12 FAQs About Boat Insurance

Many homeowner policies do have a small amount of insurance that may cover your boat. However, the provisions are very limited and require your boat to be under 26 ft. in length and have 25 or fewer horsepower. If your boat is damaged by a covered loss, the maximum payout is usually $1,000. This may be sufficient for a fun little rowboat or canoe you use to putter around a small lake, but most boat owners will find they need a separate policy. It is important to note that a homeowner policy will never cover personal watercraft (PWC) such as a jet ski.  

A basic policy is structured similarly to your auto insurance, with property and liability coverages. Property coverage provides money to repair or replace your boat in the event of a covered loss. Liability covers you if you negligently cause injury or property damage to others while using your boat. Optional coverages that will be very familiar relative to your auto policy include uninsured/underinsured watercraft and medical payments. Although a basic policy seems very similar to auto insurance, it is important to realize there are many options and considerations in a watercraft policy that are unique both because of the nature of the vessel and the way you plan to use it.    

Property coverages are generally designed to pay you in one of three ways: 1) Actual Cash Value (ACV) which is the value of your boat without depreciation; 2) Replacement Cost Value (RCV) which is what it would cost for you to repair or replace your boat without consideration for depreciation; or 3) Agreed Value which is a value that you and the insurance company contractually agree will be paid to you in the event of a total loss. 

When you buy a new boat, these three methods will produce a very similar payout. However, as a boat gets older, ACV will be cheaper than RCV coverage because the impact of depreciation will result in a lower payout if there is a loss. Agreed Value is often used when there is a something about the boat that makes it very unique and not easily appraised in the open market, such as a limited edition or collectible model. When you choose a policy with Agreed Value, it is important to remember to review the Agreed Value regularly so you can change the amount to reflect any market changes. 

4.  How much liability coverage should I carry?    

 

Of course, that is a personal decision that depends on many factors you will want to discuss in detail with a local Georgia insurance company. Liability limits usually start at $25,000 and can be increased from there. However, it’s important to realize that once meeting certain liability limits on a boat policy, you can increase liability coverage by adding the boat to most umbrella policies. Although doing this will slightly increase that premium, using an umbrella for higher limits of liability coverage is usually the least expensive way to get greater liability protection. In some cases, an umbrella may even extend coverage to protect you for perils that are not covered by your boater’s policy.

  

Uninsured/underinsured coverage pays for property damage and/or bodily injury to you and your passengers when someone who is not adequately insured has an at-fault accident with you. If you plan to boat in a body of water that is frequently crowded with other boats and watercraft, this could be the most important coverage you buy. 

Unfortunately, unlike an automotive vehicle, in many jurisdictions virtually any adult can captain almost any size boat without training, experience or a license. This allows many potentially dangerous boaters on the water. Also, unlike drivers on the road who are legally required to carry liability insurance, in most states there is no such requirement for boaters. If you are involved in a boating accident, it is statistically very likely that the other party will not have insurance to protect you. 

     

Your watercraft policy will typically cover physical damage to your boat while it is being towed or transported over land. When you use your personal vehicle to move your boat from home or storage to the water, though, liability resulting from an at-fault accident during that time would be covered under your auto insurance. Be sure to check with your agent regarding additional coverage you may need for a trailer.       

 

Boat insurance does not necessarily cover your liability when using your boat for watersports such as water skiing, wakeboarding or tubing. Check with your agent or read your policy carefully to make sure this is included if it is needed.

Surprisingly, a boater’s policy does not necessarily cover the peril of a boat that sinks. Sometimes, this requires an extra endorsement, or even a separate policy. You may want to consider a policy with an “all risk” feature. This will cover damage from any occurrence that isn’t specifically excluded in the policy language.

This is a significant consideration. The personal property coverage on a boat policy is typically limited to a small amount in the range of $500 - $1,500. If you have added a lot of equipment or technology, you will want to review that coverage with your agent. Some policies have a feature that will cover your electronics on an all-risk basis. This can be very helpful, since many watercraft additions are technology-based.

 

To some degree, the need for other coverages may be dependent on how you want to use the boat. If boating in a lake or on a river, towing may be a nice feature, but not absolutely necessary. However, if you will be boating out on the sea, towing could be essential. If you plan to travel extensively on the ocean, you definitely want to ensure your policy will cover you when outside American waters. To address this, some policies will allow you to add an extended navigation territory. And, if your travels take you on long adventures away from home, you may even want to explore trip interruption and emergency travel coverages. 

For planning purposes, the average boat insurance premium is 1-3% of your watercraft’s current market value. That said, there are many other factors that will impact your cost including the boat’s type, size, age, and motor. The state in which you reside, as well as where you plan to use the boat, whether in a lake or on the ocean, can also be determinants of the final cost. Most boat insurance premiums range between $75 - $500 per year; but a policy with all the bells and whistles could extend higher. 

If budget is a key issue, work with your agent to create a policy that best suits your needs for the amount you are comfortable to pay. Also, be sure to ask if payment plans are available, as many companies will allow you to split the annual cost into multiple payments over time.

Discounts are always available, but each company offers a slightly different list. Some of the most common discounts are offered when you 1) pay in full, 2) have multiple watercraft insured, and/or 3) add a watercraft policy to other policies you also insure with the same company.

If you store your boat for some number of months each year, you can often get a discount for the lay-up period. Be careful, though, because you would not be covered for operating your watercraft during this period of time.

Finally, every insurance company likes safety. Be sure to ask your agent if there are any discounts for steps you may have taken to improve safety. For example, many companies offer a discount if you have completed a boater safety course, or if you have installed certain safety devices, such as an engine kill switch that will automatically turn off the engine in an emergency. 

Buying a boat is exciting! Boat ownership, though, is a responsibility, and you should never consider going on the water without insurance. Find an agent you trust who can help you explore all your insurance options. If you’re looking for a local Georgia insurance company to cover your boat and passengers, DeSalvo Agency has expertise that will help keep your summer boating experiences memorable and fun! Click here for a FREE quote!