Boat Insurance Coverage Explained

When water is life, there are few greater joys than cutting across the lake or ocean on your favorite vessel. Of course, it’s your pride and joy. But is your boat protected against physical damage, theft, collisions, and other threats?

Many boat owners don’t realize that neither auto insurance nor homeowners insurance policies cover boats, leaving them underinsured and underprotected. You’re liable for any damage or injuries your boat causes, and without boat insurance coverage, you could be stuck footing a bill for thousands of dollars.

To make sure you’re covered if your boat is damaged or involved in an accident, you need quality boat insurance, and a local independent insurance agent can help you get the right policy. While it isn’t mandatory in most states, it is highly recommended to protect your wallet and your vessel. Here’s what boat owners should know about boat insurance coverage.

What Is Boat Insurance?

So, what is boat insurance, exactly? Boat insurance covers you in the event your boat is damaged, stolen, or involved in an accident. Some policies include both bodily injury liability and property damage liability insurance, which help pay for injuries or damage that your boat causes.

Most watercraft with motors, including fishing boats, pontoon boats, paddle boats, leisure crafts, and yachts, are covered by boat insurance. It doesn’t typically cover canoes, kayaks, or personal watercraft (PWC), like Jet Skis. However, small watercraft may have limited coverage under your homeowners policy. You might also be able to add a special endorsement or buy separate coverage for them.

What Does Boat Insurance Cover?

What’s covered by your boat insurance coverage varies based on the type of vessel that's insured, as well as the types of coverage you choose for your policy. Similar to auto insurance, your policy can include several types of boat insurance to provide well-rounded protection, such as:

• Collision damage: This coverage includes repair or replacement of your boat due to damage from a collision, but may not include cleanup of wreckage unless you purchase optional additional coverage.
• Property damage liability: This can help cover damage that you cause to someone else’s boat or other personal property and structures.
• Bodily injury liability: This helps cover the costs of injuries you cause someone else while using your boat. It includes medical bills, lost income, pain and suffering, and legal expenses.
• Comprehensive: This can provide compensation if your boat is vandalized, stolen, or damaged in an incident other than a collision.
• Additional coverage options: Coverage is also available for medical payments, fishing equipment, oil spills, personal effects, and roadside assistance, as well as damage and injuries from accidents caused by boaters who are uninsured or underinsured.

A standard boat insurance policy may provide coverage for the following:

• Damage or loss caused by theft, vandalism, windstorms, and lightning
• Accidental collision or impact damage to your boat's hull, sails, equipment, furnishings, and motor
• Damage your boat does to other boats and property
• Bodily injury or death of another person caused by your boat, including their legal expenses, pain and suffering, and medical bills

The amount of compensation you receive for a boat insurance claim depends on a few things, including your deductibles, limits, and whether your boater’s insurance covers your boat’s actual cash value, replacement cost, or agreed-upon value.

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Boat Insurance Coverage Add-Ons

Want better or broader protection? Additional boat insurance coverage types can help close gaps in your policy to extend coverage to other items or protect against more events. Items or protections you might add to your boater’s policy include:

• New boat replacement
• Uninsured/underinsured boater
• Fuel spill liability
• Wreckage removal and salvage
• Medical payments for you and your passengers
• Guest passenger liability (for legal expenses incurred by someone operating your boat with your permission)
• Boat trailers
• Special equipment, like fishing gear
• Boat accessories, like radar
• Ice and freeze coverage (for damage to the engine or water systems)
• Mechanical breakdown
• On-water towing
• Hurricane haul-out provisions

Loss or theft of personal property from the boat may not be covered unless it’s listed on the policy. Before paying for the extra coverage, though, check to see if your homeowners insurance policy might cover these items.

What Boat Insurance Doesn't Cover

So, what isn’t covered by boat insurance? Though boat insurance is designed to protect you and your boat, it doesn’t cover everything. Your individual policy should have a list of exclusions, or damage and events that your boat insurance won’t cover. It’s important to understand these so you can work to prevent them as diligently as possible. 

While exclusions will vary by policy and insurer, common exclusions include damage caused by:

• Mold
• Insect damage or infestation, such as from termites
• Land and sea creatures, such as waterfowl, sharks, or zebra mussels
• Rust and corrosion
• Normal wear and tear
• Negligence
• Manufacturer defects, including in the boat’s design
• Machinery damage
• Overuse

Your independent insurance agent can help review your specific policy with you to be certain of its exact coverage exclusions.

Do You Need Boat Insurance?

