Do I Need Boat Insurance?

A sailboat just off the shores of San Francisco
••• Henry Lederer / Getty Images

Whether you are a current boat owner or just considering purchasing your own boat or watercraft, you’ll want to make sure your personal property and legal liability obligations are properly protected in the event of a boating accident. While no one likes to think that a boating or watercraft accident could happen to them, the truth is that there are thousands of boating accidents in the U.S. every year. While practicing boating safety helps keep accident numbers down, there always is a chance the unthinkable will happen. There were 4,168 recreational boating accidents in 2019, resulting in 613 deaths, 2,559 injuries, and about $55 million in property damage.

What States Require Boat Insurance?

Most states do not require boating insurance, but legal requirements are not the only consideration. If you take out a loan to purchase a boat, the bank or credit union holding the loan is likely to require insurance. Also, if you keep the boat at a marina or some other location you do not own, insurance is likely to be required.

The states where boat insurance is mandatory are Arkansas and Utah. Arkansas requires at least $50,000 of liability insurance for all boats powered by engines of more than 50 horsepower. Utah also requires insurance for boats with engines of more than 50 horsepower. However, the minimum coverages are $25,000/$50,000 for bodily injury/death, $15,000 for property damage, or $65,000 combined per accident.

What Does Boat Insurance Cover?

Specific coverages depend on the details of the insurance policy. An all-risk policy will cover everything not specifically listed in a policy. Typical exceptions include things like normal wear and tear, manufacturer defects, or ice.

Depending on circumstances, your boat is not always covered by your boat insurance. For example, if the boat is damaged while stored at your home, it would be covered by your homeowners insurance policy. If it is damaged while being towed behind your vehicle, it would be covered by your auto insurance policy. Be sure to review your homeowners and auto policies for coverage details.

Overall, coverages are similar to what you would see in an auto insurance policy. Liability insurance, for example, provides coverage if you are responsible for damage to property other than the boat. Medical coverage pays for injuries sustained in an accident involving your boat.

Types of Boat Insurance

There are many different types of boats, which means there also are several different types of boat insurance policies available. It's important to familiarize yourself with each one to understand your needs.

Hull Insurance

This covers damage to your boat and any damage your boat causes to the property of others. This includes the cost of boat repairs. If a total loss occurs, hull insurance will pay the agreed value of the boat.

Third-Party Liability

This covers damage your boat causes to the property of others. It also covers any incidental damage, such as liability stemming from fuel spills, towing, medical expenses, and any rescue operations necessary. Your marina may require you to carry a third-party marine liability policy.

All-Risk Policies

Such policies typically cover any risk not specifically excluded in the boat insurance policy such as ice damage, freezing, pollution liability, reef damage liability, or mechanical breakdown. Medical insurance often is available as a rider to the policy.

Actual Cash Value or Agreed Value

This describes how the value of the boat is determined. Actual cash value is the value of the boat at the time of claim, which takes into account depreciation and may result in a lower premium. An agreed value policy will secure the amount you can receive for your boat if a total loss occurs regardless of the depreciation, although in some cases partial losses may be depreciated.

Yacht

Boats are separated into two categories based on length. Vessels 27 feet or longer are considered yachts and require a special policy that generally costs more money.

Boat Club

This covers all the members of a boat club for property damage and liability when operating a vessel.

Professional Angler, Fishing Guide, or Charter

These policies are available to cover travel and equipment needed for fishing tournaments.

Cost Factors

Several factors are used to determine the cost of boat insurance. Generally, larger boats capable of higher speeds will cost more to insure than smaller, slower boats. Other factors include:

  • The age of the boat
  • The value of the boat
  • The condition of the boat
  • If you live on the boat
  • Whether the boat has an inboard or outboard motor
  • How the boat is used (fishing, cruising, utility, etc.)
  • Where the boat is used (rivers, bays, lakes, ocean, etc.)

You may be able to help reduce the cost of your boat insurance if you qualify for available discounts. Many companies offer discounts to boat owners who have a boating license or if you are storing your boat under a covered structure such as a shed. You also may qualify for a discount if you have your boat inspected by the Coast Guard Auxiliary. Using all the available discounts will help you get the best value on an insurance policy.

Average Cost of Boat Insurance

Average boat insurance costs range from about $200 to $500 annually, but there are many variables. As with auto insurance, the more expensive the make and model of your boat, the higher your boat insurance premium will be. Newer models also will cost you more to insure. For those in hurricane-prone zones, your insurance coverage may cost you more.

Article Sources

  1. U.S. Coast Guard. "2019 Recreational Boating Statistics," Page 6. Accessed Nov. 10, 2020.

  2. Arkansas Department of Finance and Administration. "Motor Boat Registration." Accessed Nov. 10, 2020.

  3. Utah State Parks. "Boating." Accessed Nov. 10, 2020.

  4. Discover Boating. "Boat Insurance Guide." Accessed Nov. 10, 2020.

  5. Global Marine Insurance Agency. "Boat Insurance Basics." Accessed Nov. 10, 2020.

  6. Trusted Choice. "Looking for Boat Insurance Rates?" Accessed Nov. 10, 2020.