An In-Depth Boat Insurance Guide

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Boat enthusiasts will tell you that there is nothing quite like achieving the life-long goal of buying your own boat. The thrill of your future on the water is exciting and you’re probably planning your maiden voyage before you’ve even left the lot. However, before your boat is out making waves, think about protecting your new vessel.

Boat insurance isn’t the first thing we think of when purchasing a new or used boat — it might not even be in the top 10 things we think about. We picture family outings, fishing trips, and relaxing afternoons on the water. However, before you’ve signed on the dotted line and that boat becomes yours, you should be thinking about boat insurance.

Do You Need Boat Insurance

A boat is a large investment, just like a car or a home. You carry insurance for those other purchases so it only makes sense that you’d do the same for your boat. Not every state requires boat insurance — surprisingly, most don’t — but you’ll never regret having the coverage when you need it.

Avid boaters jokingly use the acronym B.O.A.T to stand for “Bring On Another Thousand,” because handling boat repairs without insurance can truly cost thousands of dollars.

A broken impeller — a pump that cools your boat’s engine while in use — could be a few hundred while a cracked engine block, which renders your boat inoperable, could cost upward of $10,000. Boat insurance might not seem essential in the beginning but if you’re faced with such expensive repairs, the insurance becomes a lifesaver.

State Requirements

Currently, there are only three states that require liability insurance for boats:

Arkansas

In Arkansas, every personal watercraft or motorboat with an engine over 50 horsepower is required to hold liability insurance. Other requirements include:

The policy must have at least $50,000 of liability coverage

Only an insurance company authorized to do business in Arkansas can issue the policy

Hawaii

Boating insurance in Hawaii is only required for boats parked in the Department of Land and Natural Resources Division of Boating and Ocean Recreation (DOBOR) facilities. A boat insurance policy should include:

At least $500,000 in coverage for all boats in DOBOR facilities, including harbors and offshore mooring

The policy must name the State of Hawaii DOBOR as the additional insured party

You must have coverage for salvage costs for grounded or sunken vessels, damage to docks, pollution containment, and wreck removal

Utah

In Utah, each motorboat* or personal watercraft is required to have liability insurance with the following minimum specifications:

$25,000/$50,000 for bodily injury or death

$15,000 for property damage

$65,000 for combined coverage per accident

Proof of insurance must be on board when the boat is in operation

*Motorboats with engines less than 50 horsepower and all airboats are exempt from these requirements.

Safety Education Courses

Most states don’t require boating insurance; however, almost all of them require mandatory boater education courses. Taking these required safety courses usually gives you a credit or discount on your boating insurance.

What Does Boat Insurance Cover?

You can get insurance for many different watercraft vessels, including:

Boats (26’ long or less)
Personal watercraft (Jet Skis, Sea-Doos, or Wave Runners)
Yachts (27’ or longer)
Dinghy
Sailboats

In some cases, you can even get coverage for rental crafts; however, you should discuss that with your insurance agent before finalizing a plan.

Boat insurance plans can be customized to your specific situation but there are many options that are standard coverage in most states. Speak with your insurance agent to see which policy or combination of coverage is right for you and your boat.

Liability Coverage

This coverage is for damage or injury that you might cause while boating, including:

Damage to other boats, docks, pilings, etc.
Passenger injuries on the other boat
Any injuries to your passengers in an accident — including during recreational activities

Comprehensive Coverage

When things happen to your boat that are out of your control, this is the coverage you need. It should cover:

Vandalism
Theft
Explosions
Fire
Weather-related damage
Falling-objects damage

Collision Coverage

Collision coverage takes care of any damage to your own boat in the event of an accident — regardless of fault. You should also be covered if your boat happens to capsize while on the water.

Uninsured Coverage

If you are involved in an accident with another boater who doesn’t have insurance, this covers your injuries within the limits of your own policy.

Additional Coverage Options

In addition to standard coverage, there are other coverage options insurers can add to your policy. Some options may be company-specific so ensure that you find a provider that offers what you are looking for.

Full value for replacement parts
Sunken boat and fuel spills
Tubing, wake surfing, and other sports coverage
Free towing for your tow vehicle
No rate increase for certain accidents

Add-Ons You Can Choose

After standard coverage and insurer options, you have even more coverage choices that can be added on to your policy, including:

Total loss replacement
Trailer trip interruption
Fishing equipment
Deductible drops
Mechanical breakdown coverage
On-water towing

Types of Boat Insurance

Aside from the coverage you can get on your boat, there are two types of insurance policies popular among boaters. Research each policy type to determine which is best for your situation.

Agreed Value Policy

An agreed value policy means that you and the insurance agency have agreed on a pre-approved amount that you’ll get if something happens to your boat. Boaters often prefer this policy type since they know exactly what they’ll be getting back if they have an approved claim. However, not all accidents and repairs are covered so it’s important to get in touch with your insurance agent before filing a claim.

Benefits of an agreed value policy include:

Predetermined boat value
Potential to receive the total value of the boat back upon claim approval
Easy application and appraisal process
More coverage overall

Actual Cash Value Policy

Unlike an agreed value policy, an actual cash value policy only pays up to the value of the boat at the time of the accident or loss. The insurance company factors depreciation, damage, and wear and tear into the value of your boat, which can significantly decrease the amount you are paid upon claim approval. However, an actual cash value policy does have advantages, including:

More affordable

Simple application and appraisal process

Easier claim process

Benefits of Boat Insurance

The United States Coast Guard reported 4,168 accidents, 613 deaths, 2,559 injuries, and approximately $55 million in property damage due to recreational boating accidents in 2019. Combine these numbers with the fact that only three states require boating insurance, and it is likely that many boat owners were paying for these damages out of pocket.

