Boat Insurance: What You Need to Know
Boating on the open water can be incredibly thrilling and fun.
But it also carries risk and responsibility. And if you don’t have enough insurance and get into a boating accident, it isn’t fun at all.
Making sure you have the proper coverage is essential to conscientious boat ownership. That means protecting not only the vessel, but also the trailer you use to tow the boat back and forth.
If you own and insure a car and a house on top of that, it can be tricky to keep track of which policy covers what. Buoying yourself with knowledge is the best way to stay above water when it comes to boat and trailer towing insurance.
What is boat insurance?
Boat insurance is special coverage you can purchase to protect your boat from damage or loss due to an accident, and to pay for any property damages or injuries you may cause.
It works similar to the way auto and homeowners insurance does. And much like home and auto policies, boat insurance includes various types of coverage for different situations.
Generally, boat insurance policies cover vessels with motors.
Depending on the policy, boat insurance may also cover any damages to the trailer you use to tow the boat.
Why do I need boat and trailer insurance?
- Homeowners insurance may not be enough. Standard homeowners and renters insurance policies provide limited coverage for small boats such as canoes, small sailboats and powerboats with less than 25 mph horsepower.
Larger, faster and more expensive vessels, however, require a separate policy. These include pontoon boats, sailboats, yachts, fishing boats, leisure crafts and paddle boats. You would also need to purchase a separate policy for personal watercrafts, known by brand names including Jet Ski, Sea-Doo and WaveRunner.
- Auto insurance may not be enough, either. Even though your vehicle’s liability coverage will protect you if you cause injury or damage to someone else’s property while towing your boat, your comprehensive and collision coverage won’t apply here. You would need specific boat, trailer or personal watercraft insurance to protect against damages while towing them.
- Boating and towing is risky. According to 2021 statistics from the U.S. Coast Guard, there were 4,439 accidents involving 658 deaths, 2,641 injuries and approximately $67.5 million in property damage from recreational boating accidents.
There are inherent risks in towing those boats as well. The National Highway Safety Administration reports about 400 people die annually in accidents involving utility trailers towed by passenger vehicles, and that there are about 50,000 accidents each year related to towing.
- You may be required to buy it. Most marinas require that you carry boat insurance to rent a dock or boat slip, and many banks require it if you plan to lease or finance your boat.
Although most states don’t mandate boat insurance, you’re legally required to buy it if you live in Arkansas or Utah. In both states, boaters must carry liability coverage to operate personal watercraft or motorboats with engines of more than 50 mph in horsepower.
How does boat insurance work?
There are two types of boat insurance you can purchase, based on how much coverage you want versus how much of a premium you’re willing to pay.
Actual Cash Value. This type of policy covers only the cost of replacing the boat or its parts, minus depreciation, at the time of the loss. Because this policy offers less coverage, the premium will be lower.
Agreed Amount Value. This policy offers coverage based on a value of the boat that you and your insurer agree upon. The premium would be higher, but the policy would pay out the agreed amount, which is usually more than just the replacement cost of the vessel.
What does boat insurance cover?
Boat insurance commonly includes the following coverage, or the option to add these as riders:
• Loss or damage to the boat
• Trailer damage or loss
• Boat accessories
• Theft of the boat and personal belongings
• Bodily injury
• Property damage
• Medical payments if the boat’s owner or passengers are injured
• Liability for passengers
• Fuel spills
How much does boat insurance cost?
According to Progressive, boat insurance ranges in cost from an average of $263 for an annual policy in low-cost states to $527 in high-cost states.
Factors affecting cost:
• Cost and type of watercraft
• Safety features
• Age of boat
• History of watercraft
• Diesel power.Diesel is much less flammable than gasoline, and therefore a safer way to fuel a boat.
• Safety equipment. You can earn a discount by keeping Coast Guard approved fire extinguishers and a ship-to-shore radio on board.
• Education. You can lower your rates by having your crew complete boating and water safety education courses, such as those available from the Coast Guard Auxiliary, U.S. Power Squadrons or the American Red Cross.
• Bundled policies. Much like home and auto, carrying multiple policies with the same insurer will save you money.
• Safety record. Insurers will lower rates on vessels that go two years claims-free.
How to insure your boat
There are a few ways you can make sure you have enough protection for your boat:
• Homeowners insurance. If you have a small, non-motorized boat like a canoe or dinghy, your homeowner’s insurance may offer all the protection you need to pay for damages to your boat, as well as liability in case you hurt someone or cause property damage. Be sure to confirm with your insurer that your policy offers this coverage.
• Watercraft bodily injury and property damage liability. If you own a larger, motorized boat, you will need this coverage to protect you if you are at fault in a boating accident that causes injury or property damage.
• Personal umbrella policy. An umbrella policy can supplement homeowners, auto and boat insurance to provide additional liability coverage for each.
How to insure your trailer
A combination of coverage is necessary if you want to protect a towing trailer.
Trailer insurance. Although it isn’t a standalone policy, this coverage may be included in your boat policy or available as a separate rider. You will need trailer coverage to protect against loss, theft or damages to your trailer.
Auto insurance. Even if you have boat and trailer insurance, you will still need liability coverage from your auto policy in case you are liable for causing injuries or property damage in an accident involving your trailer.
Homeowners insurance. If a covered incident like a fire, flood or windstorm damages your trailer while it’s stored at home, your homeowners insurance may kick in. Always check with your insurer to find out what’s included in your policy, and what coverage you still need.