Last summer, I went sailing on Lake Michigan, just off the Gold Coast of Chicago, on my brother’s 23-foot sailboat. There’s nothing like feeling of the sun on your face and the spray of the water wetting your brow as the boat slices through the deep blue waters. Magic. That is, until a speedboat full of partiers nearly runs you over! That’s right. It headed directly towards us and missed us by a hair. After the adrenaline stopped rushing through our veins, I looked at my brother and said, “Is this boat insured?”
Getting Started
Boat insurance is definitely not a one-size-fits-all kind of policy. The type of watercraft as well as how and where your boat will be used are taken into account when finalizing a boat insurance policy and premium. Other factors include age, condition, type of engine, boat safety equipment, and the driving record or experience of the boat owner. For instance, you may own an older personal watercraft (PWC), a new bass boat or, like my brother, a sailboat. You may use your PWC on coastal waters in Florida or your bass boat on the lakes of Minnesota. All of these variables contribute to how much your boat insurance premium will cost based on what you choose to have covered in your policy.
The Hull and All
There are two types of boat insurance policies that cover the value of your boat in the event of total loss: actual cash value vs. agreed value. Actual cash value policies will cover the replacement cost of your boat minus depreciation. In the case of a partial loss, this policy will cover the total cost of repair minus a percentage of the depreciation of the boat. The premium can be lower with this type of policy, but so can your coverage amount. With an agreed value policy, your boat’s value is agreed upon between you and the insurance company at the time you sign up for the policy, and that value remains the same regardless of depreciation. In the event of partial loss, this policy will cover the replacement of most old items for new ones. Your premiums can be higher with this kind of policy, but you'll have greater coverage. Some items may not be covered such as sails, trailers, dinghies, or outboard motors. A good rule of thumb is if the item is not permanently attached to your boat, it is likely not covered. You will want to confirm what is and isn't covered with your insurance company.
Deductibles
Both policies have deductibles for the boat and motor and, depending on the coverage you purchase, a deductible for your trailer and liability coverage. Most deductibles can be calculated as a percentage of the boat’s value, usually 1% to 3%, or as a flat rate. Depending on the add-on coverages you select, you could also have deductibles such as “named storm” deductibles or deductibles for state-of-the-art electronics.
Overall, boat insurance coverages can include comprehensive, collision, bodily injury liability, property damage, reasonable repairs, medical payments, uninsured/underinsured boater, personal effects, motor, additional boat equipment, boat trailer, and wreck removal. Please note that if you plan to take a loan out on your boat, your lender will require proof of insurance on the vessel for you to secure the loan. Also, boat insurance is not required in most states; however, it is recommended you purchase boat insurance for your peace of mind as well as the safety of your passengers and other boaters.
In addition to coverages, many policies offer different kinds of benefits, including salvage assistance, wreckage removal, roadside assistance, fuel-spill liability, boat towing, accident forgiveness, and 24/7 dispatchers. Dispatch and towing may be critical coverages, especially if you will be boating on larger lakes or to international waters.
There may also be add-on coverages such as total loss replacement, soft ungrounding, and diminishing deductible.
Liability and Personal Effects
Most marinas require minimum liability insurance. The industry recommends $1 million in liability and at least $10,000 in uninsured/underinsured boater coverage. Let me tell you, there are some crazy boaters out there who unfortunately pay little attention to other craft especially smaller boats. Your boat could also become unmoored, causing damage to other boats, the docks, or marina establishments. Additionally, this type of policy could cover the personal belongings you store on your boat.
Discounts
It’s a lot. I know, and your premium could really add up. However, there are ways to save money by taking advantage of the many discounts offered by insurance providers. You can save up to 13% if you have multiple policies with the same insurance company, take a boat safety course, or have safety equipment on board, such as Coast Guard-approved fire extinguishers or a ship-to-shore radio.
Check out our Top Ten List of Boat Insurance Providers and get detailed quotes from at least three insurers. Here’s to enjoying the sun on your face and the sight of the glistening water. Safe and happy boating!