Are you shopping around for a boat? The thought of being out on the water in the summer is thrilling and a great way to spend time with family and friends. Whether you’re a fishing enthusiast or you enjoy water sports, boat ownership is plenty of fun.
However, many people don’t realize the full cost of boat ownership before making their purchase. There are marina and maintenance fees to consider, and let’s not forget about the insurance. That’s right; you need to ensure your boat, especially if you’re financing it. When financing your boat, the dealer won’t let you take it from the showroom until you have your proof of insurance.
Even if you’re buying a pre-owned boat, it’s a good idea to have insurance. If something happens to your boat and its sinks, you’re left holding the bag if you don’t have insurance to cover you for the loss. So, how much does boat insurance cost? Typically, boat insurance only runs you around $200 to $500 per year, and it’s well worth the protection against the risks of boat ownership.
This post unpacks everything you need to know about the costs, policy details, and cover involved with insuring your boat.
Contents
Do I Need Insurance for My Boat?
While the general answer is yes, there are a few “bats” that don’t require the need for insurance. You can include smaller boats under your homeowner’s insurance. Some of the models that might fall into this category include the following.
- Kayaks
- Canoes
- Jon boats
- Paddle boats
- Boats with low-powered engines under 25-HP
Your insurance policy may also offer you the option of adding a rider to protect the person from injury or liability if they’re out on the water with you and something goes wrong.
However, if you have a larger boat, you’ll need an independent insurance policy to provide the cover you need.
Charter Boats
Charter businesses may also need to include commercial insurance policies in their cover.
Fishing Boats
Bass boats and every vessel involved with the freshwater or saltwater versions of the sport.
Houseboats
You’ll need to ensure the houseboat like you would your home.
Personal Watercraft (PWCs)
Jets skis and wave runners are fun but risky. You’ll need insurance coverage to protect against liability and damage.
Pontoon Boats
If you like to party out on the water, make sure you have insurance. Pontoons are where the party’s at! So make sure your boat and your passengers are protected.
Sailboats
Long-distance sailing and racing required specialized insurance policies.
Speedboats
Higher speeds mean the chance for accidents, and insurance is a must.
Yachts
A luxury vessel is an expensive purchase, and you need insurance against damage and disaster.
All the boats mentioned above require insurance, even if it’s not mandatory to have it by state law. Having an accident or disaster occurs in an uninsured vessel could end up setting you back in your finances for the rest of your life.
Boating accidents were the cause of $55 million in property damages during 2019, with 2,559 injuries in the same period. Liability insurance protects you from these situations, ensuring you don’t experience financial problems at the hands of lawsuits.
How Much Does Boat Insurance Cost?
The average cost of boat insurance works out to between $200 and $500 per year. However, this figure is only an average, and the price you pay could be far more than that, especially if you have a longer or luxury model.
Typically, the cost of your annual insurance premiums will equate to around 1% of the boat’s total value. So, if you have a million-dollar yacht, you’re going to pay approximately $10,000 a year in insurance premiums.
However, it’s also important to note that plenty of other factors influence the cost of your insurance premiums.
What Are the Factors Affecting Boat Insurance Premiums?
The vessel’s value isn’t the only consideration insurers take into account when assessing you for premiums. There are many factors insurers look at to get an idea of your “risk profile” to set your policy rate.
Engine
A high-powered performance watercraft carries more risk of accidents and problems and thus a higher insurance premium.
Condition
The current condition of your boat plays a role in setting the price of your premiums.
Model and Year
The model and year of manufacturing make a difference, with older boats being cheaper to insure.
Driver Age
Your age plays a role in your policy premiums. If you’re between the ages of 25 and 60, you’ll receive the best rates.
Use
How do you intend to use the boat? Are you going out on the ocean or sailing on the lake? If you’re using it for business, such as a dive charter, then you’ll have to pay additional premiums over recreational users.
Locations
Where you reside in the United States and where you’ll use the boat also play a role in the cost of your premiums. You’ll pay more for insurance if you live in a Hurricane-prone area like Florida, compared to California.
Boating Driver Record
Your driver record also influences the cost of your insurance premiums. If you have an accident-free history, you can expect the best premium pricing. If you have a bad record, the insurer may reserve the right to refuse to insure you.
Can I Get a Discount on My Boat Insurance?
There are several ways boat owners can save on the costs of their boat insurance premiums. The insurer will typically offer a discount if you meet any of the following criteria.
- You take a boating safety course.
- Your boat has a diesel engine.
- You carry the right PPE and coast-guard-approved safety equipment onboard your boat.
- If you decide to bundle your home, auto, and boat insurance.
- You take a high deductible.
- You don’t claim on your policy for at least two years.
