What type of boat insurance should I get?

To determine the type of boat insurance to purchase, you'll want to consider all of the following:
  • What type of boat do I own? (powerboat, sailboat, houseboat/liveaboard, fishing boat, PWC, etc.)
  • Where do I use my boat? (ocean, lake, river, etc.)
  • Where do I keep my boat? (marina, on trailer, private dock, etc.)
  • What do I use my boat for? (fishing, diving, business, cruising, skiing/watersports, etc.)
  • What is the value (purchase price and replacement cost) of my boat?
  • Will I use my boat year-round or will it be stored away from the water at times (during winter, etc.)?
  • Does my marina require minimum levels of liability insurance?
  • What policies cover environmental liabilities (such as fuel spills, chemicals, salvage/recovery of sunken vessels)?
  • Do I need to be aboard the boat for coverage, or can a deliver captain or boatyard operate the vessel?
Once you've answered the above questions, an insure agent can help you narrow down the type of policy and the amount of coverage that is appropriate for your situation. For example, if you're cruising the Caribbean on a sailboat, you'll need specific insurance that will cover your boat while it is in other countries and potentially in areas where hurricanes are more common.

Typically, most insurance policies will have specific requirements and restrictions regarding activities and areas where you'll be covered. To use the above example again, your sailboat policy for the Caribbean may have a restriction that will not cover the boat for damage if you're in a hurricane-prone area during the months of June-November (hurricane season in the Caribbean). Other policies may actually pay to have your boat hauled if a storm is imminent.

Determining Value
Another very important variable in boat insurance policies is how the value of your boat and equipment is determined. Some policies use Book Value, which is based on NADA and BUC market sales data. Sometimes this works just fine for new boats and boats that are just a few years old, but using this method for older boats is difficult and often inaccurate. Stated/Agreed Value is a number that is agreed upon by both the insurer and the policy holder. Typically a survey is used in conjunction with market data to arrive at this value. Lastly, some policies use Cash/Replacement Value, often only for equipment. This value represents what an item is actually worth today, as opposed to when it was purchased in the past. This is not to be confused with Replacement Cost, which is the current actual price to replace something. For example, if your stereo from 2001 is damaged by water, a policy with replacement cost coverage for equipment would pay for the cost of a new stereo while replacement value coverage would only pay the depreciated value of the 2001 stereo. Many policies are a hybrid of the above values, using Agreed Value for the hull and Cash/Replacement Value for equipment.

Liability Insurance vs. Hull Insurance
Liability insurance may not be related to the value of the boat as much as it is the odds that the owner/operator will cause damage to another person, boat, property or the environment. Your boating experience sometimes helps the insurer determine the costs of this coverage. Even if you decide to have no other insurance coverage, it is wise to have liability insurance.

Hull insurance is what covers the actual boat. Most lenders will require that you carry hull insurance in the amount specified by one of the values above. The cost and coverage of hull insurance is therefore related to the value of the boat, but can also be partly determined by how much experience you have on similar size/type vessels.

Specialty Policies
Certain situations and activities may require a special insurance policy or rider. For example, live aboards need a special policy. In general, live aboard insurance policies can be difficult to obtain because many insurance companies believe this activity poses a higher liability risk. The value of personal belongings/equipment is often also higher.

Long-range cruising and offshore policies and riders may also be needed by some boaters. Some insurers will write custom policy riders to cover specific cruising grounds (e.g. Baja, Bahamas, Bermuda, etc.). These riders may restrict your boating activities and time periods and call for specific procedures for dealing with storms, storage and maintenance. Long-range cruisers should also become familiar with insurance requirements for foreign countries that they intend to visit.

Determining the type of policy and the amount of coverage you need are critical for protecting your boat, your personal liability, and for getting the most cost effective insurance. When shopping for boat insurance, take your time and be sure to get several quotes and let agents/companies know that they are competing with others for your business.