Boat Insurance: The Difference Between Smooth Sailing and Rough Waters

Arial view of a boat on the open water - waters are clear and blue

For those who long to be out on the water, there is nothing quite like the freedom and thrill of a day spent on your very own powerboat. But with as much pleasure as boat ownership can bring, boating also carries with it inherent risks and responsibilities. Boat insurance, though not always required, is something every owner should understand and seriously consider when investing in a powerboat.

When is boat insurance required?

Boat insurance is mandatory when you:

  1. Live in a state that requires it. Contact your insurance agent if you are unsure of your state’s regulatory policies pertaining to powerboats.
  2. Carry a loan on the boat. If you borrow money to purchase a boat, the lender will require you to carry insurance that covers the full value of the boat in case significant damage or theft were to occur.
  3. Rent space to dock your boat. Most marina operators require proof of liability insurance before you can sign a contract at their sites.

Why invest in boat insurance?

Even if it’s not legally required, boat insurance is a smart choice for every boat owner as one mishap, even if it’s not your fault, can turn boat-ownership bliss into financial calamity. Without boat insurance, you would likely be on the financial hook if scenarios such as the following were to occur.

  • Your boat was to sink at the dock and require major equipment and work hours to extricate it
  • A bad storm was to relocate your boat and a salvage team had to recover it
  • You were to cause bodily injury to another person while boating and the person were to claim medical expenses and loss of income due to the injury
  • Your boat were to suffer a fuel spill requiring expensive environmental cleanup
  • An uninsured boater was to damage your boat or trailer

Clearly, insurance can cover a lot more than just the value of your boat. Even if your boat isn’t worth much on paper, an insurance policy could be worth every penny if an unforeseen disaster were to strike.

What and who does boat insurance cover?

As with most types of insurance, boat insurance varies in levels of coverage:

  • Collision coverage would repair or replace your boat and trailer if either or both were to be damaged in a collision.
  • Bodily injury liability would cover expenses — medical, lost income, and legal — related to any bodily injury caused while operating your boat.
  • Property damage liability covers any damage your boat may cause to another’s property, including boats, docks, and structures.
  • Comprehensive covers your boat if it were to become damaged or lost in an incident other than a collision such as theft, vandalism, or fire.

Added coverage may also be available to protect fishing or watersports equipment as well as subsidize or cover towing expenses and assistance if you were to have mechanical problems on the water.

Because potential boating risks are so varied and unpredictable, most boat insurance carriers offer “all risk” policies. These provide coverage for the vast spectrum of potential incidents including theft, vandalism, stolen equipment, collision, fire, and sinking. And your boat policy wouldn’t just protect you: Most boat policies allow anyone to operate your boat if you’ve given them permission. Thus, your insurance covers all authorized operators. If a passenger was to be injured on your boat, he or she would be covered under whatever liability insurance you carry.

Is boat insurance expensive?

Boat insurance costs vary widely — from $75 per year to more than $500 per year — depending on many factors:

  • The level of coverage and deductibles you choose
  • The age and type of your boat
  • The power of your boat’s engine
  • Where you intend to primarily use your boat, whether on the open ocean, on inland waters, or on a river, reservoir, or lake

Coverage type and cost also can depend on the size of your boat: In general, powerboats 26 feet long or shorter are “boats” while vessels 27 feet or longer are considered “yachts.” Insurance coverage for yachts can be very specialized since larger boats tend to travel greater distances and carry more people, often in open seas.

The important thing to remember is that owning a boat should be fun, not a constant source of worry. Having adequate boat insurance provides boat owners peace of mind that their boats and financial well-being are properly protected — even if boat ownership hits rough waters.