Boat insurance is an important consideration if you’re planning to purchase and own a boat. Not only do you need to factor in insurance into the total cost of ownership, but insurance is crucial for protecting your asset and managing the liability risk that comes with boat ownership and operation.
While a typical homeowners insurance policy might cover very small watercraft (e.g. canoes, boats with very small or no engines), anyone doing serious boating will need a separate boat insurance policy. Your boat insurance costs will be dictated by a number of variables about the boat itself as well as the owner and planned operation. The age, size and value of the boat are all important variables as well as other considerations such as whether the boat is used as a primary residence, what kind of activities the boat will be used for and where you plan to store the boat when it’s not in use.
Generally speaking, boat insurance covers repair or replacement of the boat in the event of an incident, the damage done to other property such as another boat or a dock and bodily injury of those involved in an accident. Policies can vary widely, and you’ll want to understand your policy in great detail before agreeing to it. To help you further understand boat insurance, here are ten items to understand when getting a boat insurance policy:
Boat insurance premiums generally run 1.5 – 2% of the value of the boat.
This is a good rule of thumb for general insurance costs, however a number of variables and additional coverage options will cause prices to go up or down from there.
Your driving record is a major factor in determining boat insurance rates.
By and large, if you have a stellar driving record with few incidents, you’ll get better rates for your boat insurance policy than if you have a record with events such as driving under the influence, reckless driving citations, etc.
Damage coverage usually comes in two forms: actual cash value or agreed amount value.
Actual cash value refers to the value of the boat at the time of damage. If the boat is destroyed, the insurance company will attempt to determine the market value at the time of the incident and cover the loss up to that amount. Agreed amount value is different in that the insurer will pay you a previously agreed upon amount if the boat is destroyed regardless of current market value. Actual cash value policies might cost less, but an agreed amount value policy will protect you from depreciation. Buyers of new boats often go with the agreed amount value approach for this reason.
Ask your insurance agent about mechanical breakdown coverage.
If your policy covers mechanical breakdown, it will cover repairs or replacements to outboard motors as long as it’s not a result of normal wear and tear.
Boat insurance can often include layup periods.
A layup period is a period of time in which the boat is not in use. This is common up north during winter seasons when boating is rare. Insurance companies will give you a break on the cost if they know the boat is not in use during a season. Note, however, that if you use the boat and something happens during a layup period, you won’t be covered by the policy.
You might need a captain depending on the size of the boat and your experience.
If you’re jumping in size (40 feet and up), and you don’t have experience with this size vessel, the insurance company might require the use of a captain until enough experience has been gained.
Make sure the appropriate water activities are covered under your policy.
Boat insurance policies can vary in the activities that are covered. For instance, if somebody is injured while waterskiing behind your boat, this liability may or may not be covered depending on the policy. If you plan a vary of activities, make sure your policy covers liability associated with such use.
Some additional coverage options might be worthwhile.
You can add on additional coverage such as covering the personal belongings on the boat (e.g. expensive fishing gear), towing services and even coverage for your trailer.
You’ll need a hurricane plan in Florida.
Detailing what you plan to do in the event of an approaching hurricane is important. Insurers will want to know what your hurricane plan is, and in the event of boat damage or loss during a major storm, they will verify that you followed the approved plan. A hurricane plan might be as simple as ensuring the boat is removed from the water and stored in a secure location.
Also, note that many boat insurance policies have separate deductibles for hurricane related damage or loss.
Research the areas of overlap between your various insurance policies and understand what policies kick in what in various situations.
If you’re keeping your boat stored at your home, your homeowners insurance may cover damage to the boat in the event of an incident at the home. Similarly, your auto insurance may cover damage to the boat if it’s damaged while being trailered on the roads. Additionally, some boat owners have umbrella policies that can kick in when limits are reached or the other policies don’t cover a certain element. It’s important to understand how your various policies work, where they overlap, what is covered exactly and what those limits are under various circumstances.
Do you have any questions on boat insurance? The Tom George Yacht Group professionals are here not only to help you find the perfect boat for you and your family, but to help ensure you have a great ownership experience for years to come. Contact us today if you have any questions.
What’s next? Check out our articles on boat financing and extended warranties.