If those numbers alone aren’t enough to persuade you into getting boat insurance, perhaps the benefits of having insurance will change your mind.

Protecting Your Investment

Since buying a new or used boat is a large investment, having an insurance policy on the vessel helps protect what you bought. Get financial protection in case of accidents or damage to your boat or bodily injury during a boating activity.

Emergency Assistance

Anything can happen when you’re out on the water and even the best preparations can’t negate an emergency. If your boat insurance policy covers emergency assistance and towing, you won’t feel the financial strain of an unexpected breakdown or accident.

Total Loss Replacement

Your insurance policy can include coverage for the total cost of your boat in the event of irreparable damage or sinking. Without insurance, you’ll be out your boat and all the money you put into it. With insurance, you could have the funds to replace your boat and get back on the water in no time.

Boat Insurance Cost

The cost of your boat insurance varies depending on which company you go with, how much coverage you get, and a variety of other factors about when, where, and how you use your boat. A typical range, however, is anywhere between $75 and $500 a year.

Factors Affecting the Price

Insurance agents consider all of the following factors when determining how much coverage you need for your boat.

Value

The more you paid for your boat, the higher the insurance coverage will be. Generally, you can expect to pay about 1.5% of the value of your boat a year for insurance. A $20,000 boat could be around $300 a year while a multimillion-dollar yacht might be upward of $30,000 a year.

Length

Bigger boats may be harder to handle in the water and could increase the likelihood of an accident. Your insurance agent takes the length of the boat into consideration when creating your insurance policy.

Age of Boat

If you purchase an older boat, it automatically has less value based on its age. Insurance companies generally require less coverage since the boat isn’t worth as much from the beginning.

Type of Boat

Since there are many different types of boats, it only makes sense that the differences would factor in insurance costs. Additionally, a boat with an outboard motor could cost less to insure than a boat with the motor inside the vessel.

Mooring Location

A boat that is constantly moored or docked in a harbor, meaning it is almost always in the water, could also affect insurance rates. Boats are also more exposed to wind and storm damage in a harbor so an insurance agent considers those risks as well.

Intended Area of Navigation

If you live in Florida and only use your boat in and around the state, your insurance rates will be based around that location. However, if you take your boat all the way up the eastern coast or around Florida and into the gulf, your annual price reflects the wide area of navigation.

Previous Boating Experience

Just like auto insurance, boating insurance is affected by your experience as well as that of every driver on the policy. The longer you have been driving a boat, the lower your deductible is likely to be, while less-experienced young drivers could cause your rates to go up.

Claim History

When it’s time to renew your current policy or update to a new one, your insurance agent checks your claim history to see how often you file claims. The fewer claims you file, the better chance you have at getting a lower deductible.

Ways to Reduce the Cost

Unlike the factors above that are typically out of your control, there are a few ways that you can take action to lower the cost of your insurance policy.

Choose a High Deductible

When you choose a higher deductible, it typically lowers your monthly premium. Keep in mind that you may pay more out of pocket for claims initially, but your insurance covers more in the long run.

Get a Lay-Up Period

Depending on where you live, there might be a season or two where using your boat is not only impractical but even impossible. The time when your boat is not usable is called a lay-up period and adding this to your insurance policy can save you quite a bit of money. Your insurance agent will set the parameters of the lay-up period and decrease your monthly payment.

If you take your boat out before the end of the specified time, it nullifies the lay-up time and your policy could be voided.

Limit Boating Area

Limiting your boating area to one state or a smaller area automatically decreases your monthly premium.

Upgrade Safety Features

If you’ve purchased a used boat without newer safety features, upgrading helps lower your overall insurance cost. Consider adding items like a fire extinguisher, VHF radio, or auto tethers to increase your savings.

Look Into Credits

An insurance credit is a positive point toward your plan and brings down the overall cost of the policy. You can qualify for many different credits, but discuss the options with your insurance agent to know for sure.

Diesel engine credit — Diesel engines are less hazardous to run than gasoline engines and help save money on your insurance policy.
Fire extinguisher credit — To take advantage of this credit, you’ll need a Coast Guard-approved B series fire extinguisher (B-I or B-II).
Navigation system credit — Adding a navigation system to your boat is an added safety feature that keeps you safe and saves you money.
Safety courses credit — Most states require a boat safety course before you can drive the boat and, while you may not need insurance in every state, you’ll get a policy credit for completing the course.
Claims-free credit — Having little to no claims against your insurance applies a credit toward your renewal or a new policy.
Multi-policy discount — If you can bundle your homeowners, auto, and boat insurance with one company, you can usually get credit off your premium.
Driving record discount — A clean driving record is a good indication that you are also a safe, smart boat driver and companies are likely to give you a discount for that.

Where to Get Boat Insurance

Most popular insurance companies currently offer boat insurance. Take some time to shop around and get a few quotes before you finalize a policy to ensure you are getting the best coverage for the best deal.

Here are a few of your insurance options:

Apply online or give these agencies a call to get started on your boat insurance quote.

Begin Your Boating Journey

If you haven’t made the leap into becoming a boat owner, Germaine Marine is here to help. We carry a variety of new and used boats from all the top brands, including Tige, Apex, Supra, Avalon, and more. With all of your new knowledge about boat insurance, you can confidently purchase a boat and get the coverage you need to keep it protected.

We have locations in Mesa, Arizona, American Fork, Utah, or Norco, California.

Stop by our showroom or contact us today to begin your boating journey.