Boating Insurance Basics: What You Need to Know

If you’re a new or prospective boat owner, there are plenty of rules, regulations, and requirements you need to learn and implement before you hit the water, but one of the most important of those is boating insurance.

Many marinas require proof of insurance, for one, and some states require it, depending on the type of boat you own. Plus, if you expect to take a loan out from a bank to buy the boat (using the boat as collateral), they’ll certainly require insurance.

But beyond meeting basic rules and requirements, having boat insurance is just a good idea. Boating accidents and the accompanying legal fees can come with astronomical price tags.

You can protect your investment and reduce your risk by getting the right kind of policies. Here’s a brief intro to what you need to know about boating insurance.

Types of Boating Insurance

According to Boat Ed, boat insurance can typically be separated into a few types: liability, uninsured motorist, and collision/comprehensive coverages.

Liability insurance is the minimum standard required by most states, banks, and marinas. In general, the faster and more powerful your boat, the more insurance is recommended or required. It will cover the costs of damages if you’re found at fault for damage to other people’s property, or for the cost of injuries caused during boating.

Uninsured motorist insurance, of course, covers damages to your own property or bodily injury caused by other people who aren’t insured.

Collision and other policies can vary quite a bit with what kind of damages they cover. Most of these policies are considered “all risk.” As this post on Boat Owners Association of The United States’ website sums up, that means that they’ll cover “a broad array of calamities that could befall your boat, including theft, vandalism, lightning, fire, grounding or sinking to lost or stolen belongings.” Most of these policies will also cover things like permanently attached equipment and items like anchors, oars, trolling motors, tools, seat cushions, and life jackets. Insurance coverage may also be contingent upon your staying within the United States or in a certain geographic area.

However, Discover Boating, clarifies that the term “all risk” can be misleading, because some risks are usually specifically omitted in the policy. Typical exclusions to comprehensive coverage include damage from wear and tear, cosmetic damage such as dents, damage from animals, manufacturers’ defects, design defects, and damage from ice and freezing.

If you want to expand your coverage, you can buy special add-ons to cover the kinds of risks that are typically excluded, along with other boating-related expenses. For example, you can look for a policy that includes towing expenses (which can cost $400 per hour) or coverage for a specific, expensive piece of boating equipment, such as a navigation system.

Boating Insurance Pricing and Discounts

How much you’ll pay for your insurance policy will vary from one provider to the next. In general, of course, you’ll pay more for policies with higher payouts and lower deductibles.

Also, as we mentioned earlier, more powerful boats will generally cost more to insure, and the condition and the age of the boat will also influence the cost of insurance. For example, many insurance providers require a marine inspection for older boat models before they’ll insure them. (Marine surveys can also be a good idea just to make sure that your boat meets all current safety requirements.)

However, other factors can also influence your insurance prices. Most insurance providers take the following factors into account when setting rates.

• Where you boat – As we mentioned, some policies can be less expensive if you can limit the area where you’ll take the boat. That applies to keeping your boat in domestic waters, but it also usually costs less to be insured in freshwater versus salt, and keeping your boat in a hurricane zone can increase your costs, as we’ll discuss next.
• Training or certification – If you can demonstrate that you’ve completed formal boating safety education courses, it can lower your insurance rates. On the other hand, adding more drivers to your policy may increase the monthly costs.
• Your driving records – If you can show that you’ve been a responsible driver in the past, it may result in lower monthly payments.
• Your hurricane plan – If you live or plan to boat in a hurricane zone, you may pay lower rates if you can provide a plan that shows how you’ll keep your boat safe in the case of a storm. For example, will you store it in a hurricane-proof facility or have it towed somewhere safe? Keep in mind that failing to follow the plan in the case of a storm may void your coverage.
• Your safety gear – Extra safety features onboard may also result in insurance discounts.
• Winter layup – If your boating is restricted in the winter months, you may be able to get deductions for those months.
• Bundling – Some insurance companies may award you for your loyalty if you bundle your home, car and boat insurance together (but keep in mind that most boating coverage that you need is not typically provided by homeowners’ insurance).

How Much Coverage to Get

The amount of insurance you get for your boat will depend on your personal tolerance for risk.

However, here is what Discover Boating lists as standard when it comes to limits and deductibles: 

• Medical payments, $5,000
• $1,000 limit personal effects, $250 deductible
• Uninsured boaters liability, between $300,000 and $500,000
• $500 to $1000 limit Towing and assistance, no deductible
• $1,000 limit Fishing equipment, $250 deductible

However, when it comes to getting compensated for physical damages, you’ll need to make sure you understand how your insurance company will assess your boat’s value. If the policy insures your boat for an “agreed value,” that means that damages will be assessed based on the full value of the boat when the policy was purchased. However, if the boat is insured for “actual cash value,” the policy will take depreciation into account when assessments are made.

To sum up, “actual cash value” policies tend to cost less upfront, but pay out less in the case of damages because they assess based on depreciated value.

A Haven for Boat Owners

If you’re a new boat owner or new to the world of boating, you may be looking for some ideal vacation spots or even homes that will make it easy for you to enjoy your boat.

If that describes you, you won’t want to miss out on a chance to own beautiful real estate in historic Savannah right on the riverfront and an easy excursion away from world-class beaches.

Residents of Upper East River homes in Savannah’s brand new Eastern Wharf neighborhood can enjoy access to a nearby marina, as well as full use of a boating concierge who can retrieve your boat and bring it right to you at Upper East River’s dock.

Click here to learn more about our concierge service, and click here to get in touch with us.