What you'll discover in this report:
They are called pleasure boats or pleasure crafts, but, let's face it, sometimes they're a "pain." They are expensive, to say the least -- and potential danger comes with the pleasure.
They are, after your home(s) and maybe your car(s), possibly your most valued assets. You can choose to own and operate a boat, yacht or personal watercraft without insurance (although some marinas and yacht clubs won't let you dock your craft unless you have coverage). However, that's not a very smart choice.
* Note. If you have a homeowner's insurance policy you may have some coverage for your watercraft but it is very, very minimal. A typical homeowners policy may pay up to $1,000 or $1500 to repair damage to your boat, but -- guess what? -- that damage has to occur while the boat is at your home. This is not exactly the kind of coverage you need on a watercraft. In addition, there may be some liability coverage, but it depends on the size of your engine --- normally only outboard engines of 25 hp or less.
You could gamble and not buy insurance for your watercraft, but that's a big gamble. You're risking not only losing or severely damaging the boat in an accident, but possibly your other assets if your boat causes damage and/or injuries to other boats and/or boaters.
First, you need to know that there are three types of "boats."
You will find that insurers have varying appetites for these types of watercraft. For this insurance, smaller is often not better. In fact, personal watercraft tends to be more accident-prone than most kinds of boats and yachts.
Some insurers won't provide coverage for your personal watercraft at all or will only provide coverage if it is part of a larger policy. Your policy should include coverage for injuries to you and your passengers, the craft itself, liability (for damage and injuries to other crafts and people) and theft.
* Note. If you use your watercraft for water-skiing, make sure you get coverage for this exposure as well. (Depending on the insurance company, it may not be automatically covered.) You can also get coverage for the trailer(s) you use to transport the watercraft.
In the insurance world, "boats" are usually smaller powerboats and sailboats. Standard policies for boats cover damage to the craft, including damage caused by fire, lightning, theft, vandalism, collisions, and windstorms.
The coverage is usually available for the boat itself, outboard motor(s), the boat's trailer and personal property on the craft that is part of the normal operation of the vessel. Some insurers offer separate coverage for fishing equipment.
Depending on the insurance company and the age of your boat, you may find a variety of settlement options in the event that your boat experiences a total loss. The best coverage, usually available only on recently manufactured boats, is "replacement cost" where the company will buy you a similar brand new boat. Other options include "agreed value" where you and the insurance company agree in advance what the settlement value will be in a total loss, and "actual cash value or ACV" where the insurance company will pay the fair market value of the boat at the time of the loss up to a specified rating base.
The standard boat policy also provides liability coverage, which is usually offered in increments of $100,000 to as much as $1 million. Therefore, it is similar to auto insurance liability in terms of what is available.
Most boat policies also cover medical expenses incurred by you, your family and any other passengers on-board. Some policies also provide coverage for injuries caused by uninsured boaters or by boaters who don't have enough insurance. If this sounds like uninsured motorist coverage in an Auto Insurance policy, it basically serves the same purpose.
* Tip. If you're shopping for boat insurance, it's wise to consider those policies that offer this "UIB" coverage. Our agents would be happy to discuss this with your further.
If your watercraft is 26 feet or longer, you may need to buy yacht insurance, which provides basically the same coverage as boat insurance, but the policy terms (or vocabulary) are different. Under a boat policy, coverage for damage to the craft is called "physical damage."
Under a yacht policy, the boat is referred to as "hull." Liability coverage under a yacht policy carries the name "property and indemnity," which insurance people often abbreviate to P&I. As with boat liability coverage, P&I is available in increments of $100,000. Depending on the size of your craft, you can buy P&I limits from $300,000 to as much as $50 million.
* Note. Like boat insurance, you should seek a yacht policy that offers coverage for medical payments (for you and your passengers) and uninsured boaters.
The cost of your boat or yacht policy is based on a variety of factors: horsepower; how fast it moves (it can cost as much as 50% more to insure a speedboat than it does a sailboat of similar size); where it is to be used; age of the craft and experience of the vessel's operator.
* Tip. Insurers often offer discounts of 5% to 20% to those boat/yacht owners who have taken an approved boating safety course. (In some states, such courses are required to operate a boat or yacht.) Discounts are available, from some insurers, for newer vessels and protective devices (depth finders, ship-to-shore radios, burglar alarms). You can also save money on the policy by electing a higher deductible.
Like boating itself, watercraft insurance is not cheap. As such, it truly pays to shop around. There are a lot of different policies and coverage options available. Some policies might be significantly cheaper than others, but they don't offer the coverages you need.
* Tip. This is a complex area of insurance with lots of options. Talk to someone from our office. Let us help you to assess the many options out there and find the coverage that best suits your needs and best protects your assets.