Boaters often want to know whether boat insurance is required to enjoy the water. Unless you’re in Arkansas, Hawaii, or Utah, the answer is no, boat insurance isn’t required by law, but that doesn’t mean you don’t need it.

Arkansas, Hawaii, and Utah each require coverage for boats by law. Arkansas and Utah both mandate boat liability coverage for vessels with engines of 50 horsepower or higher. If you want to dock your boat at a marina, they may require you to purchase liability coverage, too. Additionally, if you financed your boat purchase, your lender would likely require you to have more extensive boat insurance coverage to minimize financial risk. 

Hawaii requires boat insurance for vessels that are at least 26 feet in length. But even if you're not located in a state that legally requires you to purchase boat insurance, it’s worth getting anyway. All it takes is one accident to total your boat or leave you with a significant bill if you don’t have the appropriate coverage.

How Does Boat Insurance Work?

Boat insurance works by compensating you for the expenses of covered incidents and damage, according to your policy’s limits, deductible, and more. When you buy boat insurance, you must decide on the amount and types of coverage you need for your boat, plus the deductible (i.e., your out-of-pocket expense per claim). Generally, the higher your deductible, the lower your monthly payments.

If you're involved in an accident, experience a theft, or suffer another loss that’s covered under your policy, you can file a boat insurance claim and receive a payment to help cover the loss. The amount you receive depends on your policy’s limits and coverage. 

Your policy’s limits are the most you can be paid for a claim, and different coverage types often have different limits. These dictate how much you may receive for each type of claim you file. 

For example, you may have liability coverage up to $65,000 per event and boat trailer coverage up to $4,500, its agreed-upon value. You may also have comprehensive coverage up to your boat’s replacement cost (the real cost to replace it).

So, how does boat insurance work when an accident happens? If you get in an accident with another boat and it causes serious damage to your vessel, what happens next will vary based on your coverage, the other boater’s coverage, and state laws. Here are a few possibilities: 

• If you’re deemed to be at fault, your boat collision insurance can help cover the damage up to the limits of the policy, if you have that coverage.
• If the other boater was at fault, their boat liability coverage can pay for your damage up to the limits of their policy.
• If the other boater was at fault but did not have boat insurance or did not have enough to cover your expenses, your uninsured/underinsured boaters insurance could cover the damage, if you have that coverage.

Your independent insurance agent can help you ensure you have enough coverage to protect your boat from many potential scenarios. 

How Much Does Boat Insurance Cost?

In general, boat insurance can range anywhere from as little as $200 to as much as $500 per year. If you are looking for boat insurance for older boats, costs will vary significantly. The cost of boat insurance can vary depending on:

• The coverage types, limits, and deductibles you want
• The state you live in
• The type, size, and age of the boat you wish to insure
• The size of the motor and how it's powered
• The requirements of your lender or marina
• Whether you operate the boat on inland waters or the open seas

Boat insurance companies also offer a number of boat insurance discounts that can give you a price break in certain situations. For example, you might be eligible for a lay-up discount if you don’t use the boat year-round, or a discount for boating in fresh water instead of salt water. 

You may also qualify for discounts if you’ve taken a boating safety course or have a clean boating record. Safety equipment, like shore-to-shore radios and Coast Guard-approved fire extinguishers, can also help you score discounts.

Insurance companies vary in the discounts they offer. An independent insurance agent can compare boat insurance quotes and options from multiple carriers to find you the best deal.

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How Much Boat Insurance Do I Need?

The amount of boat insurance you need depends on a number of factors, including the boat’s value, motor size, age, and how you use it. Your own risk tolerance level should also be considered. If you have a brand-new high-performance speedboat, for example, you’ll likely need more liability and collision coverage than if you own an older pleasure cruiser.

Insurance professionals recommend buying at least $1,000,000 in liability insurance. If you have a boat that's riskier to operate, more valuable, and can cause more damage than other vessels, you should have even more coverage. For uninsured/underinsured motorist coverage, a typical recommended minimum is $10,000. 

However, the amount you purchase should reflect the potential injuries and damage you may need to cover if you, your passengers, or your vessel is harmed. Your other policy limits, including for collision and comprehensive coverage, should be based specifically on the value of your boat.

Where Can I Get Boat Insurance?

You can easily obtain boat insurance quotes online to directly compare your options and prices. If you have questions, special circumstances, or a high-dollar boat to insure, your best bet is to work with an independent insurance agent.

To find the best boat insurance rates available, contact a local independent insurance agent who knows the insurance regulations in your area. They can compare options and rates from multiple companies to help you make an informed decision. And down the road, your agent can help you update your policy when necessary and can even file boat insurance claims for you.

FAQs About Boat Insurance