Boat Insurance: A Beginner’s Guide

Whether you have a luxury yacht, a runabout, or anything in-between, boat insurance will provide peace of mind when venturing into the open seas. If you’re looking for new boat insurance or just want to make sure your existing insurance policy is still right for you, this guide is designed to cover the key factors to consider, along with some handy hints and tips. The critical questions most boaters have include:

A-boat-capsizing We hope the owner of this craft had boat insurance in place. Photo credit: Matteo Miliddi.

Do I Need Boat Insurance?

While it’s not usually a legal requirement in most waters, it’s almost always a requirement when financing a boat. Plus, boat insurance can make the difference between navigating a crisis calmly, and having to pay thousands and thousands of dollars if things go wrong. You’ve made a huge investment in your vessel, and you will want to protect it. Boat insurance can also protect against third party liability for damage caused by you and your vessel. This is a particularly important protection – to the extent that some local authorities and marinas won’t let you moor there unless you have third party liability insurance.

boat sinking in slip
This boat was rescued before it sank all the way to the bottom, but the engines ingested water and caused thousands of dollars in damage – damage which was not covered by boat insurance. Photo by Lenny Rudow.

Ultimately, being out on the open waters should be a relaxing activity. Boat insurance will grant you a feeling of security in knowing that you’re protected.

What Does Boat Insurance Typically Cover?

Boat insurance policies usually cover two main factors: physical damage and liability. In most (but not all) boat insurance policies, this includes:

  • Accidental damage
  • Loss or damage of personal belongings
  • Third party liability
  • Personal accidents

An important variable to consider is whether the insurance policy you get covers the “agreed value” or “actual value” of your boat Agreed value coverage means that the boat is insured for the value you and the insurer agree upon at the time you get insurance, and the amount of coverage remains the same while you own the boat and maintain the coverage. Actual value coverage, however, depreciates over time. If there’s a loss the insurer won’t reimburse you what you paid for the boat, nor for what it would cost to replace it with a new model. Rather, it will pay the cash value of the boat at the time of the loss.

What Is Typically Excluded From Boat Insurance Policies?

It is very important that you carefully consider what is excluded from your insurance policy before agreeing to it. Significant factors which are often excluded are:

  • Wear and tear
  • Gradual deterioration
  • Faulty parts
  • Lack of maintenance
outboard engine failure
Mechanical failure due to aging and normal wear and tear is generally not covered under most boat insurance policies. Photo by Lenny Rudow.

Insurance claims may also be rejected if you were situated a certain distance from shore during the incident, if you were under the influence of drugs or alcohol while operating the vessel, and in some cases claims for theft which took place when the vessel was unmoored or unattended.

What Factors Can Typically Increase The Price of Boat Insurance Policies?

Several factors can vary the price of boat insurance policies. The age, condition, and value of your vessel is an obvious one. Where you live can also have a huge impact – for example, if you live in an area which is particularly prone to storms and hurricanes, you can (unfortunately) expect to pay a premium on your boat insurance. Some insurers will even require you to have a hurricane plan and may deny coverage if you fail to follow it. See Hurricane Insurance Q&A, to learn more about the topic.

How far you travel and where you travel to can also impact the price of insurance. Obviously the wider the region covered, the more chance there is of things going wrong. The type of water you frequent can also make a difference and regularly boating far into the ocean, in busy or danger-prone cruising areas, and even in saltwater versus freshwater, can mean higher rates.

offshore fishing boat
Where you do your boating matters and this offshore fishing boat, which regularly runs 50 or more miles into the ocean, will have higher premiums than if the same boat were used in a sheltered waterway. Photo by Lenny Rudow.

Historically, being a trained skipper meant that you could expect to see the price of your policy drop. These days having completed a safe boating course at the very least is often a factor used to determine whether you will even receive a quote or not. Your record matters, too, including your driving record on land, and having a checkered history can cause rates to go up.

The limits on liability and the deductible you choose will also have an impact on the rates you get charged. These factors work exactly as they do with automotive insurance. If you accept lower liability limits and higher deductibles, the rates go down. But accordingly, if there’s an incident you’ll be expected to shoulder a larger portion of the bills.

What Other Factors Should I Consider?

Outside the key questions we’ve already addressed, there’s a list of some specific considerations that you may want to ask your insurance provider to ensure that you set off to sea with all bases covered.

  • Does your insurance provider require a survey? Often this will be the case when insuring used boats, especially large or expensive models. If so, when should you provide this? Consider whether the insurance provider requires surveys at regular intervals.
  • Is your hull insurance tailored specifically for the way that you intend to use your vessel? For example, does your insurance provider take into account whether you’re going to be taking your boat on a breakneck race, versus a leisurely cruise?
  • If a part fails due to wear and tear, is any resulting damage caused covered by your insurance policy? Be aware that not all insurance policies include this.
  • What items are subject to a deductible? And if you’re not happy with it, can you buy yourself out of the deductible entirely?
  • What support will you receive? Is there round-the-clock care? Will you receive adequate international support if that’s among your needs? Does the insurer have their own in-house claims team or do they subcontract a third party provider?
boating with insurance
With the right insurance in place, you can set sail without any worries. Photo by Lenny Rudow.

Whether you’re a bona-fide adventurer or just taking a few turns around the local lake, it’s really important that you know your insurance policy is tailored precisely to your needs and that you have a team that you can rely on.

How Do I Obtain a Boat Insurance Quote?

There’s an easy answer to this question: go to Boat Trader! Our boat insurance services will give you a free insurance quote within minutes. We are committed to delivering an unprecedented user experience to boat buyers and sellers. Boat Trader has been supporting seafarers and offering the boating industry solutions for buying, selling and insuring their vessels since 1996.