It’s also important to note that the value of your boat diminishes every year. It’s a good idea to call the insurer at the start of the year and ask them to adjust your policy based on your clean driver record, the new valuation on your boat, and your payments record.
What Will My Boat Insurance Policy Cover?
The boat insurance policy covers you against the financial liability and risk involved with an accident in the boat, whether in the water or on land.
You get coverage to protect you against liability lawsuits, damage to your boat, and outright loss. You also have options for coverage of any medical bills in the event of an injury and lawsuit protection in the case of accidental death.
Let’s unpack each type of coverage in detail.
Liability Coverage
Your liability cover is the most important type of boat insurance for owners. This policy covers medical bills and repairs to other people’s property damaged in an accident. Without this cover, you expose yourself to a lawsuit that could ruin you financially.
You also have options for passenger liability and for cover against hitting docks. There is also cover should you release pollutants into the water, like gasoline and oil, in the event of a crash or sinking on the water.
Physical Damage Coverage
This cover protects you and your boat against physical damage to your boat or another person’s property in the event of an accident. Some of the points covered by this insurance are the following.
- Collisions with docks, boats, debris, or submerged objects.
- Damage from storms and wind or hail.
- Vandalism and theft.
- Fire and sinking.
Many insurers offer boat owners a comprehensive “all-risk” policy that covers you for any event that damages your boat, other people or results in a total loss of your property.
Agreed Value
When assessing your risk profile for insurance, the insurer will ask you to take your boat to an accredited assessment center for an inspection. When they finish the check, they value your boat based on its current state.
This “agreed value” is what the insurer will pay you out in the event of a total loss of your property. Typically, this insurance model is suitable for expensive and classic boats.
Actual Cash Value
This policy value looks at the current market value on the day you insure the boat. Let’s say your boat is $20,000; you will receive a $20,000 payment, even if you paid $22,000 for the vessel.
This situation also applies to boat owners that make upgrades to their boats. The insurer will not pay out the value of any accessories or additions you make.
Medical Expenses
This coverage takes care of any medical expenses involved with your accident. The cover extends to you and any other people injured in the accident due to your actions.
Personal and Private Property
This insurance covers any personal or private property on the boat that goes missing. Unattached accessories like fishing gear, navigation systems, and other personal items have insurance coverage against loss, damage, or theft.
Uninsured Boats and Watercraft
If you’re involved with an accident with an uninsured watercraft, you don’t have to worry; your insurance will cover your repairs – the other guy is out of luck. Without this insurance in place, you’ll likely end up in court battling it out with the other boat owner.
Boat Salvaging
If your boat is in an accident or situation where you’re on the open water out at sea, you need a two back to land, and the insurer will cover the costs.
This insurance policy will also cover the costs of removing your boat from the water if it sinks and the cost of hauling it to the salvage yard.
Most authorities will require you to remove the boat if it sinks in shallow waters, as it causes a hazard to other boats in the area.
Is there Anything My Boat Insurance Won’t Cover?
While an insurance policy covers you against damage and loss of your boat in various situations, there are some things that the policy won’t cover.
Wear and Tear
Your insurance policy won’t cover damage caused by the normal wear and tear of the parts on your boat. So, if your engine is in poor condition and worn out, don’t expect the insurer to replace it.
Faulty Mechanics
Some insurance policies cover owners against mechanical breakdowns and repairs for motors. However, these are specialized policies, and you’ll usually pay a higher premium for the protection. It’s important to note that the policy won’t cover you for manufacturer defects.
Damage Inflicted By Animals
If you hit a marine animal, you won’t have any coverage against the damage. Make sure you understand the local environment before you go out racing across the ocean with high-powered engines.
Pest Infestation
Pest infestations inside the boat don’t have any cover, and barnacle infestations on the hull won’t cover removal. You’ll need to ensure you remove the boat from the water annually and inspect it for pests and damage.
Improper Transportation and Storage
If you fail to load, transport, and store your boat correctly, and the insurer can prove it – you won’t have any coverage. The insurer won’t cover you for negligence.
The insurance company will issue a navigational limit. If you go offshore beyond this limit, then the insurer voids your coverage if anything goes wrong.
Accidents Outside the Layup Period
The layup period is when you remove your boat from the water for a long period, typically during the winter in the northern states. If you use the boat outside of your layup period, you won’t have any coverage.
Unnamed or Underage Drivers
If your kids drive the boat or your friends get behind the wheel on occasion, you want them protected against every possibility. This policy gives other drivers the same protective benefits from your policy as you receive.
Wrapping Up
There are dozens of insurers online. Take the time to shop around for quotes and compare pricing between insurers. You can even play them up against each other to see if they offer you a good deal.
