Does Your Boat Need Insurance?

Insurance is not usually a gray area. Drivers know they need car insurance, homeowners know they need homeowners insurance, and renters know they need renters insurance. It seems like common sense that boat owners would need boat insurance; however, this is not always the case. Depending on several factors, an individual’s homeowner’s or renter’s insurance may provide coverage.

Coverage Available for Small Boats

If a boat is small enough, an individual’s existing homeowner’s or renter’s insurance policy may provide sufficient coverage. These policies usually provide $1000 worth of coverage. Some homeowner’s policies offer coverage equal to 10% of the home’s value. It covers the vessel, motor, and trailer. Examples of boats that fall under this type of coverage include:

  • Canoes
  • Small sail boats
  • Small-scale power boats that cannot exceed 25 miles per hour

However, boat owners relying on their homeowner’s or renter’s insurance should be aware they will likely need additional liability coverage. Many homeowner’s policies allow for elective add-ons like liability coverage, but boat owners should discuss coverage limits with an insurance agent before investing in supplemental policies.

Coverage Available for Large Boats

Individuals who own boats larger or faster than those described above will need a separate boat insurance policy. Some examples of these types of boats include:

  • Jet skis
  • Wave runners
  • Yachts

There are two common types of boat insurance available to boat owners: an actual cash value policy or an agreed amount policy. Actual cash value policies provide payment based on the cost of the boat minus depreciation at the time of the claim. If the boat is lost, most insurance companies use pricing guides to determine the market value.

Agreed amount policies differ in one key way. The insured and their insurer agree upon the boat’s value prior to any claims. In the event of a loss, the insured receives the agreed upon amount. This type of policy also pays out for partial losses, but without deducting depreciation costs.

Regardless of what type of coverage an individual chooses, there are likely to be limits and exclusions. The boat owner will need to invest in additional policies to cover the gaps in their insurance. However, many insurers offer discounts for bundling policies, which can help balance out the additional cost. Navigating the intricacies of boating insurance can be stressful. The Reilly Company can help individuals determine what kind of coverage they need as well as elucidate the particulars of boating insurance. Contact us to learn more.