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The Ultimate Guide to Boat Insurance
The Ultimate Guide to Boat Insurance

Nothing is more satisfying than gathering your closest friends and family members to set out into the sea. You get to enjoy the beautiful weather, go fishing, or swim out in the open water.

The last thing you want to worry about is hitting another boat owner's precious vessel or, worse, injuring someone while out at sea. To help keep your mind at ease and to protect you from any liabilities, you have the option to add boat insurance to your vessel.

If you want to learn more about boat insurance and the importance of this coverage, you will want to check out this guide. This brief article will go over what boat insurance is and who you can reach out to for additional questions and concerns!

Do You Need Boat Insurance?

Yes, you will need to buy insurance for your boat. There are a few cases where your homeowners' insurance policy will cover your boat, but the coverage does not extend too far.

Most homeowners' policies cap boat coverage at 10% of your home's insured value or $1,000, depending on what is outlined in your policy rules. It is also essential to know that your homeowners' insurance policy does not cover any liability coverage. 

What Does Boat Insurance Cover?

Insuring your boat is the best way to protect yourself from paying for any damages out of pocket or, worse, paying for a lawsuit. You can buy liability insurance for your boat, which will cover the expenses for any damages done by your boat to others.

For example, say you are out in the ocean, and you accidentally hit another person's ship, or you hit a swimmer, your boat insurance policy will take care of those damages on your behalf. 

Other covered incidents:

  • Damage from vandalism or theft
  • Damage from fire or lightning
  • Damage to permanently attached equipment
  • Guest passenger liability
  • Medical payments for you and your passengers

Guest passenger liability helps cover any legal expenses if someone else drives your boat and causes damages or harm. In order for this type of coverage to work, the driver must have your permission. 

What Is Not Covered 

Boat insurance does not cover any normal wear and tear done to the boat. It is your responsibility to ensure that the ship has proper maintenance and upgrades done to it to ensure it is fit to sail. Any damages done by mold, insects, or zebra mussels are also not covered under your boat insurance policy. 

Types of Insurance

There are two different types of insurance damage coverage you can purchase for your boat: agreed amount value and actual cash value. If you want additional coverage for your accessories or trailers, you can ask your insurer to see if they offer that option. 

Agreed Amount Value

With the agreed amount value clause, your insurer will pay you a certain amount that you and the company agreed on in the event that your boat gets destroyed. If your boat is repairable, your insurer will replace your old items with new ones without deducting depreciation for those items. 

Actual Cash Value

Actual cash value allows your insurer to only pay the value of your boat at the time of the damage. For example, let's say you purchased your boat for about $25,000 three years ago.

Your insurer will take depreciation into account to determine the current price for your boat. If the boat at the time of the accident cost $15,000, that is what your insurer will pay you. In the event that your vessel gets destroyed, your insurer will determine the market value of the boat and pay that amount to you. 

Additional Coverages

Before you head out on the water, you will want to review your policy to know what you are and are not covered for. For example, you will want to review your policy to see if there is any mechanical breakdown coverage. This type of coverage will pay to replace or repair your outboard motor in the event of an accident as long as the damage is not due to wear and tear. 

Layup Periods

A layup period is a time where you take your boat out of the water and don't use the vessel for a period of time. Most boat insurance companies offer credits if you put your boat out of commission for some time.

Once you put your boat on a layup period, it is best not to use it during that timeframe. If you do, any accidents won't be covered by your insurance policy. 


If your boat becomes disabled in the water, a basic tow most likely won't help you. To recover your boat, you may need to reach out to a salvage company to recover it.

A salvage company usually asks for a percentage of the boat's value as payment, which can be very expensive. Not all insurance companies offer this coverage, so make sure that you reach out to your reputable boat insurance carrier to see if this option is available to you. 

Gadget and Accessory Coverage

Not all boat insurance companies cover expensive accessories such as costly coolers or fishing equipment. A few companies protect those accessories when you add them to your policy as endorsements. 

Marine Inspections

If you have an older boat, most insurers will want to have your boat inspected by a marine surveyor. The surveyor will be able to determine the boat's market value and condition. Just to be safe, it may be best to have a marine survey even if it is not required. 

Important Boating Information

You will need to understand a few crucial limits about your policy before heading out on the water. For example, most boat insurance policies have navigational limits.

