Importance of Boat Insurance

         

Why do I need boat insurance?

If you’re new to boating, you may be under the impression that your homeowners insurance will magically stretch to cover your boat. Sadly, in most cases it won’t.

“Many homeowners policies will have a minimal amount of coverage for really small boats with either no engine or a very small engine, like a sailboat,” says Mitch Jawitz, vice president of marketing and distribution at The Hanover Insurance Group. “But if you’re buying a $10,000 or $20,000 boat, your homeowners policy is not going to cover you for what you need.”

“Your boat has nothing to do with your home, any more than your car can be covered under your homeowners insurance,” she says. “Your home isn’t mobile. Your boat, like your car, can go anywhere, so it requires a separate policy.”

That said, you may save money by bundling your boat policy with your home or auto insurance.

“There’s often a cross-sell discount,” says Chantal Cyr, vice president of product management for Travelers. “At Travelers, if your boat is less than 30 feet and you have one or more policies, you can save 10 percent for one policy and 15 percent for the second.”

How does it differ from home or auto insurance?

In some ways, boat insurance is a mash-up of home and auto insurance.

Like home insurance, a boat policy covers you for liability if someone is injured on your craft and gives you the choice between replacement cost or cash value in a total loss.

Like auto insurance, boat coverage typically includes coverage for bodily injury that your boat inflicts on others, property damage your boat inflicts on docks and other boats, and physical damage to your boat should you hit something or run aground. You can also purchase comprehensive coverage against theft, vandalism, fire and flood, personal property coverage for your fishing gear, uninsured boater insurance and even roadside assistance in the event you need a tow.

Unlike home and auto, a boat policy may allow you to “lay up” or suspend coverage for specified periods when you’re not using the boat.

“Sometimes boaters aren’t aware of that and (on) some nice day in November, they take the boat out for the day and have an unfortunate incident, only to find out that their boat was to be out of the water from Oct. 15 to April 1,” says Cyr.

How do ‘agreed value’ and ‘market value’ policies differ?

“A boat is a lot like a car. The moment you drive it off the lot, it starts depreciating,” says Cyr.

To help boaters save money on insuring older vessels, insurers offer the option of “agreed value” (think sticker price) versus “market value” (think depreciation) in the case of a total loss.

“With agreed value, the insured and insurer agree on the value of the boat upfront. If something happens to the boat, you’re going to get paid up to the agreed value,” says Jawitz.

“With market value, the boat depreciates; so if the boat is destroyed, you’re going to get enough money to replace the boat’s (current) value. If you bought the boat in 2005, you’re not going to get enough money to buy a 2011 model; you’re going to get enough to buy a 2005 model,” he says.

Like most insurers, Travelers offers a steep discount (25 percent) with market value policies.

“Owners of newer boats typically go with agreed value. As the boat ages and the value depreciates, and they don’t have a loan on the boat, you’ll see them switch to cash value,” Cyr says.

Key Coverage

Your property

• Physical damage coverage:
  • May help to repair or replace the insured’s boat if they are involved in an accident
  • Typically pays for damage or loss to a boat caused by collision as well as comprehensive losses (such as theft, fire or vandalism)

You and your family

• Watercraft medical payments coverage:
  • Watercraft Medical Payments provides coverage for you and resident relatives if injured in a boating accident, and anyone else who is injured while occupying the insured boat with your permission.

Other person

• Watercraft liability coverage:
  • Provides coverage if you are legally responsible for bodily injury to others while operating your insured watercraft

Additional coverages

• Uninsured/Underinsured watercraft: Covers you if you’re involved with a hit-and-run, uninsured or underinsured boat (*varies by state)
• Emergency services: Includes $100 of coverage for the reasonable cost of towing, mechanical labor at the place of breakdown, delivery of fuel, oil or battery; up to $3,000 of coverage is available in some states
  • The customer makes the arrangement and can be reimbursed through the claim service
  • File like any other claim by calling your agency and carrier
• Repair cost option: Provides replacement cost coverage for your boat, motor, boat equipment or trailer for partial losses
• Personal effects: Typically helps pay for the loss of personal property that you bring aboard the boat (e.g., clothing, cell phone, fishing and sporting equipment, etc.)
• Additional boat equipment: Typically helps pay for the loss of portable boat accessories used with the insured boat (e.g., life jackets, CB radio and fish finders)
• Agreed value: Provides the value presently listed on the dec in the instance of a covered total loss
• Boat trailer: Provides protection for physical damage losses to the trailer transporting your boat

* Refer to your policy as a definite resource for applicable coverages and coverage limits

Discounts

• Multiple policy: You can qualify for a discount on your boat insurance if you have multiple policies with the same carrier.
• Homeownership: Save money if you currently own a home, townhouse, condominium or manufactured home by insuring them with the same carrier
• Boat education: Save money if you have taken an approved boat education course
• Organization: Available for membership in certain organizations such as the Boat Owners Association of the United States (Boat U.S.) or the International Game Fish Association
• Diesel engine: Your boat may qualify for a discount if it has a diesel engine
• Automatic fire extinguisher system: Your boat may qualify for a discount if it has an automatic fire extinguisher system
• New boat: Your boat may qualify for a discount if it is five years old or less
• Full Pay: You can earn a discount when you pay your entire policy premium in full
• Easy Pay Plan: Save money by having your payment automatically withdrawn from your checking or savings account
• Early signing: Applies if you sign up seven or more days prior to your policy effective date