Boating Insurance 101

Boating Insurance 101

Your boat is an investment. And like any investment, it needs to be protected. Many boat owners just buy generic insurance that’s lumped in with their home or auto policies. Unfortunately, that likely won’t give you all the coverage you need.

Boats have unique needs that require specific own policies. After all, you wouldn’t insure your car with a homeowner’s policy! So, before you call the next insurance company that shows a commercial on TV, here’s what you need to know to insure your luxury powerboat.

First Step: Know Your Boat

Just like car insurance, the first thing an insurance agent will want to know is the specifics of your boat. This will give them an idea of the value and potential liabilities they’ll have to cover. You’ll need to have the following information handy:

  • Year, make, and model.
  • Type of engine(s) – Manufacturer and style. Outboard, inboard, etc.
  • History – Has the boat been damaged or depreciated in value.
  • Condition – Is it up to U.S. Coast Guard standards?
  • Function – How do you plan on using the boat? Cruising, racing, fishing, etc.?
  • Ownership – Is there sole ownership, or does more than one person own it?
  • Operation – Where is it going to be used? Ocean, lake, bay, river, Great Lake, etc.

Your insurance agent will use this information to determine your boat’s value and identify any potential risks. If you come armed with all this information, the process will go much more smoothly.

Three Types of Boat Insurance Policies

There are three basic types of boat insurance policies you can get. The main difference between them is how depreciation is handled.

  • Agreed Value Policy – The boat is covered for its value at the time the policy was written. In the event of a total loss, the payout is equal to the “agreed value” of the boat at the beginning of the contract. While you won’t have to worry about depreciation, an agreed value policy will cost a bit more upfront.
  • Actual Cash Value Policy – Your luxury powerboat is covered for the boat’s actual value at the time of a claim. This does factor in depreciation, but these policies are typically much cheaper.
  • Total Replacement Value – This is a newer type of policy, but it’s popular with many new boat owners, especially for high-end luxury powerboats. This type of insurance policy guarantees to replace your boat with a new one of similar make and model. This type of policy is only available on new boats, and it lasts for only two or three years before changing to an agreed value or actual cash value policy.

If you have a new luxury powerboat, a total replacement or agreed value policy is likely preferred, but you might want to switch to an actual cash value policy as it ages to save some money.

Insurance Coverage

Like all insurance policies, boat insurance coverage varies depending on the policy and agency you use. When shopping for insurance, these are the types of coverage you’ll want to think about:

  • Comprehensive – Covers damages outside of collisions like theft, vandalism, and tide damage.
  • Collision – Covers the costs of repair or replacement in the event of an accident. Boat collision coverage can be built into your homeowner’s policy, but it won’t cover some marine-related expenses like wreckage or towing expenses.
  • Salvage – Covers the cost of removing your boat from the water if it can’t make it back to shore. Towing your boat can cost up to $400 per hour, so it’s a good idea to be covered, especially if you like to travel far from shore.
  • Property Damage – Covers damage you cause to someone else’s dock, boat, or property.
  • Injury – Covers damage caused to a person while on your boat. This could include medical bills, legal fees, and pain and suffering compensation.
  • Personal Property – Covers all the items in your luxury powerboat like GPS, fishing gear, and safety equipment.
  • Specialized – If you carry an expensive item on your boat, you can get specialized coverage to cover that item specifically. It’s a way to protect valuables on the boat.
  • Consequential Damage – Covers damage caused by regular wear and tear like rot, corrosion, mold, or other long-term damages. Of course, this coverage varies, so make sure to check with your insurance provider as to what exactly is covered.
  • Storm Coverage – Covers your boat in the event of a hurricane, flood, or major natural disaster. This is a great addition to any insurance policy for boats in hurricane-prone areas like Florida.

Chances are good you won’t need all the coverages mentioned. Your insurance agent should be able to walk you through the pros and cons of each type of coverage and help you select the right ones for your needs.

Factors that Affect the Cost of Insurance

Like car insurance, the type of boat you use and how you use it will affect your insurance price. If you have a big, fancy, expensive luxury powerboat and like to race with your friends, insurance is going to cost a bit more than a weekend warrior looking for some R&R on the water.

Here are some of the factors that might impact the cost of boat insurance:

  • Horsepower or speed capabilities – The faster your boat can go, the more expensive it’ll be to insure.
  • Locations you plan to boat – Dangerous boating conditions will increase your insurance premiums. For example, deep-sea boating will be more expensive than calm lake trips.
  • Driving record – Yes, your on-land driving record will affect the price of boat insurance. Good drivers get better rates for all their toys.
  • Boater Safety Training – Remember those driver’s safety classes you took in high school? You can take them for boating too, and they can save you some money on your boat insurance.
  • Deductible – You can save a few dollars on your policy by choosing a higher deductible. Just expect to pay a bit more for damages.

Generally, if you want to keep insurance costs down, err to the side of safety. Take boater’s safety courses and stick to cruising in secure locations. Of course, at Mystic, we don’t condone reducing horsepower for the sake of insurance savings. There are plenty of other ways to save on your luxury powerboat insurance!

Insuring Your Luxury Powerboat

Insurance is never a straightforward process, but it’s one that every boat owner must endure. Protecting your boat from accidents and mishaps is essential to keeping your investment safe. By learning the terminology and basic coverages, you’ll be better equipped to get the insurance policy that’s perfect for your unique needs.