These navigational limits outline where you can and cannot navigate your vessel, especially if you own a larger boat or a yacht. If you decide to venture outside these limits, your insurance policy may not pay for any damages incurred outside the boundaries. It is also important to note that the broader your navigation limits are, the higher your boat insurance will be. 

Underage Drivers

When you have your family on board with you, it may sound like a fun idea to let your 13-year-old niece or nephew drive the boat every now and then, but that is not a good idea. If you allow an underaged and unlicensed driver to drive the boat and they damage property, your insurance company may not cover that incident. 

The age and license requirements for operating boats and any other watercraft varies from state to state. For example, in Texas, children under 13 cannot drive a boat unless they are accompanied by an operator who is at least 18. Make sure to check the boating regulatory agency in your state for requirements where you live. 

Boat Insurance Costs

The cost of insurance for your boat depends on the amount of insurance coverage you want. It also depends on the type, value, horsepower, and size of your boat. You also have the opportunity to choose your deductible amount.

This deductible amount is the amount you must pay before your insurance company's coverage kicks in. For example, if you have a $250 deductible and your boat has $1,000 worth of damage, you will only have to pay $250, and your insurance company will pay $750.

If you have only $100 worth of damage and your deductible is $250, you will have to pay out of pocket for your damages. If you do find that your damages exceed $100 and go beyond $250 after a mechanic checks out your boat, you can then reach out to your insurance company to make a claim. 

When you set your deductible with your insurer, keep in mind that the higher your deductible, the lower your insurance premiums will be. The lower your deductible amount, the higher your premiums will be. Make sure that you do not set your deductible too high to where you can't afford it in the event of an accident just to save on your policy. 

Boat Insurance Coverages

As mentioned earlier, you have the option to purchase different types of coverages for your boat, including liability insurance. Most boat insurance policies come with liability coverage as a standard to ensure that you are adequately covered if you or someone else with permission damages property or hurts someone. 

Comprehensive Coverage

Comprehensive coverage covers your boat's damage if there are damages not caused by a collision. As stated above, this includes any theft, vandalism, or lightning damage.

You will need to pay a deductible for this coverage. When you set up your policy, your agent will help you choose your deductible amount. 

Collision Damage

This coverage includes any replacement or repair to the boat due to a collision. For example, if you hit the dock or hit another ship, you can use this coverage to repair or replace your boat.

As stated earlier, you set the deductible for this coverage when you set up your policy. You do have the option to change this deductible amount throughout the entirety of your insurance policy. 

Bodily Injury Liability Coverage

In the event that you hit someone with your boat or cause some type of injury, your bodily injury liability coverage will handle those medical expenses. This coverage also helps cover any legal expenses or lawsuits brought to you by any injured parties. There is no deductible for this coverage; your policy will payout for injuries through your policy limits. 

Property Damage Liability Coverage

As mentioned earlier, if you hit anything with your boat, you have property damage coverage to take care of those expenses. Just like your bodily injury coverage, there is no deductible, and the coverage pays out through your policy limits. It also covers any legal expenses or lawsuits brought to you by the damaged property's owner. 

Boat Insurance Discounts

It is best to reach out to your insurer to see if you can save on your boat insurance premiums. Most insurers offer significant discounts for boat owners who take safety courses. If you also have car, homeowners, and boat insurance with the same insurer, they can also offer you a discount for having different lines of insurance with them. 

What Happens if I Don’t Insure My Boat?

Although recreational boating is typically a safe activity, mistakes or accidents can still happen. The most significant advantage of having boat insurance is knowing that you have liability protection. This coverage will help waive off the costs of any lawsuits presented to you in the event that you are at fault.

Without boat insurance, you lose this coverage, and you will have to pay out of pocket. Legal fees are costly, even if your lawyer can prove that you are not responsible. So it is best to have liability insurance coverage on your boat to protect you from any out-of-pocket costs or having any of your assets taken from you to satisfy a debt.

Boat repair and replacements are also costly. With the right coverage on your boat insurance, you will only have to pay your deductible instead of having to shell out thousands of dollars to repair or replace your boat. 

Protect Your Boat Today!

Having boat insurance on your vessel is one of the most important things you need to do to ensure that you have adequate coverage in the event of an accident. Regardless of whether you are actively on the boat or keeping it stored at a dock, you will want to protect your boat at all times.

Even if you decide to rent out your boat to other people, you will want to ensure that the company has the right insurance coverage over your boat. At the Boat Club, we make sure that you have the right coverage for your boat. If you want to learn more about our club, contact us now!