Going on a sea voyage on your own boat, fresh breeze ruffling your hair and the blue stretching as far as the eye can see, is a dream for many. Owning a boat unlocks new territories and more ways to explore the world. For some, a boat is vital for increasing income.
No matter the reason for getting a boat, a boat adds significant value to life and is worth the investment. Oftentimes, the investment can be quite big. When thinking of the boat’s value, it is rational to want to protect it in case something unwanted happens, and the easiest way to do that is through insurance.
While some smaller boats with less powerful engines might be covered under homeowner’s insurance, even then it is usually not enough to provide coverage when leaving the coastline or beach. If you want to go farther out on the sea or purchase something bigger with more power, then you are going to need boat insurance.
Boat insurance protects your boats and boat trailers when damage occurs, covers damage you may have caused to others, and insures the watercrafts against other unfortunate events, such as vandalism and theft. Boat insurance can be purchased from an insurance provider and a range of additional policies may be added to get an even more thorough coverage.
Only a few states mandate boat insurance and only for a few types of boats or occasions. However, that does not mean that you should not get it – it is the opposite. Another thing to consider is that when you are financing a boat with a loan, you may be required to carry both comprehensive and collision coverage. In addition, if you want to rent out a dock space at a marina or harbor, you might be asked to provide proof of liability coverage.
Despite the widespread belief that home insurance covers boats, it is actually not that common. Make sure to first check with your home insurance provider and then, to protect your boat even better, opt for boat insurance. If you are still not convinced that boat insurance is for you, consider this: recreational boating accidents resulted in $55 million dollars damage to property alone in 2019. Boats are big and can cause a lot of damage when accidents happen, which is not going to be forgiving to one’s bank account.
When purchasing boat insurance, you need to familiarize yourself with the policy’s terms. First, it is essential to consider which watercrafts and other boat-related properties can be included in the coverage.
Here are the most typical objects covered by boat insurance:
Next, determine whether the standard coverage fits your needs. Standard coverage typically consists of liability coverage, comprehensive coverage, collision coverage, and uninsured/underinsured boater bodily injury.
Liability coverage – costs associated with damages to other people and property caused by the owner of the boat, which includes:
Comprehensive coverage – damages to your boat from events that are out of your control, such as:
Collision coverage – when you collide with another boat, regardless of who is responsible, damage to your boat, including if it capsizes, will be covered.
Uninsured/underinsured boater bodily injury – if an uninsured or underinsured boater injures you, you will be covered up to the limits of your policy
Some insurance companies also include some additional coverages in their standard packages.
If the standard coverage does not meet all your needs, ask about extra policies. You can usually add:
No repairs depreciation – The watercraft will be restored to its pre-accident condition or better, regardless of how much the damage cost.
Wreckage removal and fuel spills – Cleaning up fuel spills and removing the wreckage from the water.
Accident forgiveness – Filing claims usually leads to higher insurance rates, but this coverage protects you from that. There might be a claim limit or other conditions to be met to qualify for it.
Water sports coverage – You will not be liable for any damages that occur from water sports up to your policy’s limits.
Total loss replacement – You will receive a replacement if your boat is not older than one model year.
On-water towing – The costs will be covered if you require a jump start, on-water towing, or fuel delivery.
Fishing equipment and carry-on items – Fishing equipment and other personal items, such as scuba gear, will be covered within set limits when lost or stolen.
There are two main types of boat insurance policies that determine the size of the coverage: agreed value and actual cash value.
Agreed Value Policies
The insurance company covers the value of the boat that is determined at the time of purchasing the policy. Policies like these can cost more in the long-term, but provide the benefit that the boat’s value won’t depreciate and when it needs to be replaced, it will be covered to the extent of its original price.
Actual Cash Value Policies
You will spend less with each instalment of the coverage, but over time the boat’s value will depreciate. If someone were to lose their entire boat, they would receive coverage based on the market value of the boat at the time of the accident, not its initial value. For older boats, insurers may insist on using an actual cash value policy.
As with any insurance, the insurance companies will evaluate a range of factors to determine the cost of the policy. These factors include:
They might also ask other questions about you, your boat, and what kind of coverage you are looking for.
There are three primary factors to consider and point out to the insurance company when negotiating the fairest price:
Additionally, you can also enquire about insurance discounts. For instance, if your boat will be stored over winter, you may be able to get a winter layup deduction. If you have completed a boating education class or belong to a boating association, additional discounts may be applied.
As with other insurances, such as car and homeowners’ insurance, getting offers from multiple agencies is the best way to find insurance at the most optimal price.
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The information contained in this website is provided for informational purposes only, and should not be construed as advice on any matter. The material in this website may not reflect the most current developments within the insurance industry. We disclaim all liability in respect of actions taken or not taken based on any or all of the contents of this website to the fullest extent permitted by law. Do not act or refrain from acting upon this information without seeking professional advice from a licensed insurance agent.