Do You Need Boat Insurance?

If you finance your boat, your finance company will most likely require you to obtain an insurance policy. Boat insurance is smart even for those who pay cash as it protects your investment and your potential liability on the water. Whether you are buying a jet ski, fishing boat, high performance power boat, sailboat, or luxury yacht, find out how much boat insurance you need and how much it will cost you.

Is it a Boat or is it a Yacht? That is the Question

When it comes to insuring your boat, the boat’s length determines whether you need boat insurance or yacht insurance. While you may not consider your 26-foot boat a yacht by any stretch of the imagination, your insurance company does. Generally, boats less than 26 feet in length require boat insurance while those above 26 feet require yacht insurance.

Boat Insurance Basics

Boat insurance typically covers liability protection should you be involved in a boating accident as well as physical damage protection should you boat be damaged collision, fire, lightning, windstorms, or vandalism.

As with other forms of insurance, boat insurance policies vary in their coverages, exclusions, premiums, and deductible amounts. Not all policies cover personal effects, so pay attention to the details. If you want to protect personal items, you may need to pay for additional coverage. Items that are not considered part of the boat’s normal operation, such as televisions, cell phones, scuba equipment, and cameras, fall into the personal effects category.

Another key consideration when shopping for boat insurance policies is whether the policy offers Actual Cash Value or Agreed Amount Value coverage. Actual Cash Value depreciates your boat over time and pays you based on the depreciated value at the time of the loss. If you paid $30,000 for the boat and suffer a total loss five years later, an Actual Cash Value policy will pay the current market value at the time of the loss.

An Agreed Amount Value policy pays the amount that you and the insurance company agree to at the time you negotiate the policy. For example, when you take out an Agreed Amount Policy, you will determine the value. If you agree to a $30,000 amount and suffer a total loss, the policy will pay $30,000 regardless of how much the boat has depreciated. This type of policy usually does not depreciate partial losses either, though Actual Cash Value limits may be in place on certain types of items such as sails, trailers, dinghies, drive units, outboard motors, and outdrives.