Insuring Your Boat the Right Way

What’s Covered

You’ll always want to check your specific insurance policy for details regarding your boat, but in general, here’s what kind of coverage you can expect.

Boat insurance companies usually break down coverage into two categories: physical damage and liability.

Damage

The damage portion of your policy covers loss from things like the boat sinking, catching on fire, being stolen, or hitting something. You’ll want to clarify what portions of the boat are covered, which usually include the hull and exterior, the motor if applicable, anchors, safety equipment, and additional fuel that’s on board.

Liability

Your boat insurance company should also have a liability coverage amount which protects you in the event your boat causes damage to other property or people. Common occurrences include colliding with other boats or structures such as docks. You can also be covered for other circumstances caused by your boat, including substantial wakes that consequently cause damage.  Your liability coverage should protect you from lawsuits as well, so make sure that’s included as part of your policy.

Other Considerations

Check to see what locations are included as part of your boat insurance. For instance, if your vessel is on the road attached to your truck, then it’s most likely covered by your auto insurance policy. However, there’s likely a value limit placed on the boat under this policy, which may not cover the total cost of your boat.

Ask questions of all of your insurance providers to make sure you know what’s covered and where. A broader umbrella policy can help you protect your boat (and yourself from liability) from every point in which your boat travels. This eliminates unpleasant surprises when you don’t fully understand your various policies.

Agreed Value vs. Market Value

When reviewing boat policy options, an insurance company may let you choose one of two ways to assign value to your boat. The first is called an agreed value.

The agreed value is an amount you and the insurer agree on together, which consists of the total amount you’ll be reimbursed in case something happens to your boat. The downside is that you’ll likely pay a much higher premium on this kind of insurance policy because you’re not taking into account the ongoing depreciation of the boat.

Consequently, selecting agreed value is best suited if you’ve purchased a new boat. That way, you’re not penalized for the steep depreciation that occurs right after taking the boat off the lot, especially if you’re paying a loan for the full purchase price.

Choosing market value for your boat insurance policy factors in that depreciation, so you would just be compensated for the current value of the boat, not for replacing it with a new boat. If your boat is 10 years old and is destroyed in some way, you’ll only receive enough money to replace it with a boat of a similar age. If you want to upgrade to a newer, more reliable boat, you’ll need to find another way to finance the difference.

Of course, you get what you pay for, so you’ll receive a much lower premium on your policy by choosing the market value option.

At the end of the day, you need to choose based on what you owe on the boat and how you’d like to replace it if you end up losing it to some external cause.

How to Save Money on Your Policy

As you can see from some of our top picks for boat insurance companies, there are plenty of ways to receive a discount on your policy each year. No matter which insurer you choose, check out these most common opportunities to save so you can lower your insurance costs without sacrificing the quality of your coverage.

#1: Choose a Policy to Match Your Boat

Read the fine print of your insurance policy and make sure it matched what you need. Most insurers let you get ultra-specific with the type of boat you own so you can get the perfect amount of coverage without overpaying for a plan with excessive coverage.

#2: Take a Safety Course

Many boat insurance companies offer a discount on your policy if you take an approved safety course. This shows them that you have the experience to better care for your boat, making it less likely that you’ll even need your policy. While you can’t control everything that happens, you can certainly control how you respond.

#3: Add Safety Features

Your insurance company may offer savings on your policy if you install additional safety features, like a depth finder or auto tethers. While they do involve a one-time cost, you could save money year after year on your boat insurance.

#4: Be Realistic with Your Lay-up Period

If you just use your boat seasonally, take an honest look at how much time you’re not actually on the water. You can reduce your insurance premium if you use your boat less frequently. Obviously, the point of having a boat is to enjoy it. But if you realistically don’t take your boat out until Memorial Day weekend, don’t end your lay-up period at Easter weekend unless you really intend on taking it out that early in the year.

You certainly want to pay for the right amount of insurance coverage to protect your boat. But taking the time to make sure your plan is as accurate as possible can result in major savings every year.

Frequently Asked Questions

by Lauren Ward

Personal Finance Writer

Lauren Ward is a personal finance writer with nearly ten years of experience covering topics like loans, credit, and real estate. She lives in Virginia with her husband and three children.