If you're new to boating, just upgraded to a new boat, or are simply shopping for a new insurance policy for your boat, it is important to understand your personal reasons for needing boat insurance.
Most people already know the importance of home owner's insurance and auto insurance. Not only are your assets financially protected should something happen to them, but both of these types of insurance typically also protect you from financial liability if someone (or someone's property) gets hurt at your home or by your vehicle. But do you need these types of coverage as a boat owner?
With over 75 million people in the United States alone actively participating in recreational boating, it quickly becomes evident that there is a certain level of risk involved with operating a boat. Bays, rivers, lakes, and harbors can all become busy and crowded, both of which lend themselves to increased risk of a boating mishap. Furthermore, navigational hazards such as fog, submerged rocks, and uncharted shoals can all also pose a risk for even the most experienced captain. Weather events such as hurricanes and thunderstorms can also inflict massive amounts of damage on boats and waterways. Another often overlooked reason for getting boat insurance is protect yourself against environmental liability from issues like fuel/chemical spills and salvage/recovery/clean-up costs associated with flooded and sunken boats. It may seem like these are things that will never happen to you, but many people are faced with huge environmental impact and clean-up costs because of spills and leaks. While these factors are all compelling reasons to consider boat insurance, they don't answer the question of whether you need boat insurance.
If you have a loan or lien on your boat, you are likely required to carry a certain level of insurance by the loan/lien holder. Check with your lender to be sure. Likewise, if you keep your boat at a marina, you may be required by the marina's policies to carry a minimum level of insurance for property damage, accident liability, and environmental liability. Again, check with your marina's manager and/or your slip/storage contract for details. Each state may also have individual insurance requirements (usually for liability only) for boats, so be sure to check with your secretary of state, dept. of motor vehicles, etc. or a local insurance agent.
In almost all cases, your boat is not covered by your home owner's insurance policy, just as your car is typically not covered and requires a separate automotive policy. Even if you have a small trailerable boat that is kept at home in your garage, your home owner's policy may not cover the boat because it's mobile and operated away from your home.
If you're not required to have boat insurance (see above), then you'll have to weigh the level of risk you're willing to accept. Even an inexpensive boat can become a major financial liability if you damage someone's property with it (i.e, running into a dock) or even worse, injure a person while operating your boat.