Boat Insurance: Don’t Hit The Water Without It

Boats are huge investments. Without appropriate insurance coverage, that investment can be lost. Most people, however, don’t know a lot about boat insurance. With that in mind, below are some of the basics you should be aware of.

1. Why You Need It

Some people are under the impression that their homeowners insurance coverage will protect them from things that can go wrong with their boat. While some coverage may exist under a homeowners insurance policy for a boat, the protection is very unlikely to be significant enough to cover more expensive vessels. As a generally policy, you should buy additional coverage if you spent more than $10,000 on your boat. According to DMV.org, the law in two states, Arkansas and Utah, require you to insure boats.

2. How Is It Similar to Other Kinds of Insurance?

In some ways, boat insurance is similar to home and auto insurance. Most of these similarities are related to the liability coverage provided. For example, home insurance may protect you if a guest were to get injured on your property. Boat insurance may provide the same kind or protection. Car insurance is designed to help pay for damage your car does to other people’s property. If your boat damages another person’s property such as a dock or their vessel, it can help pay for the damage.

These kinds of accidents are more common than you may assume. According to the United States Coast Guard, the damage done in 2013 by boats crashing into fixed objects was over $4.5 million.

3. How Does Boat Insurance Differ?

However, there are some big differences between boat insurance and other kinds of insurance like home and auto. The biggest is the fact that the coverage doesn’t have to cover your craft all the time. This is known “laying up” the boat insurance. This is done when the boat is placed into storage for long periods of time and isn’t being used. Insurers know that paying for insurance during these times is a very bad deal, so they give boat owners the option of suspending the insurance coverage while it’s in storage. When it’s taken back out in the spring, the boat owner can un-suspend the insurance coverage.

4. What Else You Should Know

Like cars, boats depreciate in value. One thing you need to consider when obtaining boat insurance is choosing between “agreed value” and “market value.” Agreed value is probably the preferable option because it doesn’t account for depreciation. If you choose a boat insurance plan that only covers market value, you may end up receiving a lot less money after a total loss. The depreciation over time will of course be deducted from the value of the boat at the time you purchased the policy.