of your vessel at the time of its loss.

You may want to discuss with your fellow boaters which type of coverage they recommend. If cost is an issue, then an actual cash value policy may be best. But if you are worried about depreciation on a large and expensive boat, then an agreed upon value policy would be best for providing you with future financial security and minimizing your risk of suffering from an uninsured loss.