Boat Insurance Basics
Spending time on the water in your boat with family and friends is one of life’s great pleasures. Whether you are a paddler, a sail boat racer, power boat cruiser, waterskier, or you just live to fish, being on your boat satisfies that need for the outdoors, recreation, solitude and good times. When you are on your boat the last thing you want to think about is insurance.
But think about it, we must. There are many factors that affect boats when they are on the water. The water, the weather and tides, other boats, and even animals can disrupt a pleasant boat journey. Boat insurance protects your boat and protects you from any liability from an accident caused by you and your boat. Boat insurance is absolutely necessary for anyone who spends any time on lakes, rivers or the ocean.
Insurance protects us and our investments in our boats, providing the financial safeguard and continuity should the unfortunate occur. So let’s take the time to review and understand boat insurance. Here’s what we’ve learned through experience as boat owners and by talking with insurance brokers and reading what’s out there.
Do you have to have boat insurance? There is no legal requirement to have boat insurance. However, if you have taken a loan to purchase your boat the lender will require that you have a policy in effect for the life of the loan. Regardless of that instance, and although boating is a relatively safe activity, the potential for loss of life and property exists. This should be reason enough to cover yourself while you are on the water.
Where and what does boat insurance cover? First of all, it is important to understand where your policy covers you; that is, where do you typically operate the boat and when, since for many of us boating is seasonal and involves a winter lay-up. Sometimes insurance companies will offer discounts on their premiums depending on where you do your boating.
Boat insurance typically covers damage to every aspect of the boat from the mechanicals to the hull and also the electronics and furniture. Any item that normally stays on the boat is covered for accidents, vandalism and extreme weather. If you have a dinghy it is recognized as part of your boat and is covered by your standard policy.
You are also covered for any damage against liability caused by your boat to another boat or dock. You are also covered against any injury, or even death, caused to another person in that same accident.
What doesn’t a boat insurance policy cover? Surprisingly if your boat is damaged by an uninsured boater then you are not usually covered. So, make sure you include uninsured boater coverage as a feature of your policy as there is that silly segment of the boating public that runs around uninsured.
Boat insurance does not normally cover injury caused to a passenger trying to board the vessel but more insurers are starting to cover this as a standard part of their policies. Check your policy for this.
Additional insurance products: many boaters haul their boats to the water on a trailer, and trailers can be very sophisticated and expensive. While in the act of hauling your boat your trailer is not typically covered but your boat on the trailer will be. You should add extra coverage to include the trailer but if this is not available you may be able to include it as part of your auto insurance.
Boat insurance normally covers incidental medical expenses caused by an accident. Beyond the limits of that coverage you should be sure to have health insurance, and consider some level of umbrella insurance.
If you typically haul your boat on vacation it would be wise to carry coverage for repairs or assistance far from home, as this can be expensive and potentially ruin a carefully planned trip. BoatUS, for instance, offers a cruising extension policy for boaters operating in areas not normally covered.
Additional coverage for a boat insurance policy: As with all other kinds of insurance you can be very comprehensive about the level of coverage you take out. You can get all your personal effects insured as well as the personal effects of any guests. You can have rented equipment, such as fishing and diving equipment, covered. You can add insurance for special activities such as diving. Of course, for every addition you request, your premium will go up. That said, you cannot put a price on piece of mind so be clear about what you need and then get covered.
What kind of coverage is available and what will it cost? There are typically two forms of coverage for loss. Agreed Hull Value policies pay an agreed value in the case of a total loss, while repairs for a partial loss are paid subject to depreciation. An Actual Cash Value policy pays for losses but is subject to depreciation. Hence, the premium you pay depends on which type of policy you acquire. If you add specific items to your policy the premium will reflect that, so be sure to understand from your insurance company just what they will pay for.
Liability coverage, or Protection and Indemnity, provides insurance in case you are involved in an accident and are sued by a third party for damages. If you are legally responsible for injury or damages the policy will pay the judgement up to the policy limits. You can add coverage for such items as operating another watercraft, oil spills, marine salvage and others.
As for cost, the best thing to do is clearly define what you need and then shop it around. There are a large number of insurance companies out there, but stick to those that specifically offer marine insurance. Many of these companies are run by avid boaters and understand the world of boats and boating and respond to specific issues that you may need to address.
What can you do to minimize insurance costs? There are several things you can do to keep your insurance premiums low.
First, be clear how much insurance you really need. Don’t add on coverage that you don’t actually need, or demand coverage for events such as running out of gas and needing a tow! Also, maintain as high a deductible as you can afford to keep the premium low.
Second, maintain your boat to high standards. Keep up with regular maintenance and make repairs that improve the reliability and safety of your boat. Have it inspected by a mechanic during regular services and note the results, or have a survey done on your boat to verify its condition and point out any repairs or changes that need to be made. Offer the survey to your insurance company as proof of your boat’s condition and your conscientiousness as an owner.
Third, take an approved boater safety course every so often—be up to date on rules, regulations and best boating practices. Upgrade your navigational and boat handling skills and practice emergency procedures. This will decrease the likelihood of getting into a situation that ends with damage, personal injury, and an insurance claim. And, be sure to let your insurance company know that you’re staying up to date by providing them with certificates from approved courses and organizations.
Lastly, keep your boat out of harm’s and a thief’s way. Weather related boat claims are a large driver of insurance costs. Watch the weather and be prepared to move your boat to safe harbor if extreme conditions are forecast. Secure your boat from theft or vandalism—even if you keep your boat at a marina or in your back yard—crime often happens right under our noses.
Insurance is a necessary part of owning a boat and protecting yourself from an unfortunate event. Find a good insurance broker, develop a reliable relationship with them and purchase insurance coverage that reflects your use and budget. Then file that policy where you can find it and head out on the water to do what you like best